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HRD-93-7R 1 (1992-12-18)

handle is hein.gao/gaobackfi0001 and id is 1 raw text is: United Stat.. General Accounting Office Washington, D.C. 20548 Human Resources Division B-249864 December 18, 1992 The Honorable Tim Roemer House of Representatives 148406 Dear Mr. Roemer: P This letter responds to your February 10, 1992, request that we study the impact of the proposed Pension Restoration Act of 1991 (PRA), H.R. 824, on the financial condition of the Pension Benefit Guaranty Corporation (PBGC). PRA would require PBGC to pay annuities to plan participants--known as pension losers--or their surviving spouses who lost pension benefits because their pension plans terminated prior to passage of the Employee Retirement Income Security Act (ERISA) in 1974. In this letter, we present (1) estimates of the number of pension losers or their surviving spouses, (2) estimates of the amount of annuity payments and administrative costs in H.R. 824, (3) the impact of these expenditures on the financial condition of PBGC, and (4) the difficulties of implementing PRA. BACKGROUND Before 1974, the federal government regulation of the operations of the private pension system was minimal; in particular, the government did not specify funding standards and it did not insure pension benefits. As a result, thousands of plan participants lost their benefits when the companies they worked for terminated their underfunded pension plans.' In response to these and other problems confronting private pension plans, the Congress passed ERISA in 1974. ERISA established vesting and funding standards as well as reporting and disclosure requirements; the Department of Labor (Labor) and the Internal Revenue Service (IRS) are responsible for oversight. ERISA also created PBGC to insure the payment of benefits for most defined A plan is underfunded when it does not have sufficient assets to pay promised benefits. GAO/HRD-93-7R Pension Restoration Act S5(7/4?9 GAO I Oqb 4tlb &

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