Pension Wise: Confronting Employer Pension UnderfundingAnd Sparing Taxpayers the Next Bailout (Hoover Institution Press Publication) (Volume 597)

America’s insurance system for single-employer pension plans, operated by the Pension Benefit Guaranty Corporation (PBGC), is under serious financial strain. In Pension Wise: Confronting Employer Pension Underfunding—And Sparing Taxpayers the Next Bailout, Charles Blahous—one of the nation’s foremost retirement security experts—explains the origins and dangers of current underfunding in our single-employer defined-benefit pension system and offers principles to underlie a solution. Blahous details both the technical reasons behind pension plan underfunding and the political considerations that prioritize the near-term financial demands of employers and pension beneficiaries over the long-term fiscal health of the pension insurance system. The author also presents the fundamental value judgments concerning who should bear the cost of filling the PBGC shortfall and to what extent the risk of financing pension benefits should continue to be shifted away from plan sponsors, either to other employers or to taxpayers at large. Although acknowledging that there are no obviously correct answers, he suggests a range of reforms to improve the pension insurance system’s operation and to resolve its projected shortfall. Public Policy,Corporate Finance,Political Science,Business & Economics,Economic Policy,General

The crisis in America’s single-employer defined benefit pension plans

Underfunding in our pension system: a growing systemic risk

Saving the Pension Benefit Guaranty Corporation from the political process

By late 2009, the deficit in the pension insurance programs of the Pension Benefit Guaranty Corporation (PBGC) had roughly doubled over the course of a single year, from less than $11 billion to more than $22 billion, marking the eighth consecutive year that PBGC’s outlook remained firmly in the red. The currently projected deficit of the PBGC, as well as underfunding in the pension system generally, embodies a significant national fiscal problem, with no clear path to allocating the costs of its resolution.

Pension Wise: Confronting Employer Pension Underfunding—And Sparing Taxpayers the Next Bailout examines the current crisis in our single-employer defined benefit pension plans and outlines principles to undergird a solution. Charles Blahous details both the technical reasons behind pension plan underfunding—in particular, persistent and often deliberate inaccuracy in measurement—and the political considerations that prioritize the near-term financial demands of employers and pension beneficiaries over the long-term fiscal health of the pension insurance system. The author also presents the fundamental value judgments concerning who should bear the cost of filling the PBGC shortfall and to what extent the risk of financing pension benefits should continue to be shifted away from plan sponsors, either to other employers or to taxpayers at large. Although acknowledging that there are no obviously correct answers, he suggests a range of reforms to improve the pension insurance system’s operation and to resolve its projected shortfall.

Charles Blahous, one of the nation’s foremost retirement security experts, serves as one of two public trustees for the Social Security and Medicare programs. Blahous served as deputy director of President George W. Bush’s National Economic Council and, before that, as executive director of president’s bipartisan Social Security Commission and special assistant for economic policy. 

 

 

The nature of single-employer defined-benefit pensions The nation's pension insurance system : the condition of the PBGC The magnitude of pension underfunding nationwide Technical reasons for pension underfunding Pension plan assets Pension plan liabilities Addressing underfunding : statutory contribution requirements Other funding safeguards established by the PPA Premiums Recent developments : legislation and the financial markets' plunge Additional reasons for underfunding : structural issues facing the PBGC Political economy factors Pension funding policy principles : separating measurement accuracy from value judgments Can the hole be filled? : separating fairness from risk issues Going forward : general principles for pension insurance system reform Conclusions and recommendations. Charles Blahous, one of the nation's foremost retirement security experts, explains the origins and dangers of current underfunding in our single-employer defined-benefit pension system and outlines the options for solving the problem and preventing the next taxpayer-financed bailout. He provides a tutorial on the basic workings of pension law, reviews the recent history that led to the worsening condition of the pension insurance system, and suggests a range of reforms to improve the system's operation and to resolve the projected shortfall. Charles Blahous, one of the nation's foremost retirement security experts, explains the origins and dangers of current under funding in our single-employer defined-benefit pension system and outlines the options for solving the problem and preventing the next taxpayer-financed bailout. He provides a tutorial on the basic workings of pension law, reviews the recent history that led to the worsening condition of the pension insurance system, and suggests a range of reforms to improve the system's operation and to resolve the projected shortfall In this book, the author explains the origins and dangers of the current underfunding of our sing-employer defined-benefit pension system and offers a range of options to improve the pension insurance system's operation and to resolve its projected shortfall