PBGC Record Deficit $34 Billion in FY 2012
The Pension Benefit Guaranty Corporation (PBGC) hit a record deficit of US$ 34 billion in fiscal year 2012. The agency’s deficit has been increased by lower interest rates. These rates are an input in valuing plan liabilities.
According to PBGC Director Joshua Gotbaum in a statement the “PBGC continues its work to preserve pensions and to provide some of the best service anywhere, but continuing financial deficits will ultimately threaten its ability to pay benefits.”
If the shortfall continues to metastasize, the PBGC may for the first time require U.S. taxpayer funds. In January 2012, the worst loss for the PBGC occurred in the takeover of the pension plan sponsored by Friendly Ice Cream Corporation of Massachusetts. This particular plan had US$ 115 million in unfunded benefits, which the PBGC guaranteed US$ 114 million.
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