There are some very interesting statistics provided by Bradley Belt, executive director for the PBGC, at BusinessWeek.com in this online extra–“Q & A with the PBGC’s Bradley Belt“:
Q: Much of what has come out of the PBGC in terms of congressional testimony and published reports seems to reflect concern over the state of the corporate-sponsored defined-benefit system. But some argue the worse may be past. Is that true?
A: By our calculations, total underfunding in the defined-benefit system is still around $400 billion, the largest amount ever recorded and eight times higher than the $50 billion we saw in 2000. Of that $400 billion, more than $80 [billion] is in pension plans sponsored by companies with junk-bond credit ratings, which are at higher risk of defaulting on their obligations. . .
And:
Q: The steel industry restructured itself in large part by removing a lot of its pension obligations through the PBGC. Is that the way the PBGC was intended to function?
A: You won’t find anything in ERISA [the Employee Retirement Income Security Act] that says the PBGC should help particular industry sectors. However, if you look at PBGC’s claims, fully 72% have come from just two industries, airlines and steel.Those industries represent less than 5% of insured participants. The result is that companies with well-funded plans are supporting the pension obligations of companies whose plans the PBGC has trusteed.