问答题Directions: Read the following passages and then answer IN
COMPLETE SENTENCES the questions which follow each passage. There's a time bomb ticking in America's private pension
system. Although the airline industry's hefty $32 billion in unfunded pensions
has captured headlines in recent months, the problem extends much further.
Automotive companies, for instance, have about $60 billion in pension
shortfalls. The Pension Benefit Guaranty Corp. says U.S. pension underfunding at
large companies grew 27% last year, to $354 billion. The deficit for all
companies was a staggering $450 billion. Compare that with a total shortfall of
less than $50 billion in 2000, and it's clear that this fast-growing crisis must
be addressed while the PBGC—already facing a $23 billion deficit after taking
over terminated plans from the likes of Bethlehem Steel and United Airlines—can
still shoulder the burden. If this all sounds a bit familiar,
it should. In the 1980s, the Federal Savings & Loan Insurance Corp., the
government-sponsored insurance fund for the thrift industry, watched as the
nation's S&Ls fell victim to a toxic brew of skyrocketing interest rates,
lax oversight, imprudent lending, and outright fraud. The feds stepped in and
the government eventually led a $223 billion (in today's dollars) bailout of the
industry. One reason the taxpayer tab was so high was that the government was
slow to react. That's why Washington should get serious about a pension fix
now. First, Congress must bring some sanity to the bedlam of
pension contribution rules. Now, companies can be technically current in funding
while owing billions in shortfalls, and they can increase benefits even when
they haven't funded existing promises. For example, Bethlehem Steel's pension
plan was 84% funded on a current-liability basis, but only 45% funded when all
termination costs were tallied—with a shortfall of $4.3 billion when the company
finally handed its plan over to the PBGC in 2002. Yet because of various
loopholes, Bethlehem wasn't required to make any catch-up contributions for
years prior to its plan termination and even avoided making any cash
contributions in the three years before it ditched the plan.
United Airlines' record was even worse. It wasn't required to make cash
contributions to its pilot pension plan from 2000 to 2004, even though that plan
was $3 billion in arrears. United's employee plans were technically fully funded
on a current account basis, but only 41% funded at termination." United dumped
all its plans on the PBGC earlier this spring for a total shortfall of $9.8
billion—of which the PBGC is on the hook to pay $6.6 billion. To prevent similar
abuse of the system, rules are needed that extend tax incentives to companies
that prefund pensions when they are financially flush but set tougher timetables
for making up shortfalls later. Second, Congress needs to
sharply increase the premiums the PBGC can charge underfunded plans. Today there
is little difference between what is paid by companies that have adequately
funded their plans and those that haven't. Instead, the PBGC should be allowed
to charge higher premiums to companies with shaky finances or large unfunded
liabilities. Risk-adjusted pricing is already commonplace in financial products
such as mortgages, where buyers who put up higher downpayments on their homes
get cheaper rates, and car insurance, where bad drivers pay more. It's also used
by federal bank insurers for setting deposit insurance rates. So applying
risk-based pricing to pension insurance premiums isn't exactly revolutionary.
But it's unpopular with many weak companies and with labor groups that fear
employers will simply stop offering defined-benefit pensions if premiums get
higher. Yet that argument may already be academic. The number
of workers covered by such pensions has been dropping for at least 20 years as
employers have shifted toward often cheaper 401 (k)-type plans. Thus, Congress'
first priority should be to force companies to fully fund their pensions over
the next few years—lessening the hit taxpayers could shoulder if the PBGC
becomes overwhelmed with underfunded plans later. Finally,
Congress must act to ensure that all workers receive timely, understandable
information detailing whether their pension plans are adequately funded. Under
current laws, the PBGC receives financial information on the most risky
underfunded plans fairly early, but cannot disclose it. Instead, companies can
take up to 30 months to report plan finances publicly—often too late for workers
to press for more responsible pension management. Greater transparency will also
give employees a reality check when companies offer meaningless benefits that
they can't realistically afford. Indeed, the sooner more light is cast on the
festering pension mess, the better for workers—and taxpayers.
问答题
What is the "fast growing crisis" in America's pension system? How serious is the situation? Give some examples.
【正确答案】The "fast growing crisis" refers to the situation of huge amounts of unfunded pensions. In four years' time, the "deficit" of pension underfunding for all companies in America has increased nine times, growing from $50 billion in 2000 to $450 billion in 2004, which has put great pressure on PBGC.
问答题
What is "risk-adjusted pricing"? Why does the author say that "applying risk-based pricing to pension insurance premiums isn't exactly revolutionary" (para. 5)?
【正确答案】"Risk-adjusted pricing" refers to the practice of financial pricing based on the probability of risks. The author says it isn't exactly "revolutionary" because, as he points out, it has already been practiced in a number of financial products, such as mortgages and car insurance.
问答题
Give a brief summary of the proposals about a pension fix given by the author.
【正确答案】According to the author, congress must revise pension contribution rules and increase the premiums when companies have not "adequately" funded pension plans. On the other hand, congress must ensure all workers receive "timely, understandable information" about whether their pension plans are timely funded.