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The Top 50—Revisited

Would public disclosure of pension underfunding be useful?

June 1, 2005


Ron J. Feldman Vice President
Daniel Rozycki Associate Economist
The Top 50—Revisited

Increasing the volume and accuracy of public information on insured pension underfunding offers one tool to prevent future crises for the Pension Benefit Guaranty Corp. These disclosures could pressure Congress and the PBGC to take action before a plan is terminated. And, in fact, one way the PBGC followed such a policy in the past was by publishing an annual list of the 50 companies with the largest amounts of pension underfunding, gathered through public data and company responses.

Employer representatives have expressed concern about the accuracy of such disclosures. “The PBGC used to issue an ‘Iffy 50’ list of companies with the largest underfunding in one or more pension plans, although many were actually extremely well funded,” wrote James Klein, president of the American Benefits Council, in a 2003 USA Today commentary. “Every year when the list came out, nervous workers and retirees flooded their human resources offices with calls fearful that their plan was terminating or was inadequately funded.” In fact, a company often sponsors multiple plans that are independently administered, so that even when one plan is terminated, other pensions are unaffected.

In 1997, the PBGC discontinued publication of the list. With the reporting requirements of the Retirement Protection Act of 1994 fully implemented, the PBGC saw the process as superfluous. The law’s expanded corporate reporting requirements were expected to improve the agency’s ability to monitor companies with underfunded pension plans. In announcing the elimination of the list, then-Executive Director David Strauss noted that “It is clear that the combination of legislative reforms and PBGC’s active enforcement effort are having an impact on pension funding and should result in gradual and continued improvement in funding levels over the next 10 to 15 years.”

But what was the record of the Top 50 list as an indicator of future default? Five of the top 10 on the last list published by the PBGC (and nine of the top 50) have since defaulted on their plans and handed them over to the PBGC—a process referred to as a “distress termination.” Although estimates of underfunding are sensitive to changes in interest rates or stock returns and difficult to compare over time, the gross liability assumed by the PBGC for these terminated plans is greater than the agency’s total 1996 liabilities of this type, even adjusted for inflation.

No one would argue that spiking the Top 50 list led to the current solvency crisis, but the record suggests that public disclosure along these lines could play a valuable role in the future.

Distress Terminations at Companies on the Top 50 List

Ranking on 1996 Top 50 List
Year(s) of Plan Termination
PBGC Liability for Assumed Plans


Starfire Holding Co.1


$700 million


LTV Corp.


$1,900 million


Anchor Glass Container Corp.


$219 million


Kaiser Aluminum Corp.


$555 million


Bethlehem Steel Corp.


$3,700 million


National Steel Corp.


$912 million


Foxmeyer Health Corp2


$188 million


US Airways Group, Inc.


$2,900 million


UAL Corp.


$6,600 million




$17,674 million

Source: This table is based on the Top 50 Companies with the Largest Unfunded Pension Liability (1996) from table B-5 of the Pension Insurance Data Book 1996. Estimates of total liability were assembled from press releases on Where not available in press releases, estimates were obtained by contacting the PBGC. By no means, however, is this table an official PBGC release; it is a Minneapolis Fed analysis.

1 Reflects TWA pension plans that were terminated by Pichin Corp., a subsidiary of the Icahn Holding Corp. (formerly known as Starfire).

2 Foxmeyer Health Corp., originally a subsidiary of National Steel, had assumed the pension liabilities of a Weirton Steel plan at the time of publication of the 1996 Top 50 list. This pension plan was later assumed by National Steel and was terminated together with other National Steel plans. The Foxmeyer liability figure reflects the Weirton Steel plan that was later terminated while controlled by National Steel. This amount has been subtracted from the National Steel total.

3 This table estimates the total PBGC liability for unfunded, guaranteed benefits. In some cases, PBGC recovers a portion of the total liability by reaching agreement with the plan sponsor or through bankruptcy proceedings, and may face a lesser net liability.

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