Private Pensions: Questions Concerning the Pension Benefit	 
Guaranty Corporation's Practices Regarding Single-Employer	 
Probable Claims (09-SEP-05, GAO-05-991R).			 
                                                                 
The Pension Benefit Guaranty Corporation's (PBGC) single-employer
insurance program is a federal program that insures certain	 
benefits of the more than 34 million worker, retiree, and	 
separated vested participants of over 29,000 private sector	 
defined benefit pension plans. In 2003, we placed PBGC's	 
single-employer insurance program on our high-risk list of	 
agencies and programs that need broad-based transformations to	 
address major challenges because of our concerns about the	 
program's long-term viability. In recent years, because of	 
unfavorable economic conditions and the collapse of large	 
underfunded pension plans sponsored by well-known firms like	 
Bethlehem Steel, U.S. Airways, and United Airlines, the program's
financial condition has worsened significantly. From a $9.7	 
billion surplus at the end of fiscal year 2000, the program	 
reported a $23.3 billion deficit as of September 2004, including 
a $12.1 billion loss for fiscal year 2004. While 73 percent	 
($16.9 billion) of this deficit is due to PBGC's estimated	 
liability for its probable claims (claims from plans that PBGC	 
deems likely to terminate in the future), historically over 95	 
percent of claims so classified by the PBGC have subsequently	 
terminated and become direct obligations of the agency. We are	 
providing answers to several Congressional questions about	 
single-employer probable claims regarding (1) PBGC's methodology 
for determining single-employer probable claims, (2) PBGC's	 
efforts to monitor probable claims, and (3) PBGC's practices for 
disclosing financial information about these claims.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-991R					        
    ACCNO:   A36238						        
  TITLE:     Private Pensions: Questions Concerning the Pension       
Benefit Guaranty Corporation's Practices Regarding		 
Single-Employer Probable Claims 				 
     DATE:   09/09/2005 
  SUBJECT:   Budget deficit					 
	     Claims processing					 
	     Evaluation criteria				 
	     Financial analysis 				 
	     Financial disclosure				 
	     Financial statements				 
	     Information disclosure				 
	     Internal controls					 
	     Losses						 
	     Monitoring 					 
	     Pension claims					 
	     Pensions						 
	     Program evaluation 				 

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GAO-05-991R

United States Government Accountability Office Washington, DC 20548

September 9, 2005

The Honorable John Lewis Ranking Minority Member Subcommittee on Oversight
Committee on Ways and Means House of Representatives

The Honorable Earl Pomeroy House of Representatives

Subject: Private Pensions: Questions Concerning the Pension Benefit
Guaranty Corporation's Practices Regarding Single-Employer Probable Claims

The Pension Benefit Guaranty Corporation's (PBGC) single-employer
insurance program is a federal program that insures certain benefits of
the more than 34 million worker, retiree, and separated vested
participants of over 29,000 private sector defined benefit pension plans.
In 2003, we placed PBGC's single-employer insurance program on our
high-risk list of agencies and programs that need broad-based
transformations to address major challenges because of our concerns about
the program's long-term viability. In recent years, because of unfavorable
economic conditions and the collapse of large underfunded pension plans
sponsored by well-known firms like Bethlehem Steel, U.S. Airways, and
United Airlines, the program's financial condition has worsened
significantly. From a $9.7 billion surplus at the end of fiscal year 2000,
the program reported a $23.3 billion deficit as of September 2004,
including a $12.1 billion loss for fiscal year 2004. While 73 percent
($16.9 billion) of this deficit is due to PBGC's estimated liability for
its probable claims (claims from plans that PBGC deems likely to terminate
in the future), historically over 95 percent of claims so classified by
the PBGC have subsequently terminated and become direct obligations of the
agency.

We are providing answers to several of your questions about
single-employer probable claims regarding

(1) PBGC's methodology for determining single-employer probable claims,
(2) PBGC's efforts to monitor probable claims, and (3) PBGC's practices
for disclosing financial information about these claims.

