What Participants Said

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Why GAO Convened This 

Forum

Highlights

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Highlights of GAO-05-578SP. 

June 2005

HIGHLIGHTS OF A GAO FORUM

The Future of the Defined Benefit System 

and the Pension Benefit Guaranty 

Corporation 

Forum participants debated both the specifics of potential changes to the 

regulations governing America’s defined benefit pension system and broader 

ideas about how policymakers should address retirement income security. 

There were varying levels of agreement on the following statements: 

• Current pension funding rules do not adequately ensure sound funding in 

plans that are at the greatest risk of termination, and the federal 

government needs to do more to hold employers accountable for the 

benefit promises they make. 

• Addressing deficiencies in the pension funding rules would be more 

effective and more important than reforming the PBGC premium 

structure, since policymakers should focus on getting employers to fulfill 

the promises they make to employees. 

• Greater pension funding flexibility could help maintain adequate pension 

funding and remove disincentives that have stopped plan sponsors from 

contributing more to their plans in the past. 

• PBGC’s premium structure should better reflect the risk that a pension 

plan presents to the solvency of PBGC’s pension insurance program. 

• Improvements should be made to the transparency and timeliness of 

pension plan financial information that is reported to plan participants, 

regulators, and those who invest in the plan sponsor’s stocks and bonds.

• Any reforms of pension funding rules and premium structures would be 

easier to achieve by separately addressing “legacy costs”—the costs 

from terminated and currently underfunded defined benefit plans. 

• Although the traditional defined benefit system has been in retreat for 

about 30 years, this trend might be halted if policymakers would clarify 

the legal ambiguities surrounding cash balance and other hybrid plans. 

• Rather than focusing on promoting certain types of pension plans, 

policymakers should identify and encourage those features of pension 

plans (both defined benefit and defined contribution) that are most 

likely to provide sufficient income security for American retirees. 

Employer-sponsored defined 

benefit pension plans face 

unprecedented challenges in the 

midst of significant changes in our 

nation’s retirement landscape. 

Many defined benefit plans and the 

federal agency that insures them, 

the Pension Benefit Guaranty 

Corporation (PBGC), have 

accumulated large and growing 

deficits that threaten their survival. 

Meanwhile, the percentage of 

American workers covered by 

defined benefit plans has been 

declining for about 

30 years, reflecting a movement 

toward defined contribution plans 

(e.g., 401(k) plans) and perhaps 

fundamental changes in how our 

society thinks about who should 

bear responsibility and risk for the 

retirement income security of 

American workers. It is imperative 

that policymakers address not only 

the challenges facing the defined 

benefit system and the PBGC, but 

also consider broader questions 

about overall retirement income 

policy. 

To address these issues, GAO 

convened a diverse group of 

knowledgeable individuals who 

have been influential in shaping the 

defined benefit pensions debate 

over the years. Participants 

included government officials, 

researchers, accounting experts, 

actuaries, plan sponsor and 

employee group representatives, 

and members of the investment 

community. 
Page i GAO-05-578SP CG Forum on Pensions

Contents

Introduction from the 

Comptroller General of 

the United States

1

Background 4

Funding Rules 8

PBGC Premiums 15

Transparency of Pension Plan Information 18

Emerging Issues 20

PBGC’s Mandate 25

Appendixes

Appendix I: Forum Agenda 28

Appendix II: Forum Participants 31

Appendix III: Comptroller General’s Presentation Slides 35

Appendix IV: GAO Contacts and Staff Acknowledgments 57

Related GAO Products 58

Figures Figure 1: Assets, Liabilities, and Net Financial Position of PBGC’s 

Single-Employer Insurance Program, 1980-2004 7

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Page 1 GAO-05-578SP CG Forum on Pensions

Introduction from the Comptroller General of 

the United States

Employer-sponsored defined benefit pension plans, which have served as a 

cornerstone of private sector retirement income security for several 

decades, face unprecedented challenges in the midst of significant changes 

in our nation’s retirement landscape. Many defined benefit plans and the 

federal agency that insures them, the Pension Benefit Guaranty 

Corporation (PBGC), have accumulated large and growing deficits that 

threaten their future survival. At the end of fiscal year 2004, PBGC reported 

a $23.3 billion accumulated deficit in its primary pension insurance 

program, the single-employer program, and estimates that it is exposed to 

an additional $96 billion in potential losses from underfunded plans 

sponsored by non-investment-grade companies.1

 While these deficits have 

surged in the last 3 years, the percentage of American workers covered by 

defined benefit plans has been declining for about 30 years, reflecting a 

movement toward defined contribution plans (e.g., 401(k) plans) and 

perhaps fundamental changes in how our society thinks about who should 

bear responsibility and risk for the retirement income security of American 

workers. The recent public debate over the merits of including individual 

accounts as part of a more comprehensive Social Security reform proposal 

should lead us to consider fundamental questions about overall retirement 

income policy. As part of this effort, it is imperative that policy makers 

address the challenges facing the defined benefit system and the PBGC. 

Policymakers need to confront these challenges now because over 40 

million Americans are counting on the private sector defined benefit 

system for at least part of their retirement income. The sooner action is 

taken, the more flexibility there will be to strengthen the financial 

condition of poorly funded defined benefit plans and the PBGC. Much of 

PBGC’s exposure stems from large, underfunded pension plans in certain 

industries with structural weaknesses, which may be attributed, at least in 

part, to certain macroeconomic forces such as deregulation and 

globalization. These and other terminated and underfunded plans have 

increased both the costs of the pension insurance program and PBGC’s 

exposure to risk. Because current law requires PBGC to finance itself 

through the collection of insurance premiums, the assets of failed plans, 

and related investment earnings, companies with healthier pension plans 

have borne increased premium costs over the years to help cover PBGC’s 

deficits. It is unclear how much longer companies with well-funded 

1

PBGC also manages an insurance program for multiemployer plans, which covers 

approximately 10 million participants. This insurance program had an accumulated deficit 

of $236 million at the end of fiscal year 2004.
Introduction from the Comptroller General 

of the United States

Page 2 GAO-05-578SP CG Forum on Pensions

pension plans will be willing to pay higher premiums and remain within the 

defined benefit system. The nature of any related legislative reforms will 

likely have a bearing on this issue.

In two important ways, the current condition of the PBGC is a microcosm 

of the larger federal government and our Social Security system. First, 

PBGC has a large and growing deficit, which should be addressed sooner 

rather than later. And second, PBGC’s pension insurance program is 

emblematic of a large number of federal government programs that must 

be reexamined because of fundamental changes in the world since they 

were enacted. The Employee Retirement Income Security Act of 1974 

(ERISA), which among other things established the PBGC, was passed in 

response to trends and challenges that existed at a time when defined 

benefit plans were growing and most pension plan participants in the 

private sector were enrolled in defined benefit plans. At that time, Congress 

and the American people may well have expected continued growth of 

defined benefit plans in the decades to come. 

In light of changes in the retirement landscape that have taken place over 

the last 30 years and the immediate financial and structural challenges 

facing the defined benefit system and the PBGC, GAO convened this forum 

to address problems with the existing defined benefit system, and to 

discuss broader issues of retirement income security. The forum brought 

together a diverse group of knowledgeable individuals who have been 

influential in shaping the defined benefit pensions debate over the years. 

Participants included government officials, researchers, accounting 

experts, actuaries, plan sponsor and employee group representatives, and 

members of the investment community (See app. I for the forum’s agenda 

and app. II for a list of forum participants). All brought a commitment to 

forward thinking and an eagerness to move beyond defining and measuring 

the problem to discussing how to broaden understanding and public 

dialogue so that action could be both more immediate and more informed.

The forum was designed to create a space where a rich, meaningful, and 

unattributed discussion could take place and a mutual understanding 

among the various stakeholders involved could be achieved. In particular, 

the forum sought to identify some possible approaches and strategies that 

could address the underlying structural problems and long-term challenges 

facing the defined benefit pension system and the PBGC. In smaller 

discussion groups, participants talked about pension funding rules, PBGC’s 

premium structure, and transparency and disclosure of pension plan 

financial information. In these discussions and in plenary sessions, 
Introduction from the Comptroller General 

of the United States

Page 3 GAO-05-578SP CG Forum on Pensions

participants also considered a number of other issues, including attributes 

of retirement savings plans that government should promote and whether 

“legacy costs”—costs from terminated and currently underfunded defined 

benefit plans—should be addressed separately in any proposals to reform 

pension funding and premium rules. Also, participants debated whether 

PBGC should primarily serve as a social insurance program, a marketbased insurer, or a hybrid.

This report summarizes the ideas and themes that surfaced at the forum 

and the collective discussion of the forum participants as well as 

subsequent comments received from participants based on a draft of this 

report. 

I want to thank all the forum participants for taking the time to share their 

knowledge, insights, and perspectives. These will be of value to the 

American people and to their representatives in Congress as they 

communicate with their constituents about the need for change in the 

defined benefit system and the PBGC. We at GAO will also benefit from 

these insights as we carry out our mission to help Congress examine the 

ways to ensure the sustainability of the system and the solvency of the 

PBGC while ensuring the pension benefits earned by millions of 

Americans. I look forward to working with the forum’s participants on this 

and other issues of mutual interest and concern in the future.

