By: Ceci Rodgers

September 17, 2004, CNNFN

COSTELLO: Retirement is something we all look forward to someday and we hope our pension plans will still be there when we need them. But a category five financial storm may be on the horizon. Businesses, in an effort to protect their own bottom line, may be putting our pensions at risk.

CNN's Ceci Rodgers has more for you.

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CECI RODGERS, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The agency that guarantees 44 million pensions, the Pension Benefit Guarantee Corporation, is running out of money, and it's only a matter of time before taxpayers have to foot the bill for a massive bailout.

DOUGLAS ELLIOTT, CTR. ON FEDERAL FINANCIAL INST.: Bottom line is we have a serious problem. It's just going to get worse the longer we wait.

RODGERS: The Center on Federal Financial Institutions says under current conditions, the PBGC will be broke by the year 2020 and will require a $50 billion bailout. But the scenario worsens if airline pensions default, the money runs out by 2018 and the price tag on a bailout rises to $109 billion. That would be the biggest government bailout since the S&L crisis of the early '90s, which cost taxpayers more than $150 billion. A pension bailout could be avoided, the study's author says, by taking action now, including raising the premiums companies pay into the system.

ELLIOTT: There's been a significant disproportion for 30 years now between the level of risk PBGC takes on and the premiums they charge. There hasn't been a single study that shows that premiums are even half of what they would have to be to balance that.

RODGERS: Higher premiums may only be part of the answer, especially if American companies continue to shut down or freeze their traditional pension plans in favor of defined contribution plans, such as 401(k)s that are less expensive for them in the long run.

BOB KORAJCZYK, NORTHWESTERN UNIVERSITY: As well funded plans leave the system and poorly funded plans stay in the system, there is going to be more and more pressure on the Pension Benefits Guarantee Corporation as these plans get turned over to them.

RODGERS: In fact, the PBGC says only 20 percent of today's workers have a traditional pension compared with 40 percent in the mid-'80s.

(on camera): This week the PBGC asked Congress for more legal powers to seize the bankrupt assets of companies that abandon their pensions, for example, and to force healthy companies to fully fund their pensions so that taxpayers don't have to pick up the tab when pensions fail.

Ceci Rodgers, CNN Financial News, Chicago.