To answer the questions, we reviewed documentation from PBGC on its
process for determining, tracking, and monitoring probable claims. We also
reviewed PBGC's historical data on these claims and PBGC's public
disclosures regarding them, and reviewed documentation about PBGC
practices for disclosing such information. We conducted our work from
August to September 2005 in accordance with generally accepted government
auditing standards. Your questions, along with our responses, follow.

1. What is PBGC's specific methodology for determining probable claims?

There are three concurrent steps to PBGC's process for determining
single-employer probable claims:

(1)
           identifying underfunded defined benefit plans insured by PBGC,

(2)
           classifying underfunded plans as to the probability of a loss to
           PBGC, and

(3)
           estimating the potential loss to PBGC.

The first step in determining probables is to identify underfunded insured
plans. To accomplish this, PBGC relies on information from Section 4010
filings, 1 reportable event and distress termination filings, 2 credit
ratings, and other sources. Section 4010 filings provide PBGC with
actuarial information on underfunded plans and financial information for
companies with aggregate unfunded vested liability (calculated using PBGC
variable rate premium assumptions) exceeding $50 million. The major types
of reportable events filings that PBGC uses to identify underfunded plans
include the inability of a plan to pay participants the benefits due them
in the form prescribed by the plan, bankruptcy or insolvency proceedings,
liquidation proceedings or the dissolving of the plan sponsor, and a plan
failing to meet the minimum funding standards. PBGC is notified of
reportable events affecting approximately 300 plans per year. On average,
200 of these cases undergo standard terminations or continue without
termination, resulting in PBGC not taking over the plan. 3 The remaining
100 plans eventually become distress terminations or involuntary
terminations---the termination of an underfunded plan. 4 Additionally,
voluntary distress termination filings alert PBGC to plan sponsors who
wish to terminate their underfunded plans.

PBGC also uses credit ratings in its process to identify and classify
underfunded plans. These ratings provide an assessment of a plan sponsor's
credit quality, which includes the ability of a company to meet its
financial obligations. PBGC seeks information as to whether a company's
bonds are investment-grade or below investment-grade. 5 PBGC uses Moody's
ratings, Standard and Poor's (S&P) ratings, and other financial criteria
to make their determinations. If there is no rating, PBGC staff determines
an implied rating as to whether a plan sponsor's bond would be rated as
investment grade or not based upon an

1

Section 4010 of the Employee Retirement Income Security Act (ERISA)
requires the reporting of plan actuarial and company financial information
by employers with plans that have aggregate unfunded vested benefits in
excess of $50 million, missed required contributions in excess of $1
million, or outstanding minimum funding waivers in excess of $1 million.
The information required to be filed includes (1) plan identifying
information, (2) actuarial information regarding the plan's fair market
value of assets and the value of benefit liabilities on a PBGC termination
liability basis, and (3) financial information, such as financial
statements.

2

At least one of the following criteria must be met in order for PBGC to
approve a distress termination filing: (1) liquidation in bankruptcy
(Chapter 7) or insolvency proceedings; (2) reorganization in bankruptcy
(Chapter 11); (3) a company will be unable to continue to stay in business
unless its plan is terminated; and (4) unreasonable, burdensome pension
costs caused solely by a decline in workforce.

3

The termination of a fully funded defined benefit plan is called a
standard termination.

4

PBGC may initiate involuntary terminations for several reasons, including
if PBGC's loss from that plan may be expected to increase unreasonably if
the plan is not terminated. See 29 U.S.C. 1342(a).