David M. Walker

Comptroller General

of the United States
Page 4 GAO-05-578SP CG Forum on Pensions

Background Before the enactment of the Employee Retirement Income Security Act of 

1974, companies had been sponsoring pension plans for almost 100 years.1

During the mid-20th century, private pension plans gained in popularity and 

grew from covering 19 percent of the workforce in 1945 to 40 percent in 

1960.2

 However, few rules governed the funding of these plans, and 

participants had no guarantees that they would receive the benefits 

promised. When Studebaker’s pension plan failed in the 1960s, thousands 

of plan participants lost most or all of their pensions. Such experiences 

captured national attention and prompted the passage of ERISA to better 

protect the retirement income of Americans covered by private sector 

pension plans. Among other things, ERISA created the PBGC to protect the 

benefits of plan participants, subject to certain limits, in the event that plan 

sponsors could not meet the benefit obligations under their plans. ERISA 

also established rules for funding defined benefit pension plans, instituted 

pension insurance premiums, promulgated certain fiduciary rules, and 

developed annual reporting requirements. Now, when a plan is terminated 

with insufficient assets to pay promised benefits, PBGC assumes 

responsibility for the plan and for paying benefits to participants. Although 

PBGC provides insurance protection for over 29,000 single-employer 

pension plans, covering 34.6 million people, the percentage of private 

sector workers covered by a defined benefit plan has dropped from 39 

percent in 1975 to 21 percent in 2004. 

To try to ensure that plans have sufficient assets to pay for their benefit 

obligations, ERISA created minimum funding standards. Under current law, 

if a plan becomes sufficiently underfunded, the plan sponsor is required to 

make an additional contribution, known as a deficit reduction contribution. 

The funding rules also set maximum levels for tax-deductible 

contributions. However, prior GAO work has shown that the pension 

funding rules were not designed to ensure that plans have the means to 

meet their benefit obligations in the event that plan sponsors run into 

financial distress.3

 

1

Wooten, James A., The Employee Retirement Income Security Act of 1974, A Political 

History, (2004), Berkeley: University of California Press, p.17.

2

Wooten, p.34.

3

GAO, Pension Benefit Guaranty Corporation: Single-Employer Pension Insurance 

Program Faces Significant Long-Term Risks, GAO-04-90 (Washington, D.C.: Oct. 29, 2003) 

and Private Pensions: Recent Experiences of Large Defined Benefit Plans Illustrate 

Weaknesses in Funding Rules, GAO-05-294 (Washington, D.C.: May 31, 2005).
Page 5 GAO-05-578SP CG Forum on Pensions

PBGC receives no direct federal tax dollars to support the single-employer 

pension insurance program.4

 Instead, the program receives the assets of 

terminated underfunded plans and any of the sponsor’s assets that PBGC 

recovers during bankruptcy proceedings.5

 PBGC finances the unfunded 

accrued liabilities of terminated plans with premiums paid by plan 

sponsors and income earned from the investment of program assets. Since 

its inception, PBGC’s single-employer program has received most of its 

premium income from flat-rate premiums, which companies pay each year 

for every participant in a defined benefit plan they sponsor. Initially, the 

flat-rate premium was set at $1 per participant per year. This rate was 

raised several times and since 1991 has been set at $19. In 1987, a variablerate premium was added to provide an incentive for sponsors to better fund 

their plans. For each $1,000 of unfunded vested benefits, plan sponsors pay 

a premium of $9. In fiscal year 2004, PBGC received nearly $1.5 billion in 

premiums, including more than $800 million in variable rate premiums, but 

paid out more than $3 billion in benefits to plan participants or their 

beneficiaries. 

To meet the information needs of the federal agencies that administer 

federal pension laws, the PBGC, the Department of Labor, and the Internal 

Revenue Service jointly develop the Form 5500, to be used by pension plan 

administrators to meet their annual reporting requirements under ERISA 

and the Internal Revenue Code (IRC). This form and its attached 

statements and schedules are used to collect detailed plan information 

about assets, liabilities, insurance, and financial transactions, plus financial 

statements audited by an independent qualified public accountant, and for 

defined benefit plans, an actuarial statement. We have reported in prior 

work that Form 5500 information may often be of limited value because, 

when it becomes available, its information is generally at least 2 years old.6

In addition to requiring the Form 5500, if a company’s pension plans reach a 

certain level of underfunding, ERISA requires the company to provide 

4

If funds generated are insufficient to meet operating cash needs in any period, PBGC has 

available a $100 million line of credit from the U.S. Treasury for liquidity purposes.

5

According to PBGC officials, PBGC files a claim for all unfunded benefits in bankruptcy 

proceedings. However, PBGC generally recovers only a small portion of the total unfunded 

benefit amount in bankruptcy proceedings, and the recovered amount must be split 

between PBGC (for unfunded guaranteed benefits) and participants (for unfunded 

nonguaranteed benefits).

6

See GAO, Private Pensions: Publicly Available Reports Provide Useful but Limited 

Information on Plans’ Financial Condition, GAO-04-395 (Washington, D.C., Mar. 31, 2004).
Page 6 GAO-05-578SP CG Forum on Pensions

detailed financial information to PBGC in what is called a 4010 filing. The 

4010 filing includes proprietary information about the plan sponsor, its 

total pension assets, and its total benefit obligations were the company to 

terminate its pension plans immediately. Under current law, PBGC is not 

permitted to disclose this information to the public. Last, publicly traded 

corporations whose defined benefit plans are material to their financial 

statements must provide information about the effect of their pensions on 

their balance sheet and operations in a footnote to their 10-K filings to the 

Securities and Exchange Commission. 

The single-employer program has had an accumulated deficit—that is, the 

value of program assets has been less than the present value of benefits and 

other obligations—for much of its existence. (See fig. 1.) In fiscal year 1996, 

the program had its first accumulated surplus, and by fiscal year 2000, the 

accumulated surplus had increased to about $10 billion, in 2002 dollars. 

However, the program’s finances reversed direction in 2001, and at the end 

of fiscal year 2002, its accumulated deficit was about $3.6 billion. In July 

2003, we designated PBGC’s single-employer insurance program as high 

risk, given its deteriorating financial condition and long-term 

vulnerabilities.7

 In fiscal year 2004, the single-employer program incurred a 

net loss of $12.1 billion, and its accumulated deficit increased to a record 

$23.3 billion, up from $11.2 billion a year earlier. Furthermore, PBGC 

estimated that total underfunding in single-employer plans exceeded $450 

billion, as of the end of fiscal year 2004.

7

See GAO, Pension Benefit Guaranty Corporation Single-Employer Insurance Program: 

Long-Term Vulnerabilities Warrant “High Risk” Designation, GAO-03-1050SP

(Washington, DC: July 23, 2003).
Page 7 GAO-05-578SP CG Forum on Pensions

-30

-20

-10

0

10

20

30

40

50

60

70

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

-30

-20

-10

0

10

20

30

40

50

60

70

Dollars in billions

Source: Pension Benefit Guaranty Corporation.

Fiscal year

Assets

Liabilities

Net position

-23.305

Figure 1: Assets, Liabilities, and Net Financial Position of PBGC’s Single-Employer Insurance Program, 1980-2004

Recently, the Administration has proposed wide-ranging reform for defined 

benefit pension plans and PBGC’s single-employer insurance program. 

Specifically, the proposal’s objectives are to (1) reform the funding rules to 

ensure sponsors keep pension promises; (2) reform premiums to better 

reflect a plan’s risk and restore PBGC to financial health; and (3) improve 

disclosure to workers, investors, and regulators about pension plan status. 

Similarly, in previous reports dating back to 1992, we have emphasized that 

reforming these three areas is critical to restoring financial health to 

PBGC’s pension insurance program and ensuring retirement security for 

millions of American workers.
Page 8 GAO-05-578SP CG Forum on Pensions

Funding Rules Participants generally agreed that current pension funding rules do not 

adequately ensure sound funding in plans that are at the greatest risk of 

termination and the federal government needs to do more to hold 

employers accountable for the benefit promises they make. Many said that 

successfully reworking the funding rules would be the best way to bring 

about stability in the defined benefit system and PBGC’s finances. Some 

participants suggested that the funding rules provide more flexibility to 

allow for larger contributions to plans during favorable economic 

conditions, thus improving plans’ chances of surviving difficult economic 

conditions. Forum participants also addressed the importance of properly 

measuring pension plan assets and liabilities in order for funding rules to 

function properly. Participants generally agreed that the timing of expected 

benefit payments should affect measurement of liabilities, but they 

disagreed on the merits of utilizing a yield curve to measure these 

liabilities.

Funding Rules Need 

Strengthening to Prevent 

Severe Plan Underfunding

Participants generally agreed that strengthening the funding rules is vital to 

alleviating the defined benefit system’s finances. They suggested some 

changes to the funding rules that they thought would better ensure 

adequate plan funding and reduce PBGC’s exposure to underfunded plans.
Page 9 GAO-05-578SP CG Forum on Pensions

• Minimum funding and deficit reduction contribution rules could be 

tightened. Some participants expressed concern that the threshold for 

requiring a deficit reduction contribution is not sufficiently stringent. 

Some suggested that the minimum required funding ratio of a plan’s 

assets to its current liability should be raised from the current level of 

90 percent. One participant noted that the funding rules allow 

companies considerable latitude in deciding how much to contribute to 

their pension plans in any given year.8

 Many participants also agreed 

that addressing deficiencies in the pension funding rules would be more 

effective and more important than reforming the PBGC premium 

structure, since policymakers should focus on getting employers to 

fulfill the promises they make to employees.

• Participants suggested ways to limit PBGC’s exposure to plan 

underfunding. Participants suggested that policymakers act to limit 

both underfunding in pension plans and PBGC’s exposure to pension 

underfunding by (1) curbing distribution of lump sum payments, 

(2) limiting federal guarantees of shutdown benefits,9

 and (3) restricting 

plans from increasing benefits when they are severely underfunded. 

