Uncle Sam’s Little Nephew May Need A Big Bailout

istockanalyst.com

The Pension Benefit Guarantee Corp.’s (PBGC) 2012 Annual Report reveals significant deterioration in its finances as the present value of accumulated future benefits jumped due to large declines in interest rates while losses from newly insolvent pensions and probable future insolvencies continued to grow.

PBGC protects the retirement incomes of more than 44 million American workers. It is an independent agency of the United States government. PBGC was created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans.

Now, the PBGC 34.4 billion deficit is the highest ever, and remained cash flow negative. Payouts to current pension recipients have outstripped the premium income collected from solvent pensions by $2.75 billion.

http://www.istockanalyst.com/finance/story

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