5

The term "investment grade" was originally used by various regulatory
bodies to connote obligations eligible for investment by institutions such
as banks, insurance companies, and savings and loan associations. Over
time, this term gained widespread usage throughout the investment
community. Ratings in the four highest categories, AAA, AA, A, and BBB,
generally are recognized as being investment grade. Below investment grade
is considered to be either Moody's Ba1 or lower or S&P BB+ or lower.

evaluation of financial statement information included in 4010 filings and
other available financial information. 6 If the rating agencies give the
company different ratings, (one agency rates a company below investment
grade while the other rates the company investment grade), PBGC will use
the lower of the ratings based on the conservatism principle of the
Generally Accepted Accounting Principles (GAAP). 7

Finally, PBGC relies on several other sources of information. For example,
to identify potentially underfunded plans sponsored by privately held
companies, PBGC uses data from premium filings submitted by the plan
sponsors. In addition, PBGC monitors news sources (e.g., Bloomberg,
LiveEdgar, and NewsEdge) to identify transactions that could adversely
affect plan funding status, and ultimately, PBGC.

As underfunded plans are identified, PBGC classifies each plan as to the
probability of a loss to PBGC. Plans are classified as "remote-other,"
"remote," "reasonably possible," or "probable" according to criteria that
PBGC has determined meets the requirements of the Statement of Financial
Accounting Standards No. 5 Accounting for Contingencies (FAS No. 5), which
establishes standards for accounting and reporting for loss contingencies:

     o Plans are classified as remote-other if there is no available
       information with which to make a reasonable assessment of financial
       conditions.
     o Plans are categorized as remote if the plan sponsor's bonds are rated
       investment grade by both Moody's and S&P or PBGC has assessed the plan
       sponsor as investment grade.
     o Plans are classified as reasonably possible if they have over $50
       million in aggregate underfunding, the plan sponsor's bonds are below
       investment grade, have applied for a minimum funding wavier with the
       Internal Revenue Service, have missed a minimum funding contribution,
       or are in reorganization under Title 11 of the United States Code.

In order for PBGC to classify a plan as probable, a plan must meet, as of
the financial statement date, at least one of the seven criteria PBGC
uses, five of which it characterizes as objective, and two as subjective.
Objective criteria are used where substantial evidence exists to indicate
that the plan sponsor is in liquidation or insolvency proceedings or will
meet the requirements for a distress or involuntary termination.
Subjective criteria involve management judgment. According to PBGC,
subjective criteria must typically be used when most plans meet the
criteria for recognition under FAS No. 5 of GAAP while in or close to
reorganization under Chapter 11 bankruptcy. Table 1 shows the different
applications of the objective and subjective criteria used to classify
plans as probable.

6

The implied rating is completed twice a year.

7

The conservatism principle is the accounting principle that guides
accountants to select the less optimistic estimate when two estimates of
amounts to be received or paid are about equally likely.

Table 1: List of Probable Classification Criteria

                    Type of Criteria Description of Criteria

Objective The plan's contributing sponsor(s) is in liquidation under Title
11 of the United States Code or comparable state insolvency proceeding.

Objective PBGC has received a distress termination filing, and substantial
evidence exists that the requirement for a distress termination are likely
to be met.

Objective PBGC has been informed that a distress termination will be
filed, and substantial evidence exists that the requirements for a
distress termination are likely to be met.

Objective PBGC has advised the plan administrator that a distress
termination should be filed, and substantial evidence exists that the
requirements for a distress termination are likely to be met.

Objective PBGC is considering or is expected to consider the plan for an
involuntary termination, and substantial evidence exist that the
requirements for an involuntary termination are likely to be met.

Subjective The plan was classified as reasonably possible and it was
determined that the plan is a very high risk plan that should be
classified as probable.

Subjective Plans can be classified as probable if any other set of
circumstances exist that in PBGC's judgment constitute a probable
termination.

Source: GAO analysis of PBGC data.

In fiscal year 2004, PBGC classified 45 plans as probable; 29 of these
were based strictly on objective criteria and accounted for almost $1
billion in probable claims. The remaining 16 required consideration of
subjective criteria, representing nearly $16 billion in probable claims.

