By Susan Cornwell
WASHINGTON, July 23 (Reuters) - U.S. Congressional auditors on Wednesday placed the agency that bails out failing company pension plans on a list of "high risk" programs, saying more pension losses loom for corporate America.
The General Accounting Office announcement highlighted concern over the health of America's traditional corporate pension plans and the agency that insures them -- the Pension Benefit Guaranty Corporation (PBGC).
Plans that promise a specific payout at retirement are already $300 billion underfunded and the pension agency is running a $5.4 billion deficit.
"The degree of underfunding in the private pension system has increased dramatically, and additional severe losses may be on the horizon," the GAO said in a statement.
The PBGC estimated recently that financially weak firms, including some airlines, are sponsoring plans with over $35 billion in unfunded benefits. These "ultimately might become program losses," the GAO said.
The announcement prompted calls for action from both the Bush administration and Capitol Hill.
Officials and lawmakers were already wrangling over the best way to address the nation's pension woes.
A bipartisan proposal to provide temporary relief to companies through a change in the method for valuing pension plans cleared a House committee last week.
Rep. John Boehner, chairman of the Education and Workforce committee, announced he would hold hearings in September to examine the health of the pension agency, which is funded by premiums from companies whose plans it insures.
"Today's announcement confirms that the alarming trend of underfunded defined benefit pension plans threatens the retirement security of millions of workers who rely on the safe and secure benefits that these pension plans provide," said Boehner, a Republican from Ohio.
The PBGC insures the pensions of 44 million Americans; 34 million of them are backed by its single-employer pension insurance program, the program the GAO designated "high-risk."
The Bush administration said the move underscored the worries it had expressed about the financial integrity of America's traditional corporate pension plans, the kind that pay a monthly benefit at retirement.
"Although the system can meet its obligations in the near term, it is clear that comprehensive reform of our pension funding rules is needed," said Labor Secretary Elaine Chao, chairman of the pension agency's board of directors.