The federal agency that stands behind your private pension is in financial trouble, and it's not going to have enough money to pay all the retirees it has promised to help.
Even though the woes of the little-known Pension Benefit Guaranty Corporation have been evident for several years, Congress will not act until 1984 at the earliest to solve the problem, perhaps because any financial squeeze is further in the future than that.
The PBGC insures certain private pensions so that workers do not lose their retirement income if their employer closes his door. Until Congress created the PBGC under the Employee Retirement Income Security Act of 1974, a worker's pension often evaporated if his employer went bankrupt.
The plan now insures some 32 million participants in defined benefit pension programs, the only type it insures. Under a defined benefit plan, a company promises to pay workers a fixed dollar amount when they reach retirement.
In return for an annual premium of $2.60 per employee covered (it's paid by the company), the PBGC will guarantee a defined benefit pension to a maximum of highest-paid years, whichever is lower. But this pension safety net has been frayed by a number of things, including:
* A shortfall in funds needed to pay pension benefits the PBGC is already obligated to provide.
The PBGC's latest estimate is that it is short some $333 million on the amount of funds it needs to service the 106,000 pensions it has been forced to pick up. ''And the situation has not improved'' since then, Edwin M. Jones, executive director of the PBGC, said in recent congressional testimony.
In fiscal year 1982 alone, losses from pension plan terminations were $220 million. The losses are caused by the gap between the funds which terminating pension plans have set aside and the amount employees have been promised and which PBGC must pick up. Just two plans accounted for almost $100 million of the losses. The PBGC is now predicting annual average losses of $120 million over the next five years.
* The threat that a number of financially shaky companies could close their doors, forcing the agency to raise large additional sums.
Mr. Jones notes that the agency's projected losses ''do not allow for any losses which may hit the system on account of the termination of unprecedentedly large plans.''
And the number of such plans is large.Alicia Munnell, an economist with the Federal Reserve Bank of Boston, estimated in 1980 that 22 ''financially burdened firms'' had unfunded pension liabilities of $4.4 billion but sat on only $1.1 billion of assets subject to PBGC seizure.
Some of these companies, but not all, are in better shape now that the recession is over. But only one large failure would be a severe blow to the insurance system. For example, International Harvester has unfunded pension liabilities that exceed $500 million.
* Signs that a growing number of companies that are not going out of business will use a loophole in the pension law to dump big pension obligations on the agency.
Under existing law a company can walk away from its pension plan if it pays the PBGC 30 percent of its net worth. Such a termination is attractive if the unfunded pension liability exceeds 30 percent of the company's net worth. A recent PBGC study found that over 40 percent of the agency's losses through fiscal 1982, some $232 million, resulted from companies that dropped their pension plans when they went into reorganization under bankruptcy law.
Many of these continued in business. Under its 30 percent claim on net worth, however, the PBGC recovered less than 2 percent of the unfunded amount the companies owed and PBGC will have to pay employees.
While the PBGC faces serious problems, the program is ''in no immediate danger,'' Mr. Jones contends.
''They are not on the verge of bankruptcy,'' adds Dallas Salisbury, president of the Employee Benefit Research Institute, a think tank on pension issues. ''But in a cash-flow sense they are a little worse off than last year.''
The lack of a crisis is one thing that has prevented congressional action. Then too, the requirement that pension-related bills travel through both labor and tax committees in each house, four panels in all, makes it ''very difficult to move a pension bill of any sort,'' says Steven Zaleznick, a legislative representative for the American Association of Retired People.
Both congressional and pension industry sources, however, say action may be possible next year, especially if Congress does not get bogged down dealing with budget deficits. One hopeful sign for action is that business and labor groups have finally been able to agree on the broad outlines of a solution.
The legislation is likely to follow the outlines of a bill that has cleared the House Labor Management Relations Subcommittee, headed by Rep. William L. Clay (D) of Missouri.
That bill would raise the annual PBGC insurance premium to $6, from the current $2.60. It would also require a company that terminated an underfunded pension plan but stayed in business to pay off the underfunding completely. And the bill would also make a corporate parent liable for the underfunded liabilities of units it spun off for up to 10 years.