Once a plan is classified as probable, PBGC begins to estimate the
probable losses and does so according to GAAP and FAS No. 5 standards. To
calculate the fiscal year--end financial statement assets and liabilities
for probable plans, PBGC uses an automated system known as the Integrated
Present Value of Future Benefits (IPVFB) system. Plan information, such as
Form 5500 filings, asset statements, annuity purchases, contributions, and
estimated dates of plan termination are entered into the IPVFB system in
order to calculate asset and liability amounts as of the date of plan
termination and fiscal year end. This process adjusts the liabilities from
the plan's assumptions (mortality, interest, and expected retirement age)
to standard assumptions used by PBGC. This system then produces a report
that provides PBGC staff with information on how the assets and
liabilities are brought forward, from the Actuarial Valuation Report date
to the date of the financial statements. To meet the requirements of FAS
No. 5, PBGC accrues its net probable claims in its financial statements.

PBGC stated its exposure for probable claims in accordance with FAS No. 5
as required by GAAP. Directed at the accounting objective of full
disclosure, this standard requires the PBGC to record a loss if it is
likely to occur and the amount of the loss can be reasonably estimated.
PBGC's financial statement auditors routinely review this area and its
compliance with GAAP requirements as part of their annual audit. PBGC has
consistently used a method of specifically identifying potential claims
supplemented by estimates for additional claims that might be missed by
its method for selecting probable claims.

2. The description of PBGC's method for selecting plans that are probable
changed from 2003 to 2004. Does this reflect a change in methodology for
selecting plans in the past decade? Why does PBGC not disclose the effects
of the changes in methodology on the amount of probable claims? What was
the effect of the most recent changes?

According to PBGC officials, the 2004 Annual Report expanded the footnote
disclosure describing PBGC's method for selecting probable plans but
stressed that this did not reflect a change in methodology. 8 PBGC
officials stated that the 2004 report was intended to provide a more
explicit description of the specific criteria PBGC uses. These officials
also emphasized that PBGC has consistently used a specific identification
method as required by FAS No. 5 for its identification of probables.

While PBGC did not change its methodology or criteria for determining
probable terminations in fiscal year 2004, it did make revisions to the
way it calculates reserves for unidentified probable losses. PBGC stated
that this was done in response to a PBGC Office of Inspector General
recommendation arising from the PricewaterhouseCooper's audit of PBGC's
2003 financial statements. The recommendation stated that PBGC should
"reevaluate the methods by which PBGC calculates its reserves." As a
result, PBGC initiated a study to determine how its reserve calculations
could be improved, and implemented improvements and expanded disclosures
for fiscal year 2004. We did not receive information on the effect of this
revision for calculating reserves for unidentified probable losses.
However, PBGC stated that it is preparing such an analysis, and noted that
its estimate for unidentified probable losses over the 2 year period, both
before and after the revision, constituted less than 4 percent of the
total probables estimate. 9

3. What controls does PBGC have in place to ensure that current
methodologies for selecting probable claims are sufficiently like prior
procedures?

PBGC officials stated that they have not made any changes to PBGC's method
for selecting probable claims. If PBGC were to make changes to its
procedures or methodologies, these officials told us that they would use a
multifaceted approach to review and consider those changes. PBGC regularly
monitors, reclassifies, and revalues estimates of exposure on all at-risk
plans. Any changes proposed would go through PBGC's internal review
process, which includes a review and concurrence by PBGC's Contingency
Working Group and Chief Financial Officer.

PBGC officials stated that if a change in methodology were to occur, they
would disclose the effect of such methodology changes in accordance with
GAAP. In addition, any necessary restatements of prior year amounts would
be made, including appropriate disclosures describing the effect in the
notes to the financial statements.

4. How do probable claims progress? What is the average duration, in
years, of a claim on the probable claims list? What is the distribution of
probable claims by year added?

