Poor Beneficiaries Got Crap

Apparently, the Pension Benefit Guaranty Corporation ate through an $8 billion surplus, and is now tapped out. The PBGC was created in 1974 to make sure that people could get their pensions even if a company goes el-busto. That’s 44 million retirees who are now praying that their pension fund doesn’t crack open. Basically, the PBGC got trapped between low interest rates and the crappy stock market. Here’s the interest part: how to fix it. Companies pay premiums to insure their pensions through the PBGC. The solvent companies don’t want to have to pay out for the invsolvent ones, so it’ll be a hard sell to get the premiums raised. The insolvent companies can’t fix it, obviously. The Erisa Industry Committee, who lobbies for the biggest participants, thinks that this will pass and that the $800M is premiums each year is a good “buffer.” I don’t know how the premiums became a buffer — that’s like putting groceries on your credit card. One solution is to raise premiums based on the riskiness of the contributing company’s pension fund. This makes me ask: why weren’t we doing that in the first place?