evenhanded comparisons ... true honest brokering, without a hint of dogma ... refreshingly understandable - New York Times

Research Programs

New York Times : An Outsider's Grim Prognosis for Pension Agency

Mary Walsh

Tuesday September 14th 2004; Page C1

... An independent analysis of the Pension Benefit Guaranty Corporation, made available to The New York Times, suggests that the agency will go broke in 2020 if current financial conditions persist. Even if things improve, so that fewer pension funds fail than in recent years, the agency is still expected to run out of money by 2023.

''Any private insurance company under those circumstances would be shut down,'' said Douglas J. Elliott, the president of the Center on Federal Financial Institutions and the author of the new study. ...

He ran various possibilities through his model and estimated the cost of doing nothing until the cash ran out and of making various fixes. One of the cheapest ways to revive the agency, he determined, would be to pump in $14 billion right now.

One of the costliest outcomes would occur if airlines defaulted on their pension plans without any compensatory action. That would leave the agency penniless by 2018, Mr. Elliott's model predicted, and Congress would have to authorize a $109 billion bailout to resurrect it. ...

Mr. Elliott, who also put price tags on various solutions, said that he was not advocating one type of rescue or the other, but merely trying to predict the costs.

''What I really want to do is get the debate going,'' he said. ...

A spokesman for the pension agency declined to comment in detail on Mr. Elliott's projections, saying that the agency uses a different type of statistical modeling and does not try to make forecasts beyond 10 years into the future. He did say, however, that Mr. Elliott's forecasts are generally consistent with the agency's own. ...

In an interview, Mr. Elliott said that his extensive work with insurance companies when he was an investment banker gives him the experience needed to model the pension agency's future cash flows.

''I've literally done hundreds of models of insurance companies,'' he said. ''It was my work.''

Having reached a point in his career when closing deals and making money no longer held much fascination, he said, he began to want to have a voice in public policy. ''I probably talked to about 100 people in Washington,'' he said. ''It started sinking in to me, the huge nature of the government's role as a lender and an insurer.'' ...

Risk Magazine : Rethinking Policy

Duncan Wood

July 2005

... "Right now, there's a great deal of concern that the PBGC is going to be the next S&L crisis - that it will require a taxpayer bail-out," says Douglas Elliott, president of the Center on Federal Financial Institutions (Coffi), a Washington-based think-tank. ...

"Normally, if you walk away from billions of dollars in obligations, someone is going to be extremely annoyed with you," says Coffi's Elliott. "That's mitigated in this case because the PBGC steps forward. If you're in financial distress and there's a process whereby you can transfer some of your liabilities to a government agency, that's very attractive." ...

It's this long-term threat to the PBGC's ability to act as a pension system backstop that has lit a fire under politicians in the US. Coffi's Elliott says he spends a lot of time talking to members of Congress and their staff. He feels that pension reform "has become a hot political issue. We need a policy response now. And there will be one. There will be pension legislation this year." But what will it look like? ...

Coffi's Elliott says the United Airlines default has made it harder for lobbyists to operate. "This is an area where the lobbyists normally get everything they want, but all the publicity about United has meant many constituents are worried that they won't receive a full pension. Any time you get the general public involved, lobbying becomes much less effective." ...

Global Pensions : Who will pay for past mistakes?

Douglas Elliott

June 2005; Page 14

A short editorial piece written, by Douglas Elliott, appearing in Global Pensions Magazine.

The New Republic : Pension Reform Forum

Noam Scheiber - moderator

Douglas Elliott, Kent Smetters, David Certner, Christian Weller - speakers

Thursday June 9th 2005

Business Week : Up To His Neck In The Risk Pool

Amy Borrus

Monday June 6th 2005; Page 109

... It turns out that the PBGC is just one pool in a vast sea of risks that Washington bears. Over the years, Congress has created one program after another to insure individuals and businesses against a panoply of hazards, from natural disasters to bank failures to nuclear reactor meltdowns (table, page 111). Surprisingly, the federal government doesn't tote up the potential price of all these promises. But collectively they add up to an astounding $6 trillion-plus in possible claims, according to the Center on Federal Financial Institutions ( COFFI) , a Washington think tank. ...

Federal budgeting math exacerbates the problem, since it often masks the true cost of insurance to taxpayers. The national budget shows annual cash flows from premiums and payouts on claims, with no money set aside for future liabilities. That makes it difficult to see the total long-term obligations Congress has assumed. ``The government often gives away free or cheap insurance and acts as if there is no cost until we cut the check,'' says COFFI President Douglas J. Elliott. ...

