United's Pension Sinkhole

In trying to get itself out of bankruptcy, United Airlines won court approval on Tuesday to let a federal insurance agency pick up the tab for four of its workers' pension plans.

The deal means much lower retirement benefits for workers and retirees of the nation's largest airline. For taxpayers, however, the default might eventually bring a bailout of the Pension Benefit Guaranty Corporation, the federal agency which could face more pension defaults by other wobbly airlines seeking such court judgments.

Delta Air Lines, for instance, warned this week that it too may soon seek bankruptcy - and have to turn to the PBGC. After filing for bankruptcy, US Airways ended its pension plan.

The PBGC was set up in 1974 by Congress to backstop corporations that can't pay traditional pensions. The companies pay premiums to build up the agency's reserves. More than 40 million workers are covered by such insurance.

The insurance system has faltered over the years whenever big firms went belly up. Yet Congress hasn't fully addressed the reforms needed to keep PBGC from needing a bailout of its own.

One way to improve it is to be tougher on companies that don't fully fund their pensions and to raise premiums on companies.

United's case should be a bright warning light for Congress to act quickly.