Unfunded Pensions Killing Job Recovery, Worker Security

Huge pension liabilities are strangling corporate America, and execs say this new debt is choking off an economic recovery. Companies that offer workers traditional pensions are suddenly facing a yawning $350 billion deficit in those plans. To make up that shortfall, big business is expected to pour a record $83 billion into pension funds this year—nearly double last year’s contribution and six times what companies paid in 2001.

Already, the federal Pension Benefit Guaranty Corporation (PBGC) is $5.7 billion in the hole, thanks to a string of costly pension failures in steel and airlines. And its administrator is warning Congress that the PBGC could be headed for a taxpayer bailout akin to the $150 billion S&L debacle.

Corporate lobbyists, however, warn that an economic recovery will remain MIA as long as pensions siphon off money that could be used for new business investment.

Today 44 million Americans are covered by 32,000 traditional pension plans, down from 114,000 plans in 1985. And they don’t always get what was promised. Retired US Airways pilot Michael Fairley just went to work selling lighting because his pension was cut 67 percent to $23,000 a year after the airline went bankrupt. “At 60,” says Fairley, “who thought I’d be living paycheck to paycheck again?”