 

New York Times: What's Online - Here Comes The Cram Down

Dan Mitchell

Saturday May 28th 2005; Page 5

... The nonpartisan Center on Federal Financial Institutions (www.coffi.org) provides a wealth of information on pension plans, including evenhanded comparisons of both old-style plans and personal-account plans like the 401(k).

The center's home page features about a dozen in-depth studies of various aspects of the pension problem, as well as transcripts of forums on the matter. This is true honest brokering, without a hint of dogma or advocacy for anything other than understanding and solving the problem.

The collection of documents explain, in refreshingly understandable language and helpful charts and graphs, how we got into this mess, and analyzes various proposals for getting out of it.

 

Los Angeles Times : Fixes for Retirees' Safety Net Weighed

Jonathan Peterson

Monday May 16th 2005; Page C1

... As a result, the agency's deficit -- the amount by which the value of the benefits that it owes retirees exceeds the investments it holds -- has been growing. The nonprofit Center on Federal Financial Institutions, a nonpartisan research group, estimates the agency could go belly up by 2021. ...

As a result, the goals of keeping pension sponsors happy and keeping pensions sound are not easily achieved.

"There's probably no way to completely achieve both objectives," said Douglas J. Elliott, president of the Center on Federal Financial Institutions. "You're going to have to make some choices between them." ...

Denver Post : Despite gains, United loses ground Worker morale takes nose dive

Kelly Yamanouchi

Sunday May 15th 2005; Page K1

... "It's quite obvious it's significantly harming their labor relations," said Doug Elliott, president of the Center on Federal Financial Institutions, a nonpartisan Washington-based nonprofit that speaks out on federal lending and insurance policy. ...

"Right now they're fighting for their life," Elliott said, so employees may look at United's legal maneuvers as one of the many steps the company had to take.

But, he added, "I'm sure some people will feel scarred for life." ...

Wall Street Journal : Looking to Keep Pension Agency Solvent, Congress Fears Backlash

Michael Schroeder

Thursday May 12th 2005; Page A1

... Some analysts warn that a bailout of the PBGC funded by taxpayers could be on the horizon. Without major changes, such as higher premiums, and assuming $2.7 billion in new unfunded pension plans each year, the agency will run out of cash and rack up a $78 billion deficit in 16 years, according to a new analysis by the Center on Federal Financial Institutions , a Washington think tank. ...

USA Today : Administration, business seeking pension remedies

Edward Iwata

Thursday May 12th 2005; Page 3B

... Administration officials have said the long-term solvency of the PBGC pension-insurance program is at stake, while the Center on Federal Financial Institutions, a non-partisan public policy firm, predicts the PBGC could run out of money in a decade.

Douglas Elliott, founder of the Center, says the Bush administration clearly would like to see the PGBC stay afloat without a costly public bailout. In the 1990s, the government saved the scandal-plagued savings-and-loan industry at a heavy cost to taxpayers.

But he says pension plans also must stay cheap and flexible enough for cash-strapped companies to keep offering them.

"It's a very delicate balancing act," Elliott says, "and you may not be able to do both."

Washington Post : New Strains On Safety Net For Pensions

Albert Crenshaw

Thursday May 12th 2005; Page E1

... However, a model by the Center on Federal Financial Institutions, a group that studies government insurance and lending, predicted last fall that the agency would run out of cash about 2020. ...

PBS: Newshour with Jim Lehrer

May 11th 2005

A discussion about UAL and the PBGC.

Financial Times: Deficit Fear For Pensions Safety Net

Norma Cohen

Wednesday April 20th 2005; Page 5

... But Douglas Elliott, head of the Washington-based Center on Federal Financial Institutions, a think-tank that looks at US government guarantee programmes, cautioned that even a large deficit at the PPF did not mean it was unable to pay benefits.

Indeed Coffi, which has analysed the US's Pension Benefit Guaranty Corporation, has concluded that even with its hefty Dollars 23bn (Pounds 14bn) deficit, the scheme was likely to be able to pay benefits in full at least until 2020.

"The difference is that insolvency is an accounting measure of whether over the entire future life of the scheme there is enough money to pay promised benefits indefinitely," Mr Elliott said. He noted that every time a scheme collapsed into the PBGC - upon which the PPF is modelled - it brought assets in with it and extended the time over which benefits could be paid.

