A weak economy and the failed pension plans of several bankrupt companies have increased the financial burden of the government agency that insures pensions for one in seven Americans. The Pension Benefit Guaranty Corporation (PBGC) insures private sector pension plans and takes over retirement benefit payouts when traditional pensions fail. Unfortunately, the little-known federal agency is reporting a record $26 billion deficit for the fiscal year ending in late September. The director of the agency has said that they may "eventually" need a bailout from taxpayers.
Louise Story, Wall Street and finance reporter for The New York Times, discusses her breaking story on a new investigation by the Securities and Exchange Comission against the California Public Employees' Retirement System, known as Calpers. During the financial crisis, the fund lost a significant portion of its portfolio, leaving the California on shaky financial ground.
Earlier this year, the Pew Center released a study estimating that there is a one trillion dollar gap between what states had promised workers in retiree pensions and benefits, and the money they currently had to pay for it all.
In an attempt to remedy the gap, lawmakers in Colorado, Minnesota and South Dakota have voted to reduce annual cost-of-living increases on pensions. Not surprisingly, retirees in each state have filed lawsuits.
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The show is a co-production of WNYC Radio and Public Radio International, in collaboration with The BBC World Service, New York Times Radio and WGBH Boston.
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