• Participants generally agreed that lump sum distributions from plans 

should be eliminated or at least discouraged because, on a large 

scale, they can increase the probability of insolvency in underfunded 

plans. For example, where participants in an underfunded plan 

believe that the PBGC guarantee may not cover their full benefits in 

the event of a plan termination, many may elect to receive their 

benefits in a lump sum rather than risk reduced annuity payments 

from PBGC if the plan terminates. This may create a “run on the 

bank,” exacerbating the possibility of the plan’s insolvency as assets 

8

Sponsors of underfunded plans may sometimes avoid or reduce cash contributions if they 

have earned funding credits as a result of favorable experience, such as contributing more 

than the minimum in the past. For example, contributions beyond the minimum may be 

recognized as a funding credit. These credits are not measured at their market value and 

accrue interest each year at the plan’s long-term expected rate of return on assets, which is 

called the valuation interest rate.

9

Shutdown benefits provide employees additional benefits, such as early retirement benefit 

subsidies in the event of a plant shutdown or permanent layoff. However, in general, plant 

shutdowns are inherently unpredictable, so it is difficult to recognize the costs of shutdown 

benefits in advance, and current law does not allow advance funding for the cost of benefits 

arising from future unpredictable contingent events (See 26 U.S.C. 412(m)(4)(D)). 

Shutdown benefits can suddenly and dramatically increase plan liabilities, and the related 

additional benefit payments drain plan assets. 

Minimum Funding Requirements

Generally speaking, defined benefit pension 

plans insured by the PBGC are subject to 

minimum funding requirements that are 

determined by ERISA and the Internal 

Revenue Code. Essentially, plan liabilities are 

measured in two ways: 

(1) according to an actuarial valuation method 

that relies on a number of demographic and 

economic assumptions and (2) according to a 

more uniform measure that is prescribed by 

law, though still subject to some discretion by 

the plan sponsor. In general, the required 

contribution is the expected increase in the 

liability during the year, plus an amount to 

amortize any unfunded liabilities from past 

years. If the value of plan assets falls below 90 

percent of the liability on the more uniform 

measure, the plan sponsor must generally 

make a deficit reduction contribution to the 

plan. Plan assets can be measured at either 

their market value or their actuarial value, 

which smoothes out volatility in market 

valuations, though actuarial asset values 

cannot deviate more than 20 percent from the 

market value of assets.
Page 10 GAO-05-578SP CG Forum on Pensions

are liquidated more quickly than expected, potentially leaving fewer 

assets to pay benefits for other plan participants. Forum participants 

said lump sum distributions could be discouraged by (1) setting 

minimum funding requirements according to a plan’s expected lump 

sum distribution frequency (i.e., plans with higher lump sum 

distribution frequencies would have to maintain higher funding 

levels); (2) establishing a two-tier minimum funding requirement for 

lump sum distributions, which would only allow executives to 

receive lump sums if a certain threshold were reached, and would 

only allow other employees to receive lump sums if another funding 

level was met; or (3) linking lump sum distributions to plan funding 

status. For instance, if the plan were 80 percent funded, participants 

would not be able to receive more than 80 percent of their benefit in 

a lump sum and the remaining 20 percent would either be forfeited or 

reduced and paid out as an annuity. This would require amending 

existing laws that do not permit cutbacks in earned pension benefits. 

• Some participants suggested ways to limit PBGC’s exposure to 

shutdown benefits. One option would be to require plans to prefund 

shutdown benefits by including them in current liability measures. 

Alternatively, shutdown benefits could be guaranteed at a lower level 

than regular pension benefits earned. For example, shutdown 

benefits could be subject to phase-in provisions that are based on the 

timing of factory closures, rather than the timing of amendments to 

plans that introduce or increase shutdown benefits. Currently, plant 

shutdowns prior to plan terminations usually result in higher claims 

for PBGC than if these events take place concurrently.

• Most participants generally agreed that either plans should be 

restricted from increasing benefits in underfunded plans or the 

federal government should consider further limiting PBGC’s 

guarantees of benefit increases under certain circumstances. Some 

participants expressed concerns that under current funding rules, 

plan sponsors can increase benefits for participants in underfunded 

plans, even if the plan sponsor may not ultimately be able to pay for 

these benefit increases. Thus, there are incentives for financially 

troubled plan sponsors and their employees to agree on pension 

benefit increases, in lieu of wage increases, because at least part of 

the benefit increases are guaranteed by PBGC. However, at least one 

participant said there should not be reductions in PBGC guarantees 

or limits to benefit increases.
Page 11 GAO-05-578SP CG Forum on Pensions

Current Rules Discourage 

Companies from Better 

Funding Their Pensions

Several participants said that greater pension funding flexibility could help 

maintain adequate pension funding and remove disincentives that have 

stopped plan sponsors from contributing more to their plans in the past. 

• Current funding rules do not follow the business cycle. Some 

participants said that the maximum pension plan contribution levels set 

by law are too restrictive because they do not allow companies to make 

tax-qualified contributions to their plans when they can most afford it. 

Consequently, when the economy and equity prices decline, plan 

sponsors may be forced to make contributions when they can least 

afford them. Participants suggested raising the current limit on the 

amount companies can contribute to their pension plans on a taxqualified basis during profitable times so their plans would remain in 

better financial condition in the event of a recession or stock market 

decline. Some participants said, that in recent years, the maximum 

funding restrictions have prohibited plan sponsors from making 

additional tax-qualified contributions when cash was readily available to 

the employer.10 However, at least one participant noted that increasing 

the limits on tax-deductible contributions to pension plans would 

reduce federal tax revenues. Furthermore, in one participant’s opinion, 

the companies most likely to overfund their pension plans are those in 

healthy financial condition that are least likely to submit a claim to 

PBGC.

• Taxes on plan reversions discourage firms from making additional 

contributions during profitable times. Some participants said that 

excise taxes present disincentives for plan sponsors to contribute more 

than the required minimum to their pension plans. They explained that if 

the rate of return on a plan’s assets is greater than the growth in its 

Maximum Contribution Regulations

Generally speaking, a plan sponsor may 

make a tax-deductible contribution to its 

pension plan of an amount that is at least as 

much as the plan’s unfunded current liability. 

Other rules may allow for a larger deduction. 

Contributions beyond the deductible amount 

may be subject to a tax. In the 1980s and 

early 1990s Congress reduced employers’ 

maximum tax-deductible contributions, 

imposed excise taxes on employer 

contributions that were not tax-deductible, 

and placed penalties on withdrawals of 

surplus assets.

10Recent research shows that many employers could have contributed more to their pension 

plans during the 1990s by using a more conservative interest rate to measure their plans’ 

current liabilities. One study concludes that a firm’s strategic use and commitment to its 

pension program are the most important factors explaining contributions to defined benefit 

plans over time. A recent GAO study shows that in 1996, among the 100 largest plans 

measured by current liability, 16 of the 30 plans that had a maximum deductible contribution 

of zero could have increased their maximum deductible contribution by choosing a lower 

discount rate. See T. Ghilarducci and W. Sun, “Did ERISA Fail Us because Firms’ Pension 

Funding Practices Are Perverse?,” Paper presented at the 57th Annual Meeting of the 

Industrial Relations Research Association (Philadelphia, PA: January 2005); GAO, Private 

Pensions: Recent Experiences of Large Defined Benefit Plans Illustrate Weaknesses in 

Funding Rules, GAO-05-294 (Washington, D.C.: May 31, 2005); and PBGC analysis, 

unpublished. 
Page 12 GAO-05-578SP CG Forum on Pensions

liabilities, as happened during much of the 1990s, the plan sponsor 

would be required to pay a 50 percent reversion tax plus corporate tax 

on any surplus money that the employer receives when a plan is 

terminated with sufficient assets to satisfy the plan’s liabilities. Thus, as 

companies consider their long-term cash needs, they might be reluctant 

to contribute more than the minimum as long as the reversion tax 

impedes them from recovering any excess plan funds. One participant 

asked whether the reversion tax should be reduced from its current rate 

of 50 percent to a rate that would better reflect the true economic value 

of the tax deferral that companies gain from funding their plans.
Page 13 GAO-05-578SP CG Forum on Pensions

Effective Funding Rules 

Require Accurate Measures 

of Plan Assets and 

Liabilities

Participants discussed a number of pension funding issues related to 

measurement of pension assets and liabilities. There was general 

agreement on broad principles, but disagreement over the costs and 

benefits of specific proposals.

• Measures of plan liabilities should consider the timing of benefit 

payments, though not necessarily using a yield curve. Participants 

generally agreed that the duration (a measure related to the timing of a 

set of cash flows) of plan liabilities should affect their measurement and 

required funding levels. Some participants recommended tying liabilities 

to a yield curve to more accurately measure them. This could also 

encourage plans to adopt investment strategies, based on the yield 

curve, of holding bonds of the same duration as the plan’s liabilities. 

Thus, changes in interest rates would have similar effects on both plan 

assets and liabilities and would not significantly change the funding 

status of a plan. Opponents of the yield curve approach argued that it 

might not improve accuracy of liability measures because an imbalance 

of supply and demand for bonds of certain durations could skew 

interest rates. It was added that the yield curve is only likely to improve 

the accuracy of pension measurements when short- and long-term 

interest rates significantly differ, and only then for plans with workers 

that are particularly old or young; thus, it may not be worth the 

significantly greater administrative expense of using a yield curve. 

Another participant said there are reasonable alternatives to using a 

yield curve that produce similar results. For example, plans could 

calculate the average duration of their liabilities and then use the 

corresponding interest rate to determine their current liability.

