Pensions

MOST LOSSES ON PENSION PLAN INVESTMENTS NOT INSURED BY STATES

  • Approximately one-third of all pension plan assets are invested with life insurance companies.9
  • When insurance company insolvencies occur, plans may incur losses.

9American Council of Life Insurance, 1990 Life Insurance Fact Book.

PBGC

  • Currently, the Pension Benefit Guaranty Corporation is some $333 million plus in the red, although there is still a cash flow.
  • Since our last hearing in May 1982, several important events have occurred that need to be reviewed only briefly.

1983 - GOV - Single Employer Pension Plan Termination

INSURANCE ANNUITIES NOT COVERED BY FEDERAL GUARANTEES

  • An estimated 3 to 4 million retirees and their survivors receive
    pensions in the form of annuities purchased by their pension
    plans from life insurance companies.1
  • Almost all of these pensioners came from defined benefit plans, which are guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a corporation created by the Employee Retirement Income Security Act (ERISA) of 1974.

1 Most of these retirees received their annuities through ongoing (rather than terminated) pension plans. Some defined benefit plans routinely annuitize retirees each year, thereby lowering administrative costs and avoiding PBGC premiums. For more information, see Private Pensions: Millions of Workers Lose
Federal Benefit Protection at Retirement (GAO/HRD-91-79, Apr. 25,
1991).