Probable claims can progress in a number of ways after a plan is initially
added to the list, which is updated three times a year. At each update, a
plan can remain on the list, be removed from the list because of
termination, or be deleted from the list if an upgrade in classification
is warranted based on a

8

PBGC's 2004 Annual Report, Washington D.C. 20005

9

The reserves represented $0.4 billion of the $16.9 billion in net probable
claims for fiscal year 2004 and $0.2 billion of the $5.2 billion in net
probable claims for fiscal year 2003. The reserves are comprised of a
reserve for large unidentified probable losses and a reserve for small
unidentified probable losses. According to the 2004 Annual Report, the
current method for estimating the reserve for large unidentified probable
losses is recorded based on sound, actuarial methodologies that consider
actual PBGC experience, as well as the historical industry bond default
rates. This reserve has been developed by segregating plan sponsors with
aggregate underfunding equal to or greater than $5 million into risk
bands, which reflect their level of credit risk. Another reserve for small
unidentified probable losses, that is, plans with less than $5 million in
underfunding, and incurred but not reported claims, is also recorded based
on a commonly-accepted actuarial methodology, called triangulation.

settlement with the sponsor to fund and retain the plan or termination
risk is otherwise reduced. 10 If the plan does not terminate, and PBGC
continues to consider the plan as probable, the plan remains on the list.
If a plan is progressing toward termination, PBGC closely monitors the
bankruptcy proceedings (if the sponsor is in bankruptcy) for PBGC claims
determinations and also monitors the criteria for distress termination and
PBGC-initiated termination. If the plan terminates, PBGC removes the plan
from its list of probable claims and adjusts the previously recorded loss
to reflect the actual loss on the date of plan terminations.

The majority of plans spend less than a year on PBGC's probable claims
list. Between 1995 and 2004, PBGC added 223 plans to its probable claims
list. As of September 30, 2004, 171 of these plans were removed from the
list within 1 year after they were added for various reasons, including
termination and deletion. Of those plans not removed from the list in the
year added, the majority of plans spend only 1 additional year on the
list. As shown in table 2, of the 223 plans added to PBGC's list, 52 of
these plans were on PBGC's list 1 year later, 15 of these plans were on
PBGC's list 2 years later, and only 3 plans were on PBGC's list 3 years
later. Only 3 plans have been PBGC's list 4 years or longer.

Table 2: Duration of Plans Newly Classified as Probable from Fiscal Years
1995-2004
                       Plans   Plans   Plans   Plans   Plans  Plans on
                        on      on      on      on      on    
          Plans Added  List 1  List 2  List 3  List 4  List 5 List 6   Number 
                                                                           of 
Fiscal     to         Year   Years   Years   Years   Years  Years    Plans 
           Probables                                                    Still 
Year          List   Later   Later   Later   Later   Later  Later  on List 
1995            15       8       3       3       3       2      2        - 
1996            16       6       3       0       0       0      0        - 
1997            12       3       1       0       0       0      0        - 
1998            15       5       2       0       0       0      0        - 
1999            14       3       3       0       0       0      -        - 
2000             1       0       0       0       0       -      -        - 
2001            16       3       1       0       -       -      -        - 
2002            38      15       2       -       -       -      -        2 
2003            62       9       -       -       -       -      -        9 
2004            34       -       -       -       -       -      -       34 
Totals         223      52      15       3       3       2      2       45 

Source: PBGC.

* Includes probables balance at 9/30/1994 of $1,166 million and the net
change to large unidentified and small unidentified reserves during the
ten year period of $184 million.

Of the 223 plans added to PBGC's probable list since fiscal year 1995, 187
were either terminated or deleted from the list by September 30, 2004-45
plans remain on the list, only 11 of which were added prior to fiscal year
2004. As shown in table 3, of the 223 plans, 136 were eventually
terminated, and 42 were deleted for reasons other than termination,
representing a $10,536 million loss to PBGC for terminated plans and $718
million was reversed for deleted plans. For example, 5 plans of one
financially troubled company were included as probables in FY 2003.
Through negotiations, the company subsequently agreed to continue to fund
4 of the plans and terminate only 1. As a result all five plans

 Plans may be reclassified as reasonably possible or remote, in which case they
                  would be deleted from PBGC's probable list.

were removed from the probables list--one through termination and four by
moving to the reasonably possible list.

