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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Pension Insurer Lost $4 Billion This Year

The Pension Benefit Guarantee Corp., which insures pensions earned by workers under private-sector benefit plans, lost more than $4 billion during its 2008 fiscal year, which ended Sept. 30.

For the calendar year, from January to September, the PBGC posted an overall loss of $5 billion, losing $3.9 billion from stocks and $1.1 billion from fixed investments.

Charles Millard, director of the PBGC, is testifying right now before the House Committee on Education and Labor. He said that, "despite the current economic slowdown, PBGC will be able to meet its benefit payment obligations for a number of years to come."

Millions of workers are worried about their retirement benefits. Many 401(k) funds have shrunk substantially, and stock portfolios earmarked for retirement are quickly dwindling.

But the PBGC's returns are falling fast. The total return on investments was 7.2 percent in 2007, generating $4.76 billion in investment income. WIth a loss of more than $4 billion in 2008, PBGC expects return on investments to in the range of -6 to -7 percent, Millard said in his prepared opening testimony.

Today PBGC insures almost 44 million workers, retirees and beneficiaries in more than 30,000 plans. Millard said most companies that sponsor retirement benefits are financially healthy and "should be capable of meeting their pension obligations to their workers."

However, hundreds of thousands of people work for companies that have underfunded pension plans, and that could worsen as the economy continues to weaken.

--Kim Hart

By Kim Hart  |  October 24, 2008; 12:15 PM ET
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