IN SOME RESPECTS THE defined-benefit (DB) pension system in the United
States is remarkably successful. In 2001 (the latest year for which data
from Form 5500 filings are available), roughly $130 billion was paid in
benefits to 11 million recipients. DB plans in the aggregate held an estimated
$1.8 trillion in assets as security against future benefit payments, and
in so doing made a large pool of capital available for efficient deployment
through financial markets.1 Over the thirty-plus years since the founding
of the Pension Benefit Guaranty Corporation (PBGC), the government corporation
that insures private sector DB plans, more than 168,000 plans have
been terminated, but only in about 3,500 of those cases has the PBGC had
to step in as trustee; in the other roughly 165,000 cases, plans had sufficient
assets on hand to meet accrued obligations.2 Even the often-cited $23 billion
negative net position on the PBGC’s balance sheet must be viewed in
context, as it represents only a small fraction of total benefits paid since
the founding of the insurance program in 1974.
