From: Pension Benefit Guaranty Corporation (PBGC) <pbgc@subscriptions.pbgc.gov>
Date: Tue, Sep 2, 2014 at 5:52 AM
Subject: PBGC Celebrates 40 Years of Protecting Pension Benefits of the Nation's Workers and Retirees: The Decade Now
To: iammejtm@gmail.com
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09/02/2014 07:00 AM EDT This entry is part of a series of blog posts that looks back and commemorates the agency's work. A new age of education and getting tough Since the American Revolution, pensions have been an important factor in U.S. history. While PBGC is a relatively new force in the ever evolving fundamental drive of providing fair pensions for U.S. citizens, we have already played an integral role in ensuring that what was first promised centuries ago is a promise that continues to be kept today. Now, 40 years and growing, we must realign the playing field to ensure that hard working Americans continue to see pension security as a reality. The first test of this decade came in December 2011, when American Airlines announced its intention to terminate all four of its pension plans while in bankruptcy. Following intensive efforts by PBGC, on March 7, 2012 the airline announced its new decision to keep its pension plans. The four plans were underfunded by about $10 billion and covered about 130,000 workers and retirees. We did not stand back, we led.
That was just the first test. The challenges continued to intensify and a new word entered the pension world's lexicon: "derisking." In April 2012, Ford Motor Company announced it would offer lump-sum payouts to about 90,000 U.S. salaried retirees and former employees, under a new tactic dubbed "derisking." It is a tactic aimed at ending defined benefit pensions — and the financial liability — by offering onetime payments to those under DB plans. Other companies quickly embraced the tactic and an additional retirement crisis was underway. To improve the educational component of its mission, we began an expansive effort to recognize and address a widening retirement crisis in America by using the agency's bully pulpit to identify, highlight and explain the elements of corporate de-risking such as offering lump sum payments in lieu of life time pensions. We also found new ways to keep plans alive or benefits strong. For example, in May 2013 PBGC concluded work with the Hospital Center at Orange, N.J., staff and the IRS to change the legal status of nearly 800 former employees to permit PBGC to cover their pensions. We did not stand back, we led. One month later we held our first public hearing, inviting discussion on our proposal to reform reporting requirements for the vast majority of companies and pension plans covered by the agency. Nine outside panelists and four PBGC panelists anchored the hearing. We have not slowed this year. In an innovative plan, in January PBGC employed a rarely used power to restructure and salvage some of the retirement benefits of nearly 350 former Hostess Brands employees who were members of the Bakery and Sales Drivers Local 33 Industry Pension Fund. It is only the third time ever PBGC has divided a multiemployer pension plan. We did not stand back, we led again. We made the right moves at the right time. And we promised to stay on that course and continue to lead. We have a major challenge. America is not considered one of the best places in the world in terms of retirement security, according to the Natixis Global Asset Management 2014 Global Retirement Index. The survey showed the U.S. ranked 19th among other countries, a fact that overcasts our well-known challenges. We must address the worsening retirement crisis in America. For example, in the past few weeks, one survey showed that 36 percent of adults have nothing saved for retirement, including many who are age 65 or older. We will continue to educate the public about the problems with severely underfunded multiemployer pension plans, where the benefits of about 1.5 million people are at risk.
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Jeremy Tobias Matthews
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