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Workers will now know if pension plan is lacking

Large companies that do not have enough money in their pension plans to pay promised benefits must send their workers letters this year disclosing the shortfall and the potential consequences.

The federal rule, issued this week by the Pension Benefit Guaranty Corp., affects 4.3-million workers at 1,500 large companies whose pension plans have less than 90 percent of the money needed to pay promised benefits.

General Motors Corp., the largest company on the agency's list of 50 companies with the biggest pension liability, said it did not expect to send the letters to its 600,000 hourly workers.

"We believe that by Sept. 30, the end of our pension plan year, we will meet the 90 percent requirement," GM spokeswoman Toni Simonetti said.

At its worst point, the end of 1993, GM's pension plan was $22.4-billion short of the $71-billion then needed, but, Ms. Simonetti said, the gap has been whittled down to about $5-billion. She attributed that to higher interest rates and to company contributions this year of $3.3-billion in cash plus $6.3-billion worth of GM Class E stock.

Employers can avoid sending the notices if, before the deadline for mailing the letters, they contribute enough money to their plans to meet the 90 percent financing threshold.

Martin Slate, the executive director of the pension agency, said he expected that some companies would put money into their funds to avoid having to send the letters.

"Any effort by employers to better fund their pension plans would be heartening and good for workers," Slate said.

The need for many of the letters was questioned by Kathleen P. Utgoff, who was the agency's executive director during President Reagan's second term.

"Most pension plans are very healthy, but that was true a year ago," said Ms. Utgoff, an economist who represents some of the large companies on the list.

She said that many healthy pension plans appear underfunded because the agency "uses the wrong interest rate and the wrong mortality table."

Ms. Utgoff contends that tables used by other government agencies are more reliable. Such tables would produce more favorable results for many large companies in projecting their pension liabilities.

Secretary of Labor Robert B. Reich, who is chairman of the pension board, characterized the letters as useful consumer information.

The letters must tell employees how well their plans meet pension promises and how much they would get from the agency if their plans failed.

Most affected employers must mail the letters by Dec. 15.

Four thousand employers with fewer than 100 workers each must send similar notices next year to about 200,000 workers unless the employer can reach the 90 percent threshold.

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