Underfunded Pension Plans: Federal Government's Growing Exposure
Indicates Need For Stronger Funding Rules (Testimony, 04/19/94,
GAO/T-HEHS-94-149).

Sponsors of underfunded pensions are required by law to make additional
contributions to their funds, but there is no evidence that the problem
of underfunding has abated.  The total underfunding in single-employer
plans insured by the Pension Benefit Guaranty Corporation (PBGC) rose
from $31 billion in 1990 to more than $50 billion in 1992.  In a random
sample of plans paying PBGC's variable rate premium, GAO discovered that
only 40 percent of the plan sponsors subject to the law were making
additional contributions in 1990, and the amount of additional
contributions was less than three percent of the plans' underfunding.
GAO found that the amounts sponsors were allowed to use to reduce their
additional contributions were much larger than the unreduced additional
contributions for some plans, suggesting that the design of the offset
is flawed and needs to be changed. H.R. 3396 contains provisions to
improve funding in underfunded plans, including a measure to correct the
design flaw in the offset.  Although it believes that the bill is a step
in the right direction, GAO believes that the provisions of H.R. 3396
should be strengthened to ensure that sponsors of a greater percentage
of underfunded plans make additional contributions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-94-149
     TITLE:  Underfunded Pension Plans: Federal Government's Growing 
             Exposure Indicates Need For Stronger Funding Rules
      DATE:  04/19/94
   SUBJECT:  Retirement pensions
             Pension claims
             Insurance companies
             Federal corporations
             Proposed legislation
             Insurance premiums
             Insurance regulation
             Financial management
             Pension plan cost control
             Employee benefit plans
IDENTIFIER:  PBGC Single Employer Pension Insurance Program
             Pension Fund Improvement Act
             Retirement Protection Act of 1993
             
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