The Vanishing Safety Net

For many workers, the promise of a monthly pension check in retirement is a thing of the past.

Pension checks may one day be relegated to museum exhibits along with buggy whips, telegrams and other artifacts of days gone by. The number of employers offering so-called defined-benefit plans peaked in the mid 1980s, when pensions covered one out of three private-sector workers in the U.S. By the end of 2003, pension coverage had slipped to less than one in five.

In recent years, most of the hand-wringing over pensions has been directed at corporations -- mainly in the steel, airline and auto-parts industries -- that went bankrupt and turned their pension obligations over to the Pension Benefit Guaranty Corp., the federal agency that insures private pensions. As recently as 2001, the PBGC estimated that it had more than enough assets on hand to cover its expected liabilities. But that is no longer the case. Currently, it has about $23 billion less than it needs if it has to take over several vulnerable plans at the same time. While affected retirees will continue to receive benefits from the PBGC, in some cases the payments they receive will be smaller than if employers had continued to operate the pension plans.

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