• Flexibility in rate of return assumptions may encourage riskier 

investments. Some participants said that plan sponsors have incentives 

to invest in riskier assets so they can more readily justify assumptions of 

higher expected rates of return on plan assets. One participant said 

funding rules should not make it easier for companies to make bets 

using employees’ pension assets. It was also noted that funding rules do 

not differentiate among types of plan assets and thus a fully funded plan 

can still present a risk to PBGC because an asset-liability mismatch 

would leave it exposed to market risk. Other participants, however, 

noted that some plan sponsors have greater tolerance for pension 

investment risk than others and should be allowed to invest according 

to their own strategy. 

Yield Curve Approach

Current rules require all plans to measure 

current liability with a discount rate based on 

a high-quality corporate bond index. 

However, a single rate for all plans may not 

accurately estimate the present value of plan 

obligations since demographic factors such 

as the average age of plan participants can 

vary between plans. In theory, the present 

value of a plan’s benefit obligations may be 

more accurately estimated by discounting 

expected future benefit payments at the 

market interest rate for bonds that mature 

when benefit payments are due (i.e., plans 

that cover predominantly older workers and 

retirees would use a shorter-term interest 

rate). Generally, bonds with shorter maturities 

have lower yields. Discounting benefit 

payments at a lower interest rate, assuming 

all other factors equal, results in a greater 

current liability. The Administration has 

proposed replacing the single corporate bond 

rate with a series of corporate bond rates, the 

so-called yield curve.

Rate of Return Assumptions

Pension funding rules require plan sponsors 

to estimate a long-term expected rate of 

return on plan assets. The higher this rate, 

the lower the value of assets a plan needs to 

meet minimum funding requirements, 

according to its actuarial funding method. 

However, other uniform (though still subject 

to some discretion) measures of pension 

funding may override these actuarial funding 

measures and result in additional contribution 

requirements. For further information see 

GAO-04-395.
Page 14 GAO-05-578SP CG Forum on Pensions

• Market valuations improve transparency but may not be optimal for 

plan funding. Participants generally agreed that mark-to-market 

valuations of plan assets and liabilities increase transparency and 

provide the best measure of a plan’s current funding status, but opinions 

varied about whether the benefits of increased transparency 

outweighed the costs.11 Some participants said that plan sponsors might 

accept mark-to-market accounting for disclosure purposes, but some 

participants said that plan sponsors would not support it for plan 

funding purposes. Opponents of mark-to-market accounting said it 

would increase volatility of plan funding, making it harder for firms to 

develop long-term funding and cash flow management strategies. One 

participant said plan sponsors may discontinue their pension plans if 

they do not believe they can predict and manage the cost of funding 

pension benefits. Another added that the only way to manage the 

uncertainty of mark-to-market accounting would be to shift most 

pension plan assets from equities to bonds, a change which would have 

significant ramifications for U.S. financial markets.12 

Proponents of market valuation of plan assets and liabilities said that 

the benefits of increased transparency and accuracy outweigh concerns 

over increased volatility in pension funding. One participant said 

incorporating mark-to-market methodology in both the pension funding 

and accounting rules would become increasingly harder to avoid 

because it is becoming standard financial accounting practice around 

the world as investors and regulators demand more transparency. Some 

participants said that mark-to-market accounting would compel plan 

sponsors to manage volatility by investing in bonds to match the 

duration of their plan assets and liabilities. This would both eliminate 

the market risk to which PBGC is currently exposed and lead to betterfunded pension plans. Another participant said that not switching to 

market valuations would allow companies to continue using accounting 

and reporting rules to obscure the true cost of their pensions, leading to 

a hidden subsidy for plans. 

11Mark-to-market accounting refers to recording the price or value of a liability, security, 

portfolio, or account according to its current market value rather than its book value or a 

notional value, such as an actuarial value.

12By contrast, certain actuarial funding methods aim to maintain relatively smooth 

contributions to plans over time on the presumption that returns on investments in a 

portfolio of stocks and bonds will vary from year to year, but will revert to a long-term 

average that can be estimated. Based on the estimated average rate of return, annual 

contributions may be estimated and budgeted by the plan sponsor.
Page 15 GAO-05-578SP CG Forum on Pensions

PBGC Premiums Most participants generally agreed that PBGC’s premium structure should 

better reflect risk and that the government should more strongly emphasize 

variable-rate premiums. Some said that increasing the flat-rate premium is 

necessary for reforming the defined benefit insurance system. Others urged 

government regulators to look at ways to measure the risk a pension plan 

poses to PBGC, including the financial strength of the plan sponsor and 

how plan assets are invested, in addition to the plan’s funding status. 

Pension plans invested heavily in equities expose PBGC to substantial risk, 

especially during volatile periods in the equity markets.

• PBGC’s premium structure could better reflect risk. Participants 

generally agreed that PBGC’s premium structure should continue to 

consist of two parts: a flat-rate premium met by all plan sponsors and a 

variable-rate premium paid by those companies that create additional 

risks for the pension insurance system. However, some participants said 

that the government should make the current premium structure more 

risk-based by placing stronger emphasis on the variable-rate premium 

and requiring all underfunded plans to pay it, a condition that does not 

presently exist.13 Moreover, a more expensive variable-rate premium 

could provide incentives for companies to adequately fund their pension 

plans. In addition, at least two participants said that increasing the 

annual flat-rate premium from $19 to $30 per person, as proposed by the 

Administration, would still be inexpensive for the insurance that PBGC 

provides. Furthermore, one participant added that flat-rate premiums 

should be tied to an index, such as wage growth, to ensure that 

premiums would rise as benefits grow. However, other participants 

urged caution about the extent to which the government raises 

premiums. They said the higher costs could hasten both the failure of 

unhealthy plans and the exit of healthy plans from the defined benefit 

system.

Risk and PBGC Premiums

Currently, PBGC’s premium structure does not 

reflect many of the risks that affect the 

probability that a plan will terminate and impose 

a loss on PBGC. While plan sponsors may be 

subject to a variable-rate premium based on a 

plan’s level of underfunding, premiums do not 

consider other relevant risk factors, such as the 

plan’s investment strategies, benefit structure, 

demographic profile, or the financial strength of 

the plan sponsor. For further information see 

GAO-04-90.

13Sponsors of underfunded plans can avoid paying the variable-rate premium if they are at 

the full funding limit in the year preceding the premium payment year after applying any 

contributions and credit balances. One of the ways plans earn credits is by contributing 

more than required in previous years. Credits can then be used to offset minimum funding 

contributions in later years. For example, Bethlehem Steel met this criterion and only 

contributed about $71.3 million to its pension plan during years 1997 through 2001 as 

compared with the approximately $3.0 billion it contributed from 1986 through 1996. PBGC 

terminated Bethlehem Steel’s pension plan in December 2002, resulting in a total loss of 

nearly $3.7 billion for the agency.
Page 16 GAO-05-578SP CG Forum on Pensions

• Accurately assessing risk profiles of pension plans is necessary for 

developing risk-based premiums. In order to price risk-based 

premiums, one participant noted that the government needs to develop 

a system that accurately assesses the risk that a plan poses to the 

pension insurance system. Presently, PBGC uses credit ratings, in part, 

to determine which companies’ pension plans pose the greatest risk of 

termination.14 However, some participants said that because credit 

ratings are lagging indicators, they may not sufficiently measure a 

company’s risk to PBGC. Furthermore, credit ratings could lead to 

inaccurate assessments of risk for PBGC because they may not penalize 

investment grade companies with underfunded and unhealthy pension 

plans. Instead, one participant said that PBGC needs new ways to gauge 

its risks and discussed the idea of “stress testing” plans for 

weaknesses.15 These tests, possibly performed as a mandatory service 

by the financial services industry, could be periodically reported to 

government regulators. 

14Credit ratings are generally considered to be a useful proxy for a firm’s financial health. 

Ratings typically take into consideration the creditworthiness of guarantors, or insurers, or 

other forms of credit enhancement on the obligation and take into account the currency in 

which the obligation is denominated. An investment grade rating implies that the debtor will 

probably repay its obligations when due.

15Stress testing is a risk management tool used to evaluate the potential impact on a firm of a 

specific event or movement in a set of financial variables. Stress tests help firms gauge their 

potential vulnerability to exceptional but plausible events. Bank for International 

Settlements: Stress Testing at Major Financial Institutions: Survey Results and Practice

(January 2005); Bank for International Settlements: A Survey of Stress Tests and Current 

Practice at Major Financial Institutions (April 2001).
Page 17 GAO-05-578SP CG Forum on Pensions

• Investment strategies should factor into assessments of plan risk. 

Some participants said that pension plans’ investment strategies should 

be considered when evaluating how much risk plans pose to PBGC’s 

insurance program. Some participants said there is a belief that 

investing in equities lowers a company’s pension costs because the 

higher expected returns will result in lower cash contributions. During 

most of the 1990s, investments in equities produced returns that 

exceeded growth in plan liabilities, and in many cases, these investment 

gains relieved plan sponsors of the need to make any contributions to 

their pension plans to meet funding requirements. However, at least one 

participant said investments in equities, even for fully funded plans, can 

lead to severe plan underfunding, especially during volatile periods in 

the equity markets. For example, it was pointed out that negative stock 

market returns from 2000 to 2002 resulted in rapid deterioration in the 

funding status of pension plans. Others added that under the current 

funding rules and premium structure, PBGC will remain exposed to 

moral hazard as long as plan sponsors can promise benefits that they 

might not be able to afford because plan investment risk is not properly 

priced.16 Some participants said that companies could reduce plan 

funding volatility by investing in bonds because plan liabilities have 

characteristics that are similar to bonds such as present values that are 

sensitive to changes in interest rates. However, plan sponsors may be 

reluctant to do this because it would generally have a negative effect on 

the corporate earnings they report in their financial statements.

