Posted 8/1/2004
WASHINGTON -- Looming insolvency at pension plans run by bankrupt United Airlines and other struggling companies could overwhelm the U.S. agency that insures plans and force it to seek a taxpayer bailout, the agency's former head says.
The Pension Benefit Guaranty Corp. expressed alarm last week after United, a unit of UAL Corp., said it would stop contributing to its pension plans while under bankruptcy protection, raising the specter of default.
'The PBGC wasn't designed to withstand the level of underfunding that we are now witnessing in the system,' former PBGC executive director Steve Kandarian, who stepped down in February, said in a telephone interview."
"The pension agency already has a deficit of $9.7 billion. A decision by United to scrap its pension plans, leaving the PBGC to pay benefits, would add another $5 billion to its red ink, the agency says, potentially its biggest hit ever."
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