Opportunity in UAL.(Editorial)

Pensions & Investments, May, 2005

The time has come for Congress to make hard decisions concerning the Pension Benefit Guaranty Corp. The best decision for taxpayers, and, ultimately all employers and employees, would be to freeze the PBGC's obligations at their present level. That is, Congress should say the PBGC will guarantee only the pension benefits of pension plans it has already taken over.

When the last beneficiary of those plans dies, the PBGC will cease to exist. This would get the government out from under a burden it should never have accepted to begin with - providing insurance that no private insurance company would touch. Congress should not have touched it either. That's because insuring pension liabilities exposes the government to "moral hazard'' risk. Moral hazard refers...