Other participants, however, said that returns on assets have surpassed 

expectations over the past decade, despite stock market declines since 

2000. Thus, asset allocations have not been the problem, and over time, 

most employers can withstand the volatility of equity markets. The 

bigger problem, according to at least one participant, is that liabilities 

have increased faster than expected, particularly because of low 

interest rates. 

16Moral hazard surfaces when the insured parties—in this case, plan sponsors—engage in 

behavior in which they would not have otherwise engaged had they not been insured against 

certain losses. In the case of the pension insurance system, this might include the 

willingness of parties to enter into agreements that increase pension liabilities, rather than 

taking wage increases.

Rates of Return and Earnings

For corporate financial statements, the 

expected rate of return is used to calculate the 

annual expected investment return on pension 

assets, which factors into the measurement of 

pension expense. To calculate a dollar amount 

for the expected return, the expected rate of 

return is multiplied by the value of the pension 

assets. This expected return is used instead of 

the actual return in the calculation of pension 

expense, which has the effect of smoothing out 

the volatility of investment returns from year to 

year. If the expected return on plan assets is 

high enough, a company may report a negative 

pension expense--or pension income on its 

financial statements. For further information 

see GAO-04-395.
Page 18 GAO-05-578SP CG Forum on Pensions

Transparency of 

Pension Plan 

Information

Participants generally agreed that further steps should be taken to increase 

the transparency and timeliness of plan financial information to plan 

participants, regulators, and investors. Such steps could include requiring 

additional disclosures in corporate financial statements and enhancing 

annual reports to plan participants.

• Corporate financial statements are an important source of up-to-date 

plan financial information, but additional information could help. 

Forum participants generally agreed that recent changes in corporate 

financial statement accounting rules related to pensions had improved 

the transparency of pension information.17 In particular, one person 

noted that investors and others now have key pieces of data, such as 

asset allocations, projected pension contributions, and projected benefit 

payments. However, several participants said that much of the 

information on pensions in corporate financial statements, while helpful 

to knowledgeable investors, would be of limited usefulness to average 

plan participants. While forum participants supported the Financial 

Accounting Standards Board’s efforts to improve the transparency of 

pension information, they suggested additional changes that would be 

helpful to plan participants, investors, and regulators. Suggested 

changes included requiring companies to provide

• plan cash flow projections;

• projected minimum funding contributions;

• statements in the Management Discussion and Analysis section on 

long-term trends in a company’s pensions and implications for the 

plan sponsor; and 

• disaggregated pension plan information, such as separate plan 

information based on domestic versus foreign plans and tax-qualified 

versus non-tax-qualified plans. 

17In December 2003 the Financial Accounting Standards Board issued a revision to its 

accounting standard on pension disclosures. Some of the new disclosure requirements 

include a description of how pension assets are invested, a narrative description of how the 

expected rate of return on assets was selected, and the employer’s estimated contribution to 

plans in the following year. The revised standard does not change the general approach used 

in the financial statements of aggregating this information across all pension plans.
Page 19 GAO-05-578SP CG Forum on Pensions

While such changes would further enhance the transparency of pension 

information, at least one participant noted that it is important not to 

burden companies with additional or overlapping reporting and disclosure 

requirements.

• The 4010 filing requirement could be revised to better reflect risks to 

PBGC. Some participants said that the current 4010 filing requirement 

should be revised to better target PBGC’s risks. They agreed that the 

current 4010 underfunding threshold of $50 million is too low, given the 

relative values of assets and liabilities in most large plans. There was 

support for revising the threshold so that only those plans that truly 

represent a risk to PBGC would be required to file. One participant 

noted that the 4010 provision, as originally proposed, was based on a 

percentage of underfunding rather than a flat dollar amount. However, 

plan sponsors objected to the percentage measure, and the flat dollar 

amount was a compromise. 

Participants’ opinions varied on the need to publicly disclose 4010 

information. It was suggested that plan funding information in 4010 

filings be made public because it is much timelier than Form 5500 data 

and more accurately measures the funding of a pension plan in the 

event of termination. However, concerns were raised about the ability 

of investors and plan participants to understand this information, which 

may cause unnecessary concern about the financial health of the plan 

and plan sponsor. One participant noted that there are legitimate 

business reasons not to disclose 4010 information to the public. For 

example, many plan sponsors view the detailed plan funding 

information as proprietary. 

• Participants should receive more complete and timely information on 

plan financial status and PBGC-guaranteed benefits. Many 

participants agreed that plan participants should be provided more 

meaningful and timely information on the financial condition of their 

pension plans as well as information about PBGC-guaranteed benefits. 

For example, participants may have trouble understanding the 

implications of funding information about a multibillion dollar pension 

plan. Data in the Summary Annual Reports sent to plan participants are 

based on Form 5500 filings. Consequently, Summary Annual Reports 

suffer from the same lack of timely data as does the Form 5500. Forum 

participants noted that the financial condition of a plan can change 

significantly by the time regulators receive the Form 5500 and plan 

Summary Annual Reports

ERISA requires plans to provide participants 

and beneficiaries receiving benefits from the 

plan a Summary Annual Report each year. The 

Summary Annual Report summarizes the 

plan’s financial status based on information that 

the plan administrator provides to the 

Department of Labor on its annual Form 5500.
Page 20 GAO-05-578SP CG Forum on Pensions

participants receive their Summary Annual Report. To address this lack 

of timely information, participants suggested

• moving the Form 5500 from a paper-based filing to an electronic 

filing; and

• varying the filing deadlines for the Form 5500 according to the 

importance of the information provided. For example, estimated plan 

funding information could be filed earlier than other data. This would 

also allow plan sponsors to send out Summary Annual Reports 

earlier. 

Another participant pointed out that beyond providing plan participants 

with plan financial information, plan participants need to be better 

educated about information on the Form 5500 and Summary Annual Report 

as well as how the U.S. pension system works overall. Thus, plan 

participants could better understand the information they receive about 

their pension benefits.

Many forum participants said plan participants and beneficiaries should 

receive information annually on their expected retirement benefits and the 

extent to which these benefits are guaranteed by PBGC. One person 

suggested that plan participants be provided information about their 

accrued benefits and the effect on their benefits of working both up to their 

company’s normal retirement age and beyond it. Another forum participant 

stated that information about the limits on benefits guaranteed by PBGC is 

important because, as occurred with some in the airline industry, 

participants may face a significant reduction in benefits if their plan is 

taken over by PBGC. 

Emerging Issues According to participants, the debate over funding rules, premiums, and 

the role of the PBGC should take place amidst fundamental policy 

discussions about how to promote retirement income security, particularly 

since the traditional defined benefit pension system has weakened. In light 

of debates over issues such as an individual account component to Social 

Security, simplification of the tax code, and pension reform, policymakers 

should think about how to delegate responsibility for asset management 

and risk among individuals and entities that can pool and professionally 

manage risk, such as employers, insurers, and the government. However, as 

policymakers think about the future of retirement, the past failures of many 

large defined benefit plans continue to weigh on the defined benefit 
Page 21 GAO-05-578SP CG Forum on Pensions

system. Participants suggested a few ways to address the legacy costs of 

terminated and presently underfunded plans, especially those in industries 

that have been deregulated or more affected by globalization, but noted 

there are not any easy options. 

Policymakers Should Think 

Broadly about Retirement 

Income Security

Participants recognized the decline of defined benefit pension plans and 

encouraged policymakers to broadly consider how best to promote 

retirement income security. Among other things, participants suggested 

that decision makers clarify the legal status of cash balance and other 

hybrid pension plans.

• The traditional defined benefit system is under threat. Participants 

broadly agreed that while employer-sponsored defined benefit plans 

have played an important role in providing secure retirements to 

millions of Americans, the traditional defined benefit pension system is 

in a decline that is likely to continue. Reasons cited for this decline 

include a regulatory structure that is biased in favor of defined 

contribution plans, recent investment experiences that have resulted in 

significant plan underfunding and uncertainty over potential changes in 

funding rules, pension accounting standards, and PBGC premiums. 

Furthermore, workers often do not recognize the importance of certain 

features of defined benefit pensions until they approach retirement. 

However, some participants wondered whether adoption of individual 

accounts as part of Social Security would lead employees to value 

defined benefit plans more highly.

• Clarifying the legal status of cash balance plans may encourage some 

companies to remain in the defined benefit system. Several 

participants stated that lawmakers need to clarify the status of cash 

balance and other hybrid plans as soon as possible to prevent the 

further demise of the defined benefit system and the PBGC. Cash 

balance plans constitute approximately 20 percent of large defined 

benefit plans, and some sponsors of cash balance plans have already 

exited the defined benefit system because of the legal uncertainty they 

face. Their exit, and the potential exit of other cash balance plan 

sponsors, is gradually reducing the PBGC’s premium base and 

potentially placing even greater strain on those who remain behind in 

the defined benefit system.