Table 3: Duration of Plans Classified as Probable from Fiscal Years
1995-2004     
                                    Number of                                 
                    Plans Added         Plans Number of Plans Number of Plans
Fiscal Year     to Probables Eventually    Eventually        Still on List 
                           List Terminated    Deleted         
1995                      15            11               4               - 
1996                      16             9               7               - 
1997                      12             8               4               - 
1998                      15            11               4               - 
1999                      14            10               4               - 
2000                       1             1               0               - 
2001                      16            16               0               - 
2002                      38            26              10               2 
2003                      62            44               9               9 
2004                      34             -               -              34 
Totals                   223           136              42              45 
Total Dollars                                              
(in millions)           $28,180*      $10,536         $718         $16,926 

Source: PBGC

Note: includes probables balance at 9/30/1994 of $1,186 million and the
net change to large unidentified and small unidentified reserves during
the ten year period of $184 million.

As shown in table 4, from fiscal year 1995 to 2004, PBGC had up to 19
plans remain on its probable claims list from a previous year. The
distribution of plans added to PBGC's probable claims list varied during
that time from 1 plan to as many as 62 plans added to the list in a given
year. Since fiscal year 2002, the number of plans added to the probable
claims list each year has more than doubled the average from the previous
years of 1995 through 2001.

Table 4: Plans Newly Classified as Probable and Total Plans Classified as
                      Probable from Fiscal Years 1995-2004

Plans Fiscal Remaining on ProbablesYear List from Previous Year

TotalPlans Newly Added Number of Plans to Probables List on Probables List

                                 1995 19 15 34

                                 1996 11 16 27

                                 1997 11 12 23

                                 1998 11 15 26

                                 1999 11 14 25

                                   2000 9 110

                                  2001 516 21

                                  2002 338 41

                                 2003 16 62 78

                                 2004 11 34 45

Source: PBGC

PBGC cites the deteriorating financial position of a number of
PBGC-insured plans and the companies that sponsor them as a primary reason
for the increase in claims for probable terminations. GAO has previously
reported on this and other structural problems facing PBGC's
single-employer program. 11 Risks that threaten the long-term viability of
the program include: a general downturn in economic conditions resulting
in recent deficits, a concentration of plan underfunding in financially
challenged industries as well as a premium structure that does not
adequately reflect risk. In addition, the current funding rules and other
pension regulations have not kept some plans from becoming severely
underfunded and subsequently terminating with large claims placed on the
PBGC.

5. When PBGC takes over a plan, it typically issues a press release
discussing the liability PBGC expects to incur. Often media sources appear
to indicate that the entire amount represents a worsening of PBGC's
financial condition. Why does PBGC not disclose in its press releases the
amount of the liability that the PBGC had already booked?

According to PBGC officials, the agency does not release the amount of its
previously-booked claims in its press releases for fear of compromising
PBGC's position in litigation and of negatively affecting a company's
financial condition. These officials said that releasing its
previously-booked claim amounts would enable someone to make a comparison
between PBGC's booked liability for a particular plan and the amount of
underfunding for that plan. Publicizing this information could affect
PBGC's ability to recover the full amount of a plan's claims in litigation
because companies would resist a settlement with PBGC for more than the
amount of PBGC's previously-booked losses. Another consideration is that
this information could also have a negative impact on a company's ability
to obtain additional financing and could worsen its financial condition.
Although releasing this information to the public would help interested
parties understand the potential impact, if any, on PBGC's net financial
position with regard to particular plans mentioned in PBGC's press
releases, officials believe that the potential adverse impact on PBGC and
affected companies has outweighed this potential benefit. PBGC officials
have stated that they are reviewing this policy.

6. For each plan that PBGC took over and discussed in a press release
during 2004 and 2005, what was the liability that PBGC announced and how
much of that liability had already been booked?

