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PBGC ADVISORY COMMITTEE ISSUES STATEMENT ON PRIVATE PENSION SYSTEM

 WASHINGTON, Feb. 5 /PRNewswire/ -- Defined benefit pension plans are still "the best method of providing assured retirement income," according to the advisory committee of the Pension Benefit Guaranty Corporation (PBGC). The committee released its views on a number of issues surrounding the agency's status and operations, concluding "that the private, defined benefit system as a whole is sound."
 The agency's ability to meet its commitments has been the subject of much congressional and media attention in recent weeks. The advisory committee represents a diverse range of views and constituents. Its chairman, Myron J. Mintz, noted that the committee's "unique consensus is aimed at strengthening the private pension system and the PBGC."
 The PBGC Advisory Committee was established by the Employee Retirement Income Security Act (ERISA) for the purpose of advising the corporation. Members represent the interests of employee organizations, employers and the general public. Its members are appointed by the president and serve staggered three-year terms.
 The text of the committee's statement, reached today, follows:
 1. The advisory committee believes that defined benefit pension plans are the best method of providing assured retirement income for participants and beneficiaries at the lowest cost to them and the economy as a whole. The advisory committee believes it is appropriate for public policy to encourage the growth and development of these plans.
 2. The advisory committee believes that regulatory and legislative actions taken by the government should be reviewed in advance of their implementation in terms of their impact on defined benefit plans and PBGC obligations.
 3. The advisory committee believes that it is desirable for employers' pension promises to be advance-funded. Minimum funding requirements should be strengthened, impediments to advance-funding should be eliminated, and plans should be given the ability to fund aggressively when financially able to do so.
 4. The advisory committee believes that the nature of defined benefit plans must also be understood: that is, when first established and as benefit increases are provided (such as those merited by increases in the cost of living or a new collective bargaining agreement), plans would normally experience an increase in underfunded liability.
 5. The advisory committee believes that the law should be changed to give at least as much incentive to sponsorship of defined benefit plans as to defined contribution plans.
 6. The advisory committee believes that the PBGC should have a clarified and strengthened position in the case of bankruptcies, including but not limited to a position on creditor committees, to help assure that benefit promises are kept.
 7. The advisory committee believes that the PBGC should continue to be fully financed by a combination of premium payments and payments to the PBGC by terminating plans. Premium increases should be viewed with caution due to the potential that they could induce overfunded defined benefit plans to terminate. Primary emphasis should be placed on changes in the law to strengthen the funding of all defined benefit plans while encouraging the growth and development of new defined plans.
 8. The advisory committee believes that there is merit in proposals to change the budgetary treatment of PBGC from a cash accounting basis to an accrual accounting basis.
 9. The advisory committee believes that PBGC needs more timely information on insured plans. The advisory committee recommends that a method be developed for electronic filing of Form 5500 information to allow timely analysis.
 10. The advisory committee believes that the PBGC has made significant progress in the development of accounting and forecasting systems and that necessary resources must be allocated to allow completion.
 These proposals, of course, are prospective and, accordingly, existing collective bargaining agreements should be respected.
 The members of the committee are:
 -- Myron J. Mintz, chairman
 (representing the interests of the general public)
 202-828-2247
 -- Gordon Binns, member
 (representing the interests of employers)
 212-418-3585
 -- Kenneth K. Keene, member
 (representing the interests of employers)
 212-628-8130
 -- Stephen F. Keller, member
 (representing the interests of the general public)
 818-574-7223
 -- Richard M. Prosten, member
 (representing the interests of employee organizations)
 202-842-7860
 -- Dallas Salisbury, member
 (representing the interests of the general public)
 202-659-0670
 -0- 2/5/93
 /CONTACT: Myron J. Mintz, 202-828-2247, Gordon Binns, 212-418-3585, Kenneth K. Keene, 212-628-8130, Stephen F. Keller, 818-574-7223, Richard M. Prosten, 202-842-7860, or Dallas Salisbury, 202-659-0670, all of the PBGC Advisory Committee/


CO: Pension Benefit Guaranty Corporation ST: District of Columbia IN: INS SU:

DC -- DC029 -- 3727 02/05/93 17:19 EST
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Date:Feb 5, 1993
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