• Policymakers should encourage certain pension plan features rather 

than certain plan types. Some participants suggested that the debate 

Cash Balance Pension Plans

Cash balance plans are a type of defined 

benefit plan that look more like a defined 

contribution plan to participants. As with other 

defined benefit plans, the sponsor is 

responsible for managing the plan’s 

commingled assets and complying with the 

minimum funding requirements. However, 

information about benefits is communicated to 

plan participants through the use of 

hypothetical account balances, which makes 

the plan appear like an individual accountbased defined contribution plan. The 

hypothetical account balances communicated 

to plan participants do not necessarily bear any 

relationship to actual assets held by the plan.
Page 22 GAO-05-578SP CG Forum on Pensions

over federal retirement policy needs to move beyond distinctions 

between defined benefit and defined contribution plans. Participants 

widely agreed on the value of defined benefit pension plans but 

disagreed over whether the federal government should promote defined 

benefit plans more than other vehicles for retirement savings. Others 

added that discussions of retirement policy need to focus on ways to 

create incentives and remove barriers for employers to set up 

retirement plans and how to get American workers to build adequate 

retirement savings and security. This may be achieved by thinking about 

the interaction of private pensions and Social Security and by looking at 

hybrid pension plans, such as cash balance plans and plans that 

combine the best features of defined benefit and defined contribution 

plans. Participants suggested that pension plans include the following 

features:

• automatic participation;

• portability of benefits to accommodate workers who frequently 

change jobs;18

• allow participants to pass on accumulated wealth to their heirs;

• professional money management;

• pooled investment risk;

• ability for participants to work longer;

• minimal leakage (early withdrawals and borrowing) from retirement 

savings; and

• incentives to receive benefits in the form of a fixed annuity, rather 

than a lump sum distribution.

18One participant questioned whether employers are the proper nexus for pension plans in 

today’s world since many of them cannot bear the risk of investing plan assets and being 

liable for making up investment losses.
Page 23 GAO-05-578SP CG Forum on Pensions

Addressing Legacy Costs of 

Failed and Underfunded 

Pension Plans

Participants spoke about the advantages, disadvantages, and significant 

challenges to separating legacy costs from current and future funding and 

premiums rules. They also proposed several ways to pay for legacy costs.

• Separately addressing legacy costs could encourage future 

participation in the defined benefit system and ease passage of reform 

proposals. Separating legacy costs from the existing and future 

liabilities of the remaining defined benefit plans might encourage plan 

sponsors to remain in the defined benefit system. Many plan sponsors 

are concerned that, through increased PBGC premiums, they may be 

required to pay for the failures of other companies to responsibly fund 

and manage their pension plans. Presently, companies that sponsor 

healthy plans are subsidizing weak plans, and it is unclear how much 

longer companies with well-funded pension plans will be willing to 

remain within the defined benefit system. Some participants noted that 

resolving the matter of legacy costs could be a key component of any 

pension reform legislation that tightened the funding rules and assessed 

premiums according to risk. Such a proposal would essentially strike a 

deal between the federal government and employers that would settle 

PBGC’s unfunded liabilities through an infusion of general revenues, 

while imposing stricter pension funding standards on plan sponsors to 

minimize the possibility of significant future underfunding in the defined 

benefit system. Others added that if legacy costs are addressed 

separately, it would be possible to establish a more functional, riskbased insurance system. And, one participant added, resolution of 

pension legacy costs would bring a measure of security to millions of 

American retirees and workers who face uncertainty about their 

pension benefits. While participants generally supported separating 

pension legacy costs from ongoing pension liabilities, many opposed 

limiting the scope to specific industries such as air transportation and 

steel, which have been affected by globalization and deregulation.

• Separately addressing legacy costs could set a bad precedent. 

Requiring taxpayers or other companies to pay for failed private sector 

pension plans sends a message that the government will bail out 

companies who poorly design and manage their benefit plans or 

businesses. Furthermore, according to one participant, paying for 

defined benefit plan legacy costs with federal tax revenues would 

increase the federal government’s deficit, perhaps by as much as 

$100 billion, according to one participant.
Page 24 GAO-05-578SP CG Forum on Pensions

• Defining legacy costs is difficult. Participants provided different 

definitions of legacy costs in the defined benefit system. Some noted 

that any underfunded terminated plan that has been trusteed by PBGC 

represents a legacy cost. Another proposed defining legacy costs as any 

unfunded current liability. And one person pointed out that we may not 

even be able to accurately determine the extent of the legacy costs in 

the defined benefit system because they will eventually include costs for 

events that have not yet happened.

• Determining who pays for legacy costs is politically challenging. 

Many participants said that it is not reasonable to expect the companies 

remaining in the defined benefit system to pay for the costs of plans that 

have failed. Requiring them to do so would drive the healthy plans and 

plan sponsors out of the defined benefit system. On the other hand, it is 

hard to equitably shift the costs of these benefits to the general 

population, especially since a large percentage of Americans do not 

have any form of private pension.

• Participants suggested several ways to address pension legacy costs:

• Taxpayer bailout. Some participants said that relative to the entire 

federal budget, a taxpayer bailout would not cost much over a long 

period of time, and this would be a small price to pay for shoring up 

an important part of the nation’s private pension system.

• Industry-specific fees. Some participants said that those industries 

that have placed the greatest burden on the defined benefit system 

should be required to fund at least their share of the legacy costs. For 

example, the government could impose a fee on airline tickets that 

would cover the underfunded airline plans that have been taken over 

by PBGC. 

• Consolidate plans in distressed industries. One participant 

suggested that pension plans from financially distressed companies 

in troubled industries (e.g., airlines, steel) be grouped together into 

multiemployer plans that would be jointly managed by a board of 

trustees representing employer, employee, and goverment interests. 

Such a plan would be required to follow a set of investment 

guidelines that would limit future funding risk.

• Security trading commissions. One participant suggested 

imposing a securities trading commission on the financial services 
Page 25 GAO-05-578SP CG Forum on Pensions

industry to help cover legacy costs, because they have benefited over 

the years from managing pension plan assets and have an interest in 

the continuance of the defined benefit system.

• Expand universe of defined benefit plans. Another participant 

suggested that the government seek to expand the defined benefit 

universe, primarily by resolving the legal status of cash balance 

plans. Having more employers in the system would distribute the 

costs across a wider population.

• Wait for higher interest rates. Others suggested that much of the 

underfunding problem will eventually be solved by rising interest 

rates, which would reduce the present value of benefit obligations. 

However, higher interest rates could lead to lower stock and bond 

prices and thus reduce the market value of pension plan assets.

PBGC’s Mandate Many participants said there is a conflict in PBGC’s mandates to promote 

defined benefit plans and insure them all at the lowest cost while remaining 

self-financed. Some participants advocated for PBGC serving as a social 

insurance program because a market-based program would increase costs 

for companies and make it difficult for many to maintain their plans. Others 

argued that the agency should become more of a market-based insurer so 

as to manage the risks it faces. For example, PBGC should have both the 

authority to adjust premium rates and a higher standing in bankruptcy 

proceedings. These participants also said that the current social support 

system is problematic because guaranteed PBGC insurance encourages 

weak plan sponsors to make benefit promises they cannot keep. In 

addition, participants debated the optimal investment strategies for PBGC’s 

portfolio of assets.

• PBGC should play a social insurance role. Some participants said 

PBGC should serve as part of a wider government effort to promote 

defined benefit plans. This may require the federal government to 

transfer general revenues to PBGC occasionally. At least two 

participants acknowledged that the federal pension insurance system is 

flawed because, when it was designed, nobody anticipated the collapse 

of entire industries along with their pension plans. Nonetheless, one 

participant said the legislative history shows that PBGC was not 

intended to be run like a commercial insurance company and that the 

insurance component of PBGC was drafted on a social support system 

model. It was emphasized that transforming PBGC into a market-based 
Page 26 GAO-05-578SP CG Forum on Pensions

insurer would adversely affect both sponsors and participants by 

dramatically increasing premium rates and making it difficult for 

companies to maintain their defined benefit pension plans. Some 

participants also said that without fixing the funding rules, the defined 

benefit system cannot be properly insured.

• PBGC should operate more like a commercial insurer. Some 

participants said that PBGC should remain self-financing, like a 

commercial insurance program. A few participants pointed out that 

PBGC has limited ability to control and manage its risks in the way that 

any commercial insurer normally can. Some participants suggested that

• PBGC should have the authority to set and adjust premiums and

• PBGC should be able to act sooner to work with any plan sponsor 

entering bankruptcy and restructure a plan to try to obtain long-term 

refunding if the plan would otherwise be terminated.

One participant stated that PBGC’s present role as a social insurer does 

not encourage healthy plans and is contributing to the decline of 

defined benefit plans because, in effect, it provides loan guarantees of 

promises made by weak employers to their employees. Employers can 

thus promise benefits they may not be able to afford, since they can 

pass the cost off to PBGC.

