Beginning in January, terminating defined contribution plans will have the option of transferring missing participants benefits to PBGC
instead of establishing an IRA at a financial institution.
Comments may be submitted to the PBGC
on or before November 21.
Under the new law, PBGC
is authorized to promote mergers of critical and declining plans into more healthy plans by providing financial assistance, if a merger will reduce PBGC
's potential liability.
Last spring, then-agency Director Josh Gotbaum said it has done so "in ways that both underfunds PBGC
and is convincing some companies they shouldn't offer pensions at all.
She also questioned whether the increases were in the best interests of the PBGC
While the Federal Reserve Board's low-interest rate policy "is appropriately designed to help spur economic recovery," Klein added, "it has the perverse effect of undervaluing pension assets, understating the funding levels of employer-sponsored plans and the financial position of the PBGC
director Joshua Gotbaum has pushed back against any attempt by American Airlines to terminate its pension plans, claiming it would saddle his agency with $17 billion in benefit obligations.
It is also likely that creditors including the bondholders, the PBGC
and vendors will own a significant stake in a reorganized American Airlines, or in the surviving entity in any American Airlines merger.
When an insured pension plan terminates, the PBGC
assumes the plan's assets as well as the responsibility for paying promised benefits up to a cap set in law.
Over the past several years, however, the PBGC
has struggled to settle on an investment policy for its millions of dollars in assets.
For details regarding the termination of a plan by the PBGC
, see Chapter XII.
Global Banking News-30 December 2008-BlackRock, Goldman and JP Morgan to manage PBGC
funds(C)2008 ENPublishing - http://www.