During fiscal years 2004 and 2005, PBGC issued press releases for several
large financially troubled pension plans that it had taken over. As shown
in table 5, the liability amounts listed in PBGC's press releases differ
from the amounts of its previously-booked claims. PBGC officials said that
the difference in the amounts of their previously-booked claims and the
claim amounts listed in their press releases reflects the preliminary
nature of the data used to determine their booked losses and the
assumptions used to value liabilities at that time. 12 Once the final data
are available, PBGC officials stated they recalculate the plan's liability
amounts and make the proper adjustments to reflect the actual loss
incurred at the date of plan terminations. From fiscal years 2004 and
2005, in all but three cases, PBGC's previously-booked claim amounts for
plans exceeded the claim amounts listed in the press releases that PBGC
issued when it took over a plan.

11

See GAO, Pension Benefit Guaranty Corporation: Single-Employer Pension
Insurance Program Faces Significant Long-Term Risks, GAO-04-90
(Washington, D.C.: Oct. 29, 2003); Private Pensions: Recent Experiences of
Large Defined Benefit Plans Illustrate Weaknesses in Funding Rules,
GAO-05-294 (Washington, D.C.: May 31, 2005); Private Pensions: Revision of
Defined Benefit Pension Plan Funding Rules Is an Essential Component of
Comprehensive Pension Reform, GAO-05-794T (Washington, D.C.: June 7,
2005); and Private Pensions: The Pension Benefit Guaranty Corporation and
Long-Term Budgetary Challenges, GAO-05-772T (Washington, D.C.: June 9,
2005).

12

PBGC officials noted that the net claim amount previously booked will be
adjusted in future accounting periods based on new information (e.g., plan
asset data or participant data)

Table 5: Comparison of PBGC's Expected Claims and Claims Announced in its Press
                                    Releases

(Dollars in millions)

Plan Name Fiscal Year 2005                          Claims Amount in Press 
(as of June 30, 2005) Penn    Amount of Claims $136           Release $125 
Traffic Co.                                         
United Airlines Ground               $2,571                         $2,100 
Employees                                           
United Airlines Pilots               $1,437                         $1,400 
Pension Plan                                        
US Airways Inc.                      $2,174                         $2,300 
Fiscal Year 2004                                    
Cone Mills Corp.                       $27                             $43 
Fansteel Inc.                          $23                             $19 
Fleming Companies Inc.                $348                            $358 
Fruehauf Trailer Corp.                 $14                              $7 
Pensions                                            
Horizon Natural Resources Co.          $87                             $75 
Ingersoll International Inc.           $64                             $48 
JA Jones Inc.                         $112                            $104 
Kaiser Aluminum Inactive                                                   
Pension Plan                           $56                             $47
Kaiser Aluminum Pension Plan          $296                            $262 
Lumbermens Mutual                     $565                            $529 
Piccadilly Cafeterias Inc.             $65                             $51 
Sound Shore Medical Center of                                              
Westchester                            $45                             $38
Top-Flite Golf Co.                     $39                             $30 

Source: GAO analysis of PBGC data.

Note: This table includes claims information regarding only those plans
that PBGC has both issued a press release for and has previously-booked an
expected claim amount for during fiscal years 2004 and 2005.

                                Agency Comments

We provided a draft of this report to the Pension Benefit Guaranty
Corporation, the Department of Labor (DOL), and the Department of Treasury
(Treasury) for review and comment. We received written comments from PBGC
that are reprinted in the enclosure. As stated in our report, PBGC's
letter emphasized that PBGC follows FAS No. 5. In addition, PBGC`s letter
emphasized that its financial statement auditors have regularly issued
opinions stating that PBGC practices are in accordance with GAAP. PBGC
also provided technical comments on the draft, which we incorporated as
appropriate. DOL and Treasury did not provide any comments on the draft.

If you have any questions concerning this letter, please contact me at
(202) 512-7215 or Tamara Cross, Assistant Director at (202) 512-4890.
Joseph Applebaum, Diana Brauner, David Eisenstadt, Charles Ford, Mark
Glickman, Raun Lazier, and Roger Thomas also made major contributions to
this correspondence.

Barbara D. Bovbjerg Director, Education, Workforce, and Income Security
Issues

Enclosure

Enclosure

             Comments From the Pension Benefit Guaranty Corporation

(130519)
*** End of document. ***