• PBGC would benefit from improved standing in bankruptcy, but this 

would create other challenges. Participants broadly disagreed over 

what ought to be PBGC’s standing in bankruptcy. While improving 

PBGC’s standing in bankruptcy would help PBGC recover more money 

in plan terminations, a change in the rules needs to carefully consider 

the impact on existing creditors and the access of plan sponsors to the 

credit markets. Some participants noted the following:

• Under current law, it is too easy for companies to shed their pension 

obligations during bankruptcy proceedings in order to emerge from 

bankruptcy, and

• Improving PBGC’s standing in bankruptcy would slightly increase the 

cost of credit for plan sponsors and would slightly increase PBGC’s 

administrative expenses. It is not clear whether these cost increases 

can be accurately modeled.
Page 27 GAO-05-578SP CG Forum on Pensions

• PBGC’s investment strategy may not be optimal. Participants debated 

PBGC’s investment strategy, and some of them felt that PBGC has not 

invested in an optimal portfolio of assets. It was suggested that PBGC 

invest more heavily in high-quality corporate bonds, since they offer a 

higher rate of return than Treasury bonds and are nearly as safe as 

investments. Furthermore, one person suggested that there is a conflict 

of interest in PBGC’s investment policy since the Secretary of the 

Treasury sits on PBGC’s board. Another participant said that PBGC’s 

investments in equities multiply its exposure to market risk because 

most large plans it insures are heavily invested in equities. In a stock 

market decline, the value of PBGC’s equity portfolio would fall at the 

same time that the assets of the plans it insures decline in value. Thus it 

would make more sense if PBGC were to sell short the Standard & 

Poor’s 500 stock index. It was also suggested that PBGC invest long in 

bonds of well-funded companies and sell short the bonds of poorly 

funded companies.
Page 28 GAO-05-578SP CG Forum on Pensions

Appendix I

Forum Agenda ApApenednxidexiIs

The Future of the Defined 

Benefit System and the 

PBGC

Thursday, February 3, 2005

Agenda

8:30 Registration, breakfast

9:00 Welcome and Introduction

David M. Walker, Comptroller General of the United States

9:15 Brief overviews of topics for breakout groups

• Pension funding rules

Ron Gebhardtsbauer, Senior Research Fellow,

 American Academy of Actuaries

• PBGC premiums and guarantees

Brad Belt, Executive Director, PBGC

• Pension transparency/accounting

David Zion, Director, Credit Suisse First Boston

9:30 Presentation of Administration’s Pension Reform Proposal

Ann L. Combs, Assistant Secretary, Employee Benefits Security

 Administration, Department of Labor

9:45 Break and move to discussion groups

• Breakout group discussions

• Strengthening funding rules

• Enhancing transparency of plan financial information
Appendix I

Forum Agenda

Page 29 GAO-05-578SP CG Forum on Pensions

Facilitators:

Doug Elliott, President, Center on Federal Financial Institutions

Olivia S. Mitchell, Professor of Insurance & Risk Management,

 The Wharton School, University of Pennsylvania

Dallas Salisbury, President, Employee Benefits Research Institute

11:30 Break / Pick up box lunches for working lunch

11:45 Reports from breakout groups and discussion

• Presentation of points of consensus and disagreement

• Plenary discussion based on reports from groups

Moderator: David M. Walker

12:45 Plenary Discussion of Broader Defined Benefit Plan Issues

• Presentation of pre-forum survey responses

• Discussion topics:

What is likely to be the future role of DB plans in providing retirement 

income for private sector workers?

To what extent should the federal government promote DB plans or 

should the government take a more neutral posture on private 

retirement plan design?

Was PBGC designed to fulfill a social insurance purpose, or act as a 

self-sustaining insurer?

How do we keep PBGC solvent without overburdening the employers 

remaining in the DB system?

Do we need a more explicit national policy to address structural 

weaknesses in certain industries, with large underfunded pensions?

How will/should Social Security and/or tax reform affect the DB plan 

system?
Appendix I

Forum Agenda

Page 30 GAO-05-578SP CG Forum on Pensions

Moderators: 

David M. Walker

Barbara D. Bovbjerg, Director, Education, Workforce, 

 and Income Security Issues, GAO

2:15 Wrap-up

2:30 Adjourn
Page 31 GAO-05-578SP CG Forum on Pensions

Appendix II

Forum Participants ApendxiI

The Future of the Defined 

Benefits System and the 

PBGC

Thursday, February 3, 2005

Moderator David M. Walker

Comptroller General of the United States

U.S. Government Accountability Office

Participants Eddie Adkins

Member, Employee Benefits Technical Resource Panel

American Institute of Certified Public Accountants

Joseph A. Applebaum

Chief Actuary, U.S. Government Accountability Office

Brad Belt

Executive Director, Pension Benefit Guaranty Corporation 

Richard Berner

Managing Director, Chief U.S. Economist, Morgan Stanley 

David S. Blitzstein

Director, Negotiated Benefits Department

United Food and Commercial Workers International Union

Teresa Bloom

Chief of Government Affairs

American Society of Pension Professionals and Actuaries 

Bill Bortz

Associate Benefits Tax Counsel, U.S. Department of the Treasury

Phyllis Borzi

Research Professor

The George Washington University School of Public Health

Barbara D. Bovbjerg

Director, Education, Workforce, and Income Security Issues

U.S. Government Accountability Office
Appendix II

Forum Participants

Page 32 GAO-05-578SP CG Forum on Pensions

Ann L. Combs

Assistant Secretary, Employee Benefits Security Administration

U.S. Department of Labor

Julia Lynn Coronado

Senior Research Associate, Watson Wyatt & Company

Randy G. DeFrehn

Executive Director, National Coordinating Committee for Multiemployer

Plans

John W. Ehrhardt

Principal & Consulting Actuary, Milliman, Inc.

Doug Elliott

President, Center on Federal Financial Institutions 

Karen Ferguson

Director, Pension Rights Center

Peter Fisher

Managing Director, Blackrock

Ron Gebhardtsbauer

Senior Pension Fellow, American Academy of Actuaries

Gary A. Glynn

President, US Steel and Carnegie Pension Fund

Carol D. Gold

Director, Employee Plans, Tax Exempt & Government Entities 

Internal Revenue Service

Jeremy Gold

Jeremy Gold Pensions 

Britt Harris

Chief Executive Officer, Bridgewater Associates, Inc.

Nell Hennessy

President, Fiduciary Counselors Inc.
Appendix II

Forum Participants

Page 33 GAO-05-578SP CG Forum on Pensions

Robert H. Herz

Chairman, Financial Accounting Standards Board

J. Mark Iwry

Nonresident Senior Fellow, The Brookings Institution

Dennis M. Kass

Chairman and CEO, Jennison Associates

Jim Klein

President, American Benefits Council

Betty Krikorian

Principal, BLK Consulting

James B. Lockhart

Deputy Commissioner, Social Security Administration

Olivia S. Mitchell

Professor of Insurance and Risk Management

The Wharton School, University of Pennsylvania

Michael Peskin

Managing Director, Morgan Stanley

Alan Reuther

Legislative Director, United Auto Workers

Elizabeth Robinson

Deputy Director, Congressional Budget Office

Dallas Salisbury

President, Employee Benefit Research Institute

Scott Sprinzen

Managing Director, Corporate and Government Ratings 

Standard & Poor’s

Carol Stacey

Chief Accountant, Division of Corporation Finance

U.S. Securities and Exchange Commission 
Appendix II

Forum Participants

Page 34 GAO-05-578SP CG Forum on Pensions

Gene Steuerle

Senior Fellow, Urban Institute

Mark J. Ugoretz

President, ERISA Industry Committee

Kim Walker

Chair, CIEBAQwest Asset Management CompanyCaptain 

Duane Woerth

President, Air Line Pilots Association

David Zion

Director, Credit Suisse First Boston
Page 35 GAO-05-578SP CG Forum on Pensions

Appendix III

Comptroller General’s Presentation Slides ApendxiI

Defined Benefit System

and the and the PBGC

The Future of the The Future of the

February 3, 2005
Appendix III

Comptroller General’s Presentation Slides

Page 36 GAO-05-578SP CG Forum on Pensions

Challenges Facing the DB System

1) Large accumulated deficits for many active plans, the 

PBGC, and the U.S. Government

2) Structural weaknesses in certain industries with large, 

underfunded DB plans

3) PBGC has limited control over its risks

4) Decline in DB plans

5) Changing demographics and workforce trends

6) Legal and regulatory uncertainties

7) Social Security reform initiatives

2
Appendix III

Comptroller General’s Presentation Slides

Page 37 GAO-05-578SP CG Forum on Pensions

Total Underfunding Single-Employer Program Plans

1980—2004*

0

50

100

150

200

250

300

350

400

450

500

Billions of dollars

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004*

PBGC placed on

GAO’s High-Risk List

Source: PBGC.

*Note: 2004 data is an estimate as of September 30, 2004. 3
Appendix III

Comptroller General’s Presentation Slides

Page 38 GAO-05-578SP CG Forum on Pensions

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Assets Liabilities Net Position

(23,305)

US dollars in millions

Financial Position of PBGC

Single-Employer Program, 1995—2004

Source: PBGC

4
Appendix III

Comptroller General’s Presentation Slides

Page 39 GAO-05-578SP CG Forum on Pensions

Composition of Spending as a Share of GDP

Under Baseline Extended

0

10

20

30

40

50

2003 2015 2030 2040

Fiscal year

Revenue

Social Security

Net Interest Medicare & Medicaid

All other spending

Percent of GDP

Notes: In addition to the expiration of tax cuts, revenue as a share of GDP increases through 2014 due to (1) real bracket creep, (2) more

taxpayers becoming subject to the AMT, and (3) increased revenue from tax-deferred retirement accounts. After 2014, revenue as a share of

GDP is held constant. Budgetary effects due to passage of the Working Families Tax Relief Act of 2004 are not reflected in this simulation.

Source: GAO’s September 2004 analysis. 5
Appendix III

Comptroller General’s Presentation Slides

Page 40 GAO-05-578SP CG Forum on Pensions

Composition of Spending as a Share of GDP

Assuming Discretionary Spending Grows with GDP after 2004

and All Expiring Tax Provisions are Extended

0

10

20

30

40

50

2003 2015 2030 2040

Fiscal year

Revenue

Percent of GDP

Social Security

Net Interest Medicare & Medicaid

All other spending

Notes: Although expiring tax provisions are extended, revenue as a share of GDP increases through 2014 due to (1) real

bracket creep, (2) more taxpayers becoming subject to the AMT, and (3) increased revenue from tax-deferred retirement

accounts. After 2014, revenue as a share of GDP is held constant.

Source: GAO’s September 2004 analysis. 6
Appendix III

Comptroller General’s Presentation Slides

Page 41 GAO-05-578SP CG Forum on Pensions

PBGC’s Risk is Concentrated 

in a Few Industries...

