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PENSION BENEFIT GUARANTY CORPORATION'S TOP 50 LIST SHOWS INCREASED UNDERFUNDING

 PENSION BENEFIT GUARANTY CORPORATION'S TOP 50 LIST
 SHOWS INCREASED UNDERFUNDING
 WASHINGTON, Nov. 25 /PRNewswire/ -- Pension underfunding in the Pension Benefit Guaranty Corporation's (PBGC) annual list of 50 companies with the largest underfunded plans increased by 50 percent between 1989 and 1990, going from $14.2 billion to almost $21.5 billion.
 The 50 firms had nearly $86.3 billion in liabilities in underfunded plans for benefits guaranteed by PBGC and just under $64.8 billion in assets, or a funding ratio of 75 percent.
 While inclusion on the list does not mean a pension plan necessarily poses an immediate risk, half of the listed companies have pension plans with aggregate underfunding of $11.2 billion that represent a possible or probable loss to the pension insurance fund and to workers and retirees whose benefits may not be guaranteed in full.
 "We must stem the increase in pension underfunding before we have a crisis. If companies do not pay the pensions they promise and PBGC cannot fulfill its obligations, retirees will be at risk and taxpayers may end up paying for promises they did not make," said PBGC Executive Director James Lockhart.
 "Overall underfunding in pensions has increased because pension contributions and investment income fell short of benefit payments and increases. Companies have continued to treat PBGC's guarantee as a subsidy for pension promises they make but cannot afford to meet," he added.
 "Companies and their creditors need to acknowledge that pensions represent real debt, and they must commit themselves to improve funding to pay off these debts and protect their workers. The Bush Administration recognizes this and last week proposed legislative reforms, which were introduced in Congress with significant bipartisan support. The reforms in the bankruptcy area give employers and their creditors incentives to better fund rather than terminate pension plans," Lockhart said.
 The airline, steel, auto, and tire industries dominate the list, accounting for about 75 percent of the aggregate underfunding in both years.
 Underfunding worsened among 37 companies on the list. However, the bulk of the increased underfunding, $7.1 billion, is attributable to three firms -- General Motors, Chrysler and LTV.
 Thirteen companies dropped off the list. Eastern and Pan Am's plans were terminated. The remainder either increased their funding levels or were crowded off by new entrants that experienced substantial increases in their underfunding.
 The threshold for inclusion in the top 50 list jumped from $32 million of underfunding in the previous list to $47 million. If the old threshold had been used, the new list would have contained 67 companies.
 This list only reflects underfunding for guaranteed benefits. In many cases there is also large underfunding for non-guaranteed benefits. In bankruptcy, PBGC asserts claims on behalf of participants for these amounts, as well.
 The reported underfunding for guaranteed benefits understates potential losses because funding of pension plans tends to deteriorate prior to termination. Financially pressed sponsors typically try to minimize their contributions by using the most advantageous interest rate, retirement age and mortality assumptions permitted by law. In addition, plan assets may be drained if worsening conditions lead to layoffs and plant closings that encourage early retirement and trigger subsidized or special benefits. Further, detailed information about a plan's participants and provisions allow more refined valuation methods to be used, which often produce higher liability estimates.
 On the positive side, 11 companies on the list showed some improvement from last year. Also, some companies on the list have pension plans that are overfunded. However, only the aggregate of underfunded plans are included because PBGC has no claims on the excess assets in the overfunded plans.
 Plan participants may determine funding of their plan by reviewing their employer's Annual Report of Employee Benefit Plans (Form 5500) or the Summary Annual report, which may be requested in writing from plan administrators. The list reflects PBGC's adjustments to the financial data reported.
 As last year, PBGC derived this year's list from a computerized data base (created by Standard & Poor's Compustat Service, Inc.) of corporate annual reports for fiscal years ending in 1990. PBGC supplemented the data base with information gleaned from Form 5500s and from Form 1s, which employers file with their premium payments. Subsequently, the companies were asked to verify the data.
 These data were adjusted to reflect the interest rate PBGC would use if, in fact, the plans were terminated. The rate for this list and the previous list was 7.25 percent. Mortality assumptions were also adjusted to PBGC's mortality table. However, expected early retirement ages were not adjusted. Since the interest rates and methodology for these adjustments were the same in both years, the 1989 and 1990 lists are considered comparable.
 PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic retirement benefits earned by American workers participating in private defined benefit pension plans. PBGC administers two insurance programs, which cover nearly 40 million workers in about 95,000 pension plans.


