Nov. 15 (Bloomberg) -- The Pension Benefit Guaranty Corp., a U.S. insurance program for company retirement plans, said its deficit widened to a record $26 billion in the 2011 fiscal year and it took over 152 funds that were closed.
The largest year-end deficit in the agency’s 37 years reflects lower interest rates that generate less cash used to make payments and anticipated increases in assistance to multiemployer plans, according to an annual report today. The agency had a $23 billion deficit in 2010.
“The majority of pension plans are OK, but as our deficit growth shows, we think that some will lack the funds to pay benefits,” PBGC Director Joshua Gotbaum said in an e-mail statement.
The American Benefits Council, a Washington-based trade group for companies that support retirement, health and stock compensation plans, said the agency’s financial report isn’t accurate and its condition isn’t as bad as suggested.
“The deficit is now being used to justify an enormous premium increase and to convince Congress to give the agency sweeping new powers,” James Klein, the group’s president, said in an e-mailed statement.
The PBGC, which collects premiums from companies, paid almost $5.5 billion last year to 873,000 retirees whose plans had failed. In 2011, the agency assumed responsibility for the benefits of 57,000 people in newly failed plans.
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