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Underfunded Pensions Spikes

Lax reporting rules created by Congress, coupled with corporate America's eagerness to take advantage, have left millions of workers' and retirees' pension plans underfunded without their knowledge, senators were told Tuesday.

United Airlines may have set an unsavory example for others in the airline industry, Senate Finance Committee members were told during a hearing on Capitol Hill. After declaring bankruptcy in 2002, the airline won court approval last month to shed $9 billion in pension obligations — shifting responsibility to the federal Pension Benefit Guaranty Corp.

That has contributed to a $23.3 billion deficit at the agency, which insures private pension plans, and triggered fears of another massive taxpayer bailout similar to the 1980s S&L crisis. The agency's head told senators the number of pension plans that are more than $50 million short of promised benefit levels has risen from 221 in 2000 to 1,108 in 2004. Those funds have an average of just 69 percent of promised benefits on hand.

About 34 million people — roughly 20 percent of the nation's work force — expect to receive payments from their employers through defined benefit plans.

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