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U.S. pension agency posts record deficit

Financial Law     updated  2009/05/20 08:41

The U.S. agency that insures corporate pensions posted a record $33.5 billion deficit for the first half of fiscal 2009, its acting director will tell Congress later on Wednesday.

Vince Snowbarger, acting director of the Pension Benefit Guaranty Corp, will tell a congressional panel that the agency has enough money to meet its obligations for "many years."

The PBGC, which posted an $11 billion deficit at the end of fiscal 2008, blamed the sharp increase this year on new pension plan terminations and expectations that more retirement accounts would be turned over to the government from distressed companies.

"The amount of underfunding in pension plans sponsored by financially weaker employers is very substantial," Snowbarger said in testimony prepared for the Senate Special Committee on Aging.

Pension underfunding in the auto sector for guaranteed benefits is about $42 billion, the agency said.

The agency was created in 1974 to insure pensions of American workers under so-called defined benefit plans. Such plans, which provide retirement benefits based on a worker's years of service and earnings, were popular with automakers, steel companies and airlines.

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