The health of the nation's pension plans is rebounding, and attention now should turn to expanding retirement coverage for workers, Martin Slate, the executive director of the Pension Benefit Guaranty Corp., said here yesterday.
The PBGC is a federal agency that insures private pension plans, similar to the way the Federal Deposit Insurance Corp. backs savings in financial institutions. It works to ensure that pension plans that promise a set monthly benefit have enough assets to pay retirees.
In an interview prior to a speech at the Southeast Employee Benefits Conference at the Marriott Inner Harbor hotel, Slate said that in 1993 single-employer pension plans were underfunded by $71 billion. But in 1994, the last year for which statistics are available, that amount had dropped to a five-year low of $31 billion.
The vast majority of these retirement plans insured by the PBGC are fully funded, officials said, but about 8 million people are covered by about 10,000 underfunded plans.
In Maryland, Slate said, the amount of underfunding dropped by one-half, from $600 million in 1993 to $300 million in 1994.
Slate said these plans, known as defined-benefit pension plans, were bolstered by both higher interest rates and business contributions above required amounts. Some additional contributions were prompted by reforms requiring companies with underfunded plans to pay a larger share to the insurance system.
President Clinton and congressional Republicans separately are
proposing different pension programs that would cover small business employees.
Both proposals would allow companies and their employees to contribute to a variation of a 401(k) plan that allows workers to build retirement accounts on a tax-deferred basis.
Pub Date: 5/23/96