Prometheus 6

Quote of note:

The investigators found that most companies let their pension contributions lapse to some degree, even in good years. Every year from 1995 to 2002, they said, about four plans in 10 were less than fully funded. The weaker a company happened to be, the investigators found, the likelier it was to be operating a pension fund that was also weak and to be calculating its pension values in a way that would "depict plan funding in a more optimistic light."

"These plans have the potential to create additional financial exposure and thus risk to the P.B.G.C.," the investigators wrote, referring to the Pension Benefit Guaranty Corporation.

Some Big Companies Failed to Add to Pensions in 1990's
By MARY WILLIAMS WALSH

More than half of the nation's biggest companies with pension plans sailed through the boom of the late 1990's and the bear market that followed without putting any cash into their pension funds, using loopholes in federal law to skirt a requirement for annual contributions, according to a new study by the investigative arm of Congress.

The study, issued yesterday by the Government Accountability Office, examined weaknesses in the federal pension rules in an effort to prevent cataclysmic failures like the one at United Airlines. United, which sponsors four large pension plans for its employees, followed the letter of the pension law, records at the Labor Department show, but the airline still ended up with a $10 billion shortfall in its plans.

Those plans are now expected to be taken over by the Pension Benefit Guaranty Corporation, the federal agency that insures pensions. It would be the biggest pension failure since the government began insuring pensions in 1974. The default at United has raised questions about whether other airlines will be able to keep their own pension plans going, and whether the pension guarantor will one day have to be bailed out by the taxpayers.