Pleite (E) [Pensionsfonds]

verfasst von Popeye, 24.01.2003, 17:41

-->Broke
Jan 23rd 2003 | NEW YORK
From The Economist print edition


America's system of insuring private pension plans
needs fixing

THE pension malaise in America worsens. Corporate
pension-fund deficits have swollen to some $300
billion, weighing down earnings and forcing
companies from General Motors to General Electric to
find cash to make up the shortfalls. Meanwhile, the
economy's continuing sluggishness is pushing ever
more companies into bankruptcy and adding yet more
billions to the pile of unpaid pension obligations.

Luckily for workers, help is at hand in the form of the
Pension Benefit Guaranty Corporation (PBGC), the
quasi-governmental agency charged with insuring the
basic benefits of the 44m Americans enrolled in
private, defined-benefit pension plans. Over the past
year, the PBGC has mopped up the unfunded pension
liabilities of a host of bankrupt firms, from Polaroid to
LTV Steel. So maybe it is no surprise that the
state-backed agency itself is on the brink of
insolvency.

The tipping point will be the assumption of almost $5
billion of liabilities belonging to two bankrupt
steelmakers, Bethlehem Steel and National Steel.
The PBGC applied last month to take these plans
over and is likely to do so, despite a challenge from
National. The acquisition of the two firms earlier this
month was made possible largely because the buyers
believed that the PBGC, and not they, would pick up
the pensions bill.
[img][/img]
Oddly, the PBGC's
difficulties have
scarcely raised an
eyebrow."It's back to
normality," says a
Treasury official,
alluding to the deficits
run by the agency for
the first 21 years of
its existence until
1995. In fact,
although the agency is
technically insolvent
(ie, its liabilities
exceed its assets), it
probably has enough liquidity from insurance
premiums, assets acquired when taking pension
schemes over and investment income from its own
portfolio to meet its obligations for many years to
come. Should the money ever run out, the
government would surely step in.

Indeed, the PBGC's net position is less of a problem
than the pricing of its guarantees. Zvi Bodie, a
finance professor at Boston University who
specialises in pension funds, points out that the
premium it charges companies to insure their pension
schemes is not tied to risk.

It is unaffected by credit ratings or other evidence
about a company's financial condition. So
fundamentally healthy firms in effect subsidise the
less sound. It is also unaffected by investment
behaviour, creating an incentive to invest riskily. If
all goes well, the schemes make handsome returns;
if disaster strikes, the PBGC will foot the bill. In
addition, firms that are short of cash have an
incentive, when negotiating pay, to promise improved
pensions instead of higher wages. Not only are the
costs of the pay deal postponed; they may end up
being borne by the PBGC.

The obvious solution, linking premiums to the
riskiness of pension funds, is tricky. Doing so could
force already wobbly companies into bankruptcy. And
strong steel, airline and labour lobbies in Congress,
which sets the PBGC's premiums, make any increases
difficult. Workers and pensioners in the steel and
airline industries, who account for fewer than 5% of
participants in defined-benefit plans, have benefited
from 70% of the agency's claims since 1974.

Mr Bodie suggests that restrictions on where pension
funds put their money could strengthen the insurance
system. Currently, estimates Morgan Stanley, more
than half of companies' pension portfolios consist of
equities. This partially reflects the view that the
riskiness of shares diminishes, the longer they are
held; against that, says Mr Bodie, the potential
severity of a shortfall in any one year increases with
time. Ideally, he thinks, companies should fund their
pension schemes entirely with bonds, a strategy
adopted recently by Boots, a British retailer. That
may be too restrictive a rule; but his arguments at
least imply that firms should think twice before
allocating large chunks of their pension funds to
equities.

Meanwhile, there are two immediate concerns about
the PBGC. First, unless America's bankruptcy wave
comes to an unexpected halt, the demands on it are
likely to rise. Second, the agency invests 35% of its
own portfolio in the stockmarket. Yet the PBGC is
likeliest to draw on its assets when the stockmarket
is doing badly. Shouldn't it know better?
Quelle: Economist (nur für Abo

Thread gesperrt

 

gesamter Thread:

• Pleite (E) [Pensionsfonds] - Popeye, 24.01.2003, 17:41