Word: pensiones
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Maybe more. Testifying before Congress last week, California's Garamendi pleaded for aid for the victims of Executive Life's collapse. Garamendi contended that the PBGC bears some responsibility for those annuity payments, since it supervised the termination of pension plans in which federally guaranteed benefits were replaced by insurance annuities. Said he: "Doubtless there are some villains in this piece. Venal businessmen, negligent regulators, careless rating companies, crafty accountants and lawyers, greedy pension-plan sponsors are all candidates, and if punishment is due, it should be meted out. But that's not going to solve the giant human problem...
Since 1974 the Department of Labor has exercised oversight authority, seeking to ensure that plans are operated in the best interests of their participants. When companies are unable to pay pension benefits, the PBGC steps in to meet the obligations, guaranteeing payment of up to $2,250 per month to eligible retirees...
...present the agency is faced with the daunting prospect of several dozen large plans -- representing 3 million active and retired workers -- that are underfunded to the tune of $30 billion. Worst of all is a class of financially weak corporate behemoths, such as LTV and Chrysler, whose pension plans are severely short of cash. Unless their sales and profits improve, some of these large funds could collapse. Already running a deficit of $1.8 billion, the PBGC estimates its deficit could grow to $8 billion by the end of this decade...
...should bear the responsibility? The Department of Labor is not willing. The agency argues that it does not regulate insurance companies and points to the industry-rating companies that continued to give Executive Life very high marks throughout the period when the pension plans were being converted to its annuities. Meanwhile, in Oakland a group of Executive Life's annuity holders are suing the insurer, the employer that converted their pensions to those annuities and the California Department of Insurance for allowing...
...protect retirement savings in the future, new Labor Secretary Lynn Martin would like to extend federal pension coverage to 42 million American workers who currently have none. In addition, she intends to protect against corporate pension abuses by forcing employers to fund the plans adequately...