The crisis in America’s single-employer defined benefit pension plans

Underfunding in our pension system: a growing systemic risk

Saving the Pension Benefit Guaranty Corporation from the political process

By late 2009, the deficit in the pension insurance programs of the Pension Benefit Guaranty Corporation (PBGC) had roughly doubled over the course of a single year, from less than $11 billion to more than $22 billion, marking the eighth consecutive year that PBGC’s outlook remained firmly in the red. The currently projected deficit of the PBGC, as well as underfunding in the pension system generally, embodies a significant national fiscal problem, with no clear path to allocating the costs of its resolution.

Pension Wise: Confronting Employer Pension Underfunding—And Sparing Taxpayers the Next Bailout examines the current crisis in our single-employer defined benefit pension plans and outlines principles to undergird a solution. Charles Blahous details both the technical reasons behind pension plan underfunding—in particular, persistent and often deliberate inaccuracy in measurement—and the political considerations that prioritize the near-term financial demands of employers and pension beneficiaries over the long-term fiscal health of the pension insurance system. The author also presents the fundamental value judgments concerning who should bear the cost of filling the PBGC shortfall and to what extent the risk of financing pension benefits should continue to be shifted away from plan sponsors, either to other employers or to taxpayers at large. Although acknowledging that there are no obviously correct answers, he suggests a range of reforms to improve the pension insurance system’s operation and to resolve its projected shortfall.

Charles Blahous, one of the nation’s foremost retirement security experts, serves as one of two public trustees for the Social Security and Medicare programs. Blahous served as deputy director of President George W. Bush’s National Economic Council and, before that, as executive director of president’s bipartisan Social Security Commission and special assistant for economic policy. 

One of the nation's foremost retirement policy experts, Chuck Blahous serves as one of two public trustees for the Social Security and Medicare programs. Blahous served as deputy director of President George W. Bush's National Economic Council, and before that as executive director of the president's bipartisan Social Security Commission and as Special Assistant for Economic Policy. Blahous previously served as legislative and policy director for U.S. Senators Alan Simpson and Judd Gregg. Blahous's career in public ser vice began when he was named the American Physical Society's 1989–90 Congressional Science Fellow. He lives in Rockville, Maryland, with his wife and daughter.