"When they took on the United Airlines pension fund, it had enough assets to pay benefits for 10 years," Mr Elliott said. "The problem is that people persist in living for more than 10 years." But the difference between accounting insolvency and a cash flow crunch meant politicians could ignore the problems building up at the PPF for a very long time, as they did at the PBGC, he said. ...

 

U.S. News And World Report : Pension Tension

Kim Clark

Monday January 24th 2005; Page 42

... But Douglas Elliott, head of the Washington-based Center on Federal Financial Institutions, a think-tank that looks at US government guarantee programmes, cautioned that even a large deficit at the PPF did not mean it was unable to pay benefits.

Indeed Coffi, which has analysed the US's Pension Benefit Guaranty Corporation, has concluded that even with its hefty Dollars 23bn (Pounds 14bn) deficit, the scheme was likely to be able to pay benefits in full at least until 2020.

"The difference is that insolvency is an accounting measure of whether over the entire future life of the scheme there is enough money to pay promised benefits indefinitely," Mr Elliott said. He noted that every time a scheme collapsed into the PBGC - upon which the PPF is modelled - it brought assets in with it and extended the time over which benefits could be paid.

"When they took on the United Airlines pension fund, it had enough assets to pay benefits for 10 years," Mr Elliott said. "The problem is that people persist in living for more than 10 years." But the difference between accounting insolvency and a cash flow crunch meant politicians could ignore the problems building up at the PPF for a very long time, as they did at the PBGC, he said. ...

 

Wall Street Journal : Pension Agency Puts Pressure on Congress; Growing Liabilities for Airline, Steel Retirees Spur Calls for Overhaul, Bailout

Michael Schroeder

Friday January 7th 2005; Page A4

... So far, the agency hasn't had to use any taxpayer funds, but some analysts warn a bailout funded by taxpayers could be on the horizon. Without major changes, such as higher premiums, the agency will run out of cash and rack up a $78 billion deficit in 16 years, according to a new analysis by the Center on Federal Financial Institutions , a Washington think tank. ...

Financial Times: Pension safety net's '$78bn hole'

Norma Cohen

Friday November 19th 2004; Page 15

... The Center on Federal Financial Institutions, a Washington think-tank that studies US government guarantee programmes, has concluded that the hole could be as big as Dollars 100bn, if all "legacy" airlines become insolvent and collapse their pension liabilities into the PBGC. ...

COFFI had previously estimated the cost of the bail-out of the PBGC at Dollars 67bn, before the latest financial results were issued. ...

COFFI employs a model used to value insurance companies by investment banks seeking to place a value on them in the commercial market. ...

 

Financial Times: Will they still need you, will they still feed you, When you're 64

Norma Cohen

Wednesday November 17th 2004; Retirement Page 1

... The US, which had the foresight - unlike the UK - to put an insurance underpin beneath its occupational schemes, now sees the safety net stretched dangerously. A report from the Centre On Federal Financial Institutions ( Coffi) predicts that the safety net could become insolvent by 2020, long before those it insures have passed on. Nor are the US and UK alone. In Germany, 17 per cent of the population was 60 or older in 1960; by the middle of this century, that proportion will be 40 per cent. Already, the rise in longevity has increased the cost of providing the traditional generous state pension by about 30 per cent since 1970. ...

 

Wall Street Journal : Pension Guarantor's Deficit Widens; Gap More Than Doubles To $23.3 Billion in '04 Amid Troubles at Airlines

John D. McKinnon

Tuesday November 16th 2005; Page A2

... "They [the PBGC] are thoroughly bankrupt no matter how you look at it," said Douglas Elliott, president of the Center on Federal Financial Institutions , a new nonpartisan Washington think tank; it so far is funded largely by Mr. Elliott himself, a former Wall Street investment banker. "I think the government probably is going to have to sponsor a bailout at some point." ...

Financial Times: Record Deficit At PBGC

Norma Cohen

Tuesday November 16th 2004; Page 28

... Doug Elliott, head of the Center on Federal Financial Institutions, a think-tank that has analysed the PBGC, said the latest numbers underscored the progressive deterioration of the pension insurance fund.

"This is confirmation that the PBGC is in real serious trouble," Mr Elliott said. "With an average loss of Dollars 10.4bn over the last three years, the hole is being dug deeper and deeper."

A recent report from CoFFi estimated the insurance fund would run out of cash by 2021. The finances of the PBGC have been hit hard by the financial woes of the airline industry.