The bankruptcy filing by American Airlines could saddle the obscure federal agency that insures company pensions with a $9 billion loss, officials say, raising the financial pressures on the debt-laden government fund and the possibility it could need a taxpayer bailout.
The Pension Benefit Guaranty Corp. is already facing a $26 billion deficit, the largest in its 37-year history, after being staggered by company failures across the country during the recession. ...
... “The PBGC is yet another government program that is facing a solvency crisis,” said David Kudla, chief executive and chief investment strategist of Mainstay Capital Management.
Based in Michigan, Kudla counts as clients hundreds of retirees from the auto-parts maker Delphi, which shifted its pension plan to the PBGC in 2009. He warned workers and retirees with pensions not to assume all of their pension will be there when they need it.
PBGC has $81 billion in assets and is obligated to pay out $107 billion in pension payments over time. The shortfall means the agency would eventually run out of money without additional funds.
“Many people who never thought this could happen to them or the company they worked for for decades are struggling to deal with the shortfall in the pension payments,” he said. “Every employee needs to recognize that the PBGC risk is real.”