Tuesday, November 16, 2010

PBGC payouts increas 22% in FY2010, but it gets tougher (800000 retirees under the agency now)

The Pension Benefit Guaranty Corporation (PBGC) announced Monday that it paid out 22 percent more to retirees in FY2010 (ending Sept. 30) than it had in FY2009, about $5.6 billion to 800000 retirees. Yet, it treaded water, with a deficit of $23 billion, by better return on its trust fund, and by more disciplined treatment of companies nearing bankruptcy.

There are new rules forcing companies to put more money in their pension funds during plant closings and layoffs. 35 companies kept pension plans intact during restricting, including Visteon (a spinoff from Ford), Lear Corporation, LyondellBasel Industries and Smurfit-Stone Container Corporation.

The PBGC has had to attack a corporate strategy in some industries, like steel, where companies terminate pension plans to relieve themselves of debt.

The New York Times story by Mary Williams Walsh is “As payouts rise, new tactics by the US Pension Insurer”, link here.

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