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HEHS-94-181R 1 (1994-06-24)

handle is hein.gao/gaobackpo0001 and id is 1 raw text is: Lsiui GAO United States General Accounting Office Washington, D.C. 20548 Health, Education and Human Services Division B-250346 June 24, 1994 The Honorable J.J. Pickle Chairman, Subcommittee on Oversight Committee on Ways and Means House of Representatives Dear Mr. Chairman: After our April 19, 1994, testimony before the Committee on Ways and Means,' you asked that we provide you with a more detailed description of our suggestion to strengthen H.R. 3396 and with any comments the Pension Benefit Guaranty Corporation (PBGC) might have about this suggestion. This letter contains your requested information. In summary, our position is that H.R. 3396 should improve funding in many underfunded plans as it is intended to do. In our view, the redesign of the offset is the most important funding provision in the bill and should be retained. However, not all underfunded plans will receive additional contributions under the bill. In our testimony, we expressed concern that sponsors of only about half the plans in our sample with funding ratios of between 50 and 80 percent (16 of 31 sponsors) would make additional contributions under H.R. 3396.2 Sponsors of all plans in our sample with funding ratios below 50 percent would have made additional contributions in 1990 had the bill been in effect. Sponsors of 9 of the 25 plans with funding ratios above 80 percent would also have made additional contributions. 'Underfunded Pension Plans: Federal Government's Growing Exposure Indicates Need for Stronger Funding Rules (GAO/T- HEHS-94-149, Apr. 19, 1994). 2We define a plan's funding ratio as the amount on line 13c of the Form 5500 Schedule B. In this ratio, plan assets (line 8b of the Schedule B) are reduced by the plan's prior year credit balance (line 9h) and then divided by the plan's current liability (line 6d). GAO/HEHS-94-181R Proposal to Strengthen H.R. 3396

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