GM, Chrysler bankruptcies could bury U.S. pension backer

GM, Chrysler bankruptcies could bury U.S. pension backer

BY TODD SPANGLER
FREE PRESS WASHINGTON STAFF

WASHINGTON — Should General Motors Corp. and Chrysler LLC be pushed into bankruptcy and become unable to support retirees’ pension plans, it could create an unprecedented strain on the government-sponsored corporation that guarantees those benefits.

A report from the nonpartisan Government Accountability Office released Thursday noted that GM and Chrysler’s plans are underfunded by about $29 billion — a fact that, if they fall back on the Pension Benefit Guaranty Corp. for support, could "pose considerable financial uncertainty" to its ability to remain viable.

Created by the government, the PBGC charges the pension plans it backstops — should they end — insurance premiums. According to its Web site, it "protects the retirement incomes of nearly 44 million American workers in more than 29,000 private-sector defined benefit pension plans."

The GAO report concluded that while it’s impossible to know what the exact claims would be if GM and Chrysler’s pension plans fell to the PBGC, "doing so would likely strain PBGC’s resources because the automakers’ plans represent a significant portion of the benefits it insures."

The PBGC is responsible for the current and future pensions of about 1.3 million people at present.

The GAO estimated Chrysler and GM’s plans include roughly 900,000 participants, counting both those receiving benefits now and those who have earned benefits payable in the future.

 




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