U.S. Insurer of Pensions Says Its Deficit Has Soared
By MARY WILLIAMS WALSH

Published: January 16, 2004

The federal agency that insures pension plans said yesterday that its deficit had grown from $3.6 billion to $11.2 billion in just a year and that it would try to deal with the escalating problem by overhauling its own investments, among other measures.

The agency, the Pension Benefit Guaranty Corporation, said that two consecutive years of record failures by corporate pension plans and continuing adverse market conditions left it with a shortfall much greater than a year earlier, which had been the previous low point in the agency's 30-year history.

People briefed on the new investment plan say the agency intends to reduce its risk in the stock market by investing in assets - including bonds and stock-like instruments - that will mature when it must make payments to retirees. Steven A. Kandarian, the executive director who will soon leave the agency, said that the board had recently voted to change the investment policy but declined to provide details. [P6: Diversification? What a revolutionary idea!]