November 15, 2011 / 6:01 PM / 6 years ago

US pension agency deficit largest ever at $26 bln

WASHINGTON, Nov 15 (Reuters) - The U.S. agency that insures corporate pensions reported a record annual deficit of $26 billion on Tuesday with its potential exposure to financially weak companies also on the rise in a tough economy.

The Pension Benefit Guaranty Corp said the shortfall — the difference between assets on hand and obligations it owes retired workers — grew by $3 billion in the fiscal year that ended Sept. 30.

Most of the deficit was in the account for pensions once run by individual corporations — or single-employer plans. Those traditional plans were structured to pay a set annual amount to retirees.

PBGC, which covers 44 million workers and retirees in mainly single-employer plans, said its potential exposure to financially weak companies grew by $57 billion to $227 billion from the year-ago period.

The agency did not identify specific industries or companies.

In 2011, PBGC paid nearly $5.5 billion in benefits to 873,000 retirees and assumed responsibility for 152 underfunded plans.

Lower interest rates used to measure benefit payments was a factor for the higher deficit last year, the agency said.

PBGC has $81 billion in assets on hand to cover obligations, the bulk of which are benefits to be paid over many years.

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