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PBGC'S SLATE CITES NEED FOR PENSION REFORMS IN BOSTON ADDRESS

 WASHINGTON, Dec. 10 /PRNewswire/ -- In an address to the New England Employee Benefits Council in Boston, Pension Benefit Guaranty Corporation (PBGC) Executive Director Martin Slate said that it is important for pension professionals to join in the administration effort to strengthen the security of pensions. The administration's reforms to improve pension funding were recently introduced in Congress as the Retirement Protection Act.
 "We have a common interest in defeating underfunding speedily and decisively. For us it is unthinkable that people who have earned benefits should not receive them. Let us take care of the problem now," urged Slate.
 Underfunding in the single-employer plans insured by PBGC has gone from $27 billion in 1987 to $38 billion in 1991 and "is expected to climb to well over $45 billion, perhaps over $50 billion, when the 1992 figure is reported in the next few weeks," said Slate.
 He pointed out, however, that the vast majority of the 65,000 single-employer plans -- more than 75 percent -- are fully funded. They have sufficient assets to pay all the promised benefits.
 "Indeed the majority of plans in New England are strong. Of the 5,720 we insure here covering 3.8 million people, 4,120 are fully funded," said Slate.
 PBGC steps in to protect workers' pensions, when a company can no longer support its underfunded plan. Today about 336,000 people depend on PBGC for their retirement income. Last year, PBGC paid nearly $636 million in benefits. In New England, PBGC paid nearly $26 million in benefits, including $8 million in Massachusetts.
 "I want to assure workers and retirees in New England as well as throughout the country that PBGC will continue to be here to protect their benefits if they need us in the future," said Slate.
 However, he said underfunded pension plans do pose a long-term threat, which "is serious and should be addressed while it is still manageable."
 The administration's reform proposal, he said, is comprehensive and balanced. "If enacted, it will assure that the pensions of American workers and retirees are secure, while at the same time allowing companies to continue to operate, provide jobs and contribute to the economy," said the PBGC executive director.
 The major reform measures will:
 -- strengthen the funding rules for underfunded plans;
 -- enhance PBGC compliance authority;
 -- increase premiums for those plans that pose the greatest risk;
 and
 -- provide easy-to-understand information to participants of
 underfunded plans about their plan's funding status and the
 limits of PBGC's guarantee.
 Based on an initial analysis, Slate said funding should improve over a 15-year period, from the current average of 55 percent to 90 percent of all benefits and to 100 percent of vested benefits. He added that the reforms should also stabilize PBGC's financial condition and eliminate its deficit, which was $2.7 billion at the end of 1992, within 10 years.
 The reform package was introduced in the House of Representatives (HR 3396) by Reps. William Ford (D-Mich.) and Dan Rostenkowski (D-Ill.) and in the Senate (S 1780) by Sen. Daniel Patrick Moynihan (D-N.Y.). Slate said he hopes passage of the bill "will come early in 1994."
 PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by American workers and retirees participating in private-defined benefit pension plans. PBGC administers two insurance programs, which cover more than 41 million workers in about 67,000 plans.
 -0- 12/10/93
 /CONTACT: Judith E. Bekelman, director of communications and public affairs, or Andy Gasparich, public affairs officer, both of the Pension Benefit Guaranty Corporation, 202-326-4040/


CO: Pension Benefit Guaranty Corporation ST: Massachusetts IN: INS FIN SU: LEG

DC-DT -- DC006 -- 2545 12/10/93 10:27 EST
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Date:Dec 10, 1993
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