The federal agency that backstops retiree benefits when companies fail is becoming increasingly feeble.
A recent report warns that the Pension Benefit Guaranty Corp., which guarantees pensions for some 44 million Americans, could topple over if two or three more large pension funds fail.
“The PBGC might become one of the first public entities to receive a bailout,” UBS analysts Boris Rjavinski and Matthias Rusinski wrote in a recent report. “The issue of PBGC’s solvency is coming to the fore while debates on fiscal policy hit a fever pitch.”
The report said PBGC has $322 billion of exposure to plans that might “reasonably” terminate. Hostess Brands’ liquidation, for example, is putting the Teamsters $20 billion, 300,000 member multi-employer pension plan at greater risk.