The Government Won’t Be There

The Pension Benefit Guaranty Corporation (PBGC) is a federal corporation created under the Employee Retirement Income Security Act of 1974 (ERISA).

It insures the pensions of about 33.8 million workers and retirees in nearly 28,000 private sector defined benefit pension plans under its single-employer insurance program. PBGC insurance funds pay guaranteed benefits that are not funded by plan assets or recoveries from employers at plan termination.

As of September 30, 2008, the end of the 2008 fiscal year, PBGC reported a $10.8 billion deficit in the financial statements for its single-employer pension insurance program.

Financials for 2009 are not available yet, but given the economic conditions, it is expected that the financial situation of PBGC is significantly worse.

In addition, even in good times, PBGC has maximum benefits restrictions that may impact some workers. See this article for an example: Washington Post.

Finally, the pension challenges faced by MCA-KC teammates are not unique. Other unions, such as the United Auto Workers, are being forced to dramatically change their pension plans, and the list of those in line is long.

The unions are joined by government employees. From teachers to police officers to firefighters, every government employee from the federal to municipal level is facing a pension deficit.  That means that every level of government – federal, state, county, and municipal – will be struggling to keep promises to its current employees.