Pension tension
Workers can no longer count on company-funded retirements
No easy fix. The PBGC's actuaries doubt the stock market will rebound enough to clear up corporate pension debts. And some economists question whether even the hefty proposed hikes in premiums would be sufficient to clear the PBGC's massive debt or prod firms to fund their plans. Previous attempts to force troubled companies to fund their plans have been undercut by congressional loopholes, notes Richard Ippolito, former chief economist of the PBGC. And Washington lacks the political will to keep firms from risking pension funds in the stock market, he says. Ippolito favors a cheaper method: Dock the pay and benefits of executives who don't fund worker pensions.
Whatever happens, younger workers will have time to adjust to the new retirement reality. But it will be too late for workers like 51-year-old US Airways flight attendant Eileen Zolinas of Pittsburgh. A bankruptcy judge earlier this month OK'd the termination of the airline's pensions, freezing benefits to what Zolinas has earned so far. "I really thought I was going to retire with this company. I would love to be playing shuffleboard in Florida" at 65, Zolinas says. Her experience has taught her kids to set aside their own money for retirement. But, she says, "people my age are pretty much screwed."
Shortfall
Here's the difference between what the Pension Benefit Guaranty Corp. owes workers and retirees and what it has in the bank:
In billions of dollars
2000 $10 bil.
2004 -$23.5 bil.
[chart labels]
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04
5 0 -5 -10 -15 -20
Source: PBGC; USN&WR
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