TOP 50 COMPANIES WITH THE LARGEST UNDERFUNDED BENEFIT LIABILITY
 GUARANTEED BY PBGC
 Company Guaranteed Assets Unfunded Funding
 Benefits Guaranteed Ratio
 Liability Liability
 LTV $3,387 $204 $3,183 6.0 pct.
 JESUP GROUP 132 27 106 20.3
 CF&I STEEL 219 55 164 25.0
 SHARON STEEL 213 64 150 29.9
 BLAW-KNOX 106 36 70 34.2
 LOEWS 239 101 139 42.0
 KEYSTONE CONSOLIDATED
 INDUSTRIES 178 79 99 44.4
 AMERICAN NATIONAL CAN 816 387 429 47.4
 UNIROYAL-GOODRICH 826 392 434 47.5
 BORG-WARNER 200 98 102 49.1
 NEW VALLEY 640 336 304 52.4
 HARNISCHFEGER INDUSTRIES 161 86 75 53.2
 BRIDGESTONE-FIRESTONE 510 279 231 54.7
 NATIONAL INTERGROUP 648 378 270 58.3
 ACF INDUSTRIES 149 89 59 60.0
 CHRYSLER 8,415 5,087 3,328 60.5
 TENNECO 368 224 144 60.8
 PAINE WEBBER GROUP 125 78 47 62.1
 AMERICAN FINANCIAL 150 93 56 62.3
 CARTER HAWLEY HALE STORES 158 98 59 62.3
 BUDD 490 312 178 63.7
 PHELPS-DODGE 167 116 51 69.3
 CYCLOPS INDUSTRIES 341 238 103 69.7
 BETHLEHEM STEEL 4,555 3,254 1,301 71.4
 ROCKWELL INTERNATIONAL 643 461 182 71.8
 WHITE CONSOLIDATED
 INDUSTRIES 227 170 57 74.9
 REYNOLDS METAL 542 416 126 76.8
 JAMES RIVER 263 204 59 77.5
 NAVISTAR INTERNATIONAL 2,481 1,945 536 78.4
 UAL 431 344 87 79.7
 VARITY 284 227 57 80.0
 ALLEGHENY LUDLUM 361 292 69 80.8
 NORTHWEST AIRLINES 432 355 78 82.0
 GOODRICH (BF) 533 441 92 82.7
 GENERAL MOTORS 42,034 34,889 7,145 83.0
 MAXXAM 682 567 114 83.2
 RAYTHEON 514 428 86 83.3
 WEYERHAEUSER 453 379 73 83.8
 WESTINGHOUSE ELECTRIC 4,327 3,635 692 84.0
 HONEYWELL 379 319 60 84.2
 KIMBERLY-CLARK 341 287 54 84.2
 TRANS WORLD AIRLINES 1,251 1,061 190 84.8
 DANA 533 458 76 85.8
 GOODYEAR TIRE & RUBBER 1,083 933 150 86.2
 DEERE & CO. 1,039 911 128 87.7
 ARMCO STEEL LP 622 556 66 89.4
 ALLIED SIGNAL 1,287 1,199 88 93.1
 ARMCO 797 743 54 93.2
 TEXTRON 730 681 49 93.3
 NATIONAL STEEL 829 779 50 94.0
 TOTALS (in millions) $86,287 $64,788 $21,499 75.1
 Underfunding in pension plans guaranteed by PBGC is a measure of exposure for the pension insurance program. Experience has indicated that the PBGC's losses after a plan terminates often exceed these estimates because of lower contributions and greater than anticipated early retirements. In addition, detailed information about a plan's participants and provisions allow more refined valuation methods to be used, which often produce higher liability estimates -- for example, such a valuation of TWA's plans done in August 1991 produced a $440 million estimate of underfunding for PBGC insured benefits.
 The list does not include non-guaranteed benefits or potential recoveries by the PBGC upon termination. This list implies no rating or statement of financial condition of the companies. Liabilities have been adjusted to PBGC's assumptions at time of evaluation (7.25 percent and UP-84 mortality table); and excludes, whenever identified to the PBGC, plans sponsored outside the United States and domestic non-qualified plans. Totals may not add due to rounding.
 Sources: Standard & Poor's Compustat Services, Inc., of 1990 annual report data, 1988 IRS Form 5500, 1990 PBGC Premium Payment files and information provided by contacted companies.
 -0- 11/25/91
 /CONTACT: Judith E. Bekelman, director, communications and public affairs, or Andy Gasparich, public affairs specialist, of the Pension Benefit Guaranty Corporation, 202-778-8840/ CO: Pension Benefit Guaranty Corporation ST: District of Columbia IN: FIN SU:


SB-MK -- DC013 -- 6921 11/25/91 14:26 EST
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