• Legacy costs in industries facing significant globalization,

deregulation, and competitive and technological changes and

challenges

– e.g., steel and air transportation sectors

• Potential domino effect of plan terminations

– Plan terminations by a few may encourage competitors to declare

bankruptcy to terminate their plans, too

• Raises Question: Should financial difficulties of certain industries,

including pension underfunding, be addressed separately from

wider efforts to reform the DB system?

7
Appendix III

Comptroller General’s Presentation Slides

Page 42 GAO-05-578SP CG Forum on Pensions

Exposure of Single-Employer Program

Source: PBGC

8
Appendix III

Comptroller General’s Presentation Slides

Page 43 GAO-05-578SP CG Forum on Pensions

...And Increasingly in Large Plans

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

0

20,000

40,000

60,000

80,000

100,000

120,000

% of participants in plans with 10,000 + participants

% of participants in plans with < 100 participants

Total Insured Plans

Total Plans Have Declined While Concentration

of Risk Has Increased

Total # 

DB Plans

Source: PBGC 9
Appendix III

Comptroller General’s Presentation Slides

Page 44 GAO-05-578SP CG Forum on Pensions

PBGC Cannot Limit Its Risk

• PBGC must insure all eligible plans, is subject

to certain “put option” risks, and is exposed to market 

risk from plan investments

• PBGC premiums do not reflect:

– Plan sponsor’s financial position

– Risk in plan’s investment portfolio

– Plan’s benefit structure

– Plan’s demographic profile

• PBGC is insurer of last resort

• PBGC’s revenue base is shrinking

10
Appendix III

Comptroller General’s Presentation Slides

Page 45 GAO-05-578SP CG Forum on Pensions

Employee Preference: DC vs. DB

• AAA/SOA survey conclusion: People tend to prefer the 

type of retirement plan in which they are already enrolled 

(most active participants are in DC plans today)

• The traditional DB system provides a certain and secure

benefit but may be ineffective for building retirement 

assets for those who change jobs frequently

– Vesting provisions

– Backloading of accruals

– Lack of portability

11
Appendix III

Comptroller General’s Presentation Slides

Page 46 GAO-05-578SP CG Forum on Pensions

0

10

20

30

40

50

60

70

30 to 34 40 to 44 50 to 54 60 to 64

Age

1983 1991 2004

Increasingly Mobile Labor Force

Percent of workers with tenure of 10+ years at current employer

Source: BLS (Employee Tenure Summary, 9/21/2004) 12
Appendix III

Comptroller General’s Presentation Slides

Page 47 GAO-05-578SP CG Forum on Pensions

Life Expectancy at 65 Years of Age

0.0

5.0

10.0

15.0

20.0

25.0

1970 1975 1980 1985 1990 1995 2000 2002

 Male Female

Retirees are Living Longer

Male Female

3.5

2.5

Source: National Center for Health Statistics
Appendix III

Comptroller General’s Presentation Slides

Page 48 GAO-05-578SP CG Forum on Pensions

Legal & Regulatory Uncertainties

• Employer concern over status of cash 

balance plans

• Employer concern over potential changes to:

– Pension funding rules

– PBGC premiums and other insurance reforms

– Pension accounting rules

• Lack of action by policymakers may drive more 

employers away from DB plans

14
Appendix III

Comptroller General’s Presentation Slides

Page 49 GAO-05-578SP CG Forum on Pensions

Social Security Reform Initiatives

• Social Security is not adequately funded to deliver on 

promised benefits beginning in 2042

• Social Security reform is being debated

• Social Security reform may involve modified benefits 

and individual accounts

• What implications will Social Security reform have on 

private pensions, in general, and on DB plans, in 

particular?

15
Appendix III

Comptroller General’s Presentation Slides

Page 50 GAO-05-578SP CG Forum on Pensions

Defined Benefit Plan Weaknesses Have 

Serious Implications for National 

Retirement Policy

• Current Issues:

– Protecting the benefits of workers in terminated plans

– Improving funding of DB plans going forward

– Addressing the PBGC’s financial exposure

• Broader Issues: What is the future role of DB plans in ensuring

retirement income security?

– Revitalized DB system vs. smoother transition to a

DC world

– Impact of Social Security reform on the private DB and DC 

system and personal savings arrangements

16
Appendix III

Comptroller General’s Presentation Slides

Page 51 GAO-05-578SP CG Forum on Pensions

Role of PBGC?

Social Insurance 

Program

• Encourage growth of 

private pension plans

• Cover all eligible plans

• Ability to exercise “put 

options” on the system

• Limited “risk-related” 

premiums

Financially Sound 

Insurer

• No federal budget 

appropriations

• Limited to borrowing $100M from

Treasury

• Limited ability to 

encourage funding 

and moderate losses

vs

17
Appendix III

Comptroller General’s Presentation Slides

Page 52 GAO-05-578SP CG Forum on Pensions

Other Broad Issues

• Is the pension insurance model still viable as the 

number of DB plans declines?

• Different theoretical frameworks for pension 

funding: actuarial vs. financial economics view

• Dealing with pension legacy costs in an open, 

deregulated, and dynamic economy

18
Appendix III

Comptroller General’s Presentation Slides

Page 53 GAO-05-578SP CG Forum on Pensions

Broad Goals for Reform 

of the DB System

• Improve transparency of plan financial 

information

• Provide incentives and safeguards for plan 

sponsors to improve plan funding

• Hold plan sponsors accountable for adequately 

funding their plans

19
Appendix III

Comptroller General’s Presentation Slides

Page 54 GAO-05-578SP CG Forum on Pensions

Potential Steps

Improve Transparency

• Disclose plan investments, funding status, and 

benefit guaranty limitations to plan participants 

and others

• Review and possibly revise pension accounting 

rules (FAS 87)

20
Appendix III

Comptroller General’s Presentation Slides

Page 55 GAO-05-578SP CG Forum on Pensions

Potential Steps

Modify Funding Rules and Premiums

• Strengthen funding rules applicable to poorly 

funded plans

• Raise full funding limitations

• Adjust pension premiums to reflect risk

21
Appendix III

Comptroller General’s Presentation Slides

Page 56 GAO-05-578SP CG Forum on Pensions

Potential Steps

Other Regulatory Steps

• Clarify legal status of cash balance plans

• Eliminate floor/offset arrangements with significant 

investment concentrations in employer securities

• Limit lump sums and benefit increases in underfunded 

plans

• Modify program guarantees (e.g., phase-in rules)

• Modify bankruptcy laws?

22
Page 57 GAO-05-578SP CG Forum on Pensions

Appendix IV

GAO Contacts and Staff Acknowledgments ApendxiIV

Contacts Barbara D. Bovbjerg, Director (202) 512-7215

Staff 

Acknowledgments

In addition to the contact above, David A. Eisenstadt, Benjamin A. 

Federlein, Jason S. Holsclaw, George A. Scott, and Derald L. Seid made 

important contributions to organizing this forum and producing this report.
Page 58 GAO-05-578SP CG Forum on Pensions

Related GAO Products

Private Pensions: Government Actions Could Improve the Timeliness 

and Content of Form 5500 Pension Information, GAO-05-491. 

Washington, D.C.: June 3, 2005

Private Pensions: Recent Experiences of Large Defined Benefit Plans 

Illustrate Weaknesses in Funding Rules, GAO-05-294. Washington, D.C.: 

May 31, 2005.

Pension Benefit Guaranty Corporation Structural Problems Limit 

Agency's Ability to Protect Itself from Risk, GAO-05-360T. Washington, 

D.C.: March 2, 2005.

Private Pensions: Airline Plans’ Underfunding Illustrates Broader 

Problems with the Defined Benefit Pension System. GAO-05-108T. 

Washington, D.C.: October 7, 2004.

Pension Plans: Additional Transparency and Other Actions Needed in 

Connection with Proxy Voting. GAO-04-749. Washington, D.C.: August 10, 

2004.

Private Pensions: Publicly Available Reports Provide Useful but Limited 

Information on Plans’ Financial Condition. GAO-04-395. Washington, 

D.C.: March 31, 2004.

Private Pensions: Timely and Accurate Information Is Needed to Identify 

and Track Frozen Defined Benefit Plans. GAO-04-200R. Washington, D.C.: 

December 17, 2003.

Pension Benefit Guaranty Corporation: Single-Employer Pension 

Insurance Program Faces Significant Long-Term Risks. GAO-04-90. 

Washington, D.C.: October 29, 2003.

Private Pensions: Changing Funding Rules and Enhancing Incentives 

Can Improve Plan Funding. GAO-04-176T. Washington, D.C.: October 29, 

2003.

Pension Benefit Guaranty Corporation: Long-Term Financing Risks to 

Single-Employer Insurance Program Highlight Need for Comprehensive 

Reform. GAO-04-150T. Washington, D.C.: October 14, 2003.
Related GAO Products

Page 59 GAO-05-578SP CG Forum on Pensions

Pension Benefit Guaranty Corporation: Single-Employer Pension 

Insurance Program Faces Significant Long-Term Risks. GAO-03-873T. 

Washington, D.C.: September 4, 2003.

Options to Encourage the Preservation of Pension and Retirement 

Savings: Phase 2. GAO-03-990SP. Washington, D.C.: July 29, 2003.

Private Pensions: Participants Need Information on Risks They Face in 

Managing Pension Assets at and during Retirement. GAO-03-810. 

Washington, D.C.: July 29, 2003.

Private Pensions: Process Needed to Monitor the Mandated Interest Rate 

for Pension Calculations. GAO-03-313. Washington, D.C.: February 27, 

2003.

Answers to Key Questions About Private Pension Plans. GAO-02-745SP. 

Washington, D.C.: September 18, 2002.

(130433)
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