updated 11/13/2009 4:50:49 PM ET 2009-11-13T21:50:49

The government-chartered company that insures the pensions of one in seven Americans said Friday that its deficit this year nearly doubled to $22 billion.

That's an improvement over the Pension Benefit Guaranty Corp.'s midyear record deficit of $33.5 billion, which spiked as auto makers and other companies faltered and caused the insurance fund's liabilities to spike.

Yet experts and officials say the long-term picture is grim. They say that without major changes, such as higher insurance premiums and less risky investments, the fund eventually will require a taxpayer bailout.

"We could face much higher deficits in the future," PBGC acting director Vincent Snowbarger said in a statement. "We won't fail to meet our obligations to retirees, but ultimately we will need a long-term solution."

The yearly ups and downs of the fund depend on cyclical factors like the stock market, interest rates and the performance of the PBGC's investments, said Douglas Elliott, a fellow at the Brookings Institution who has studied pension insurance for years.

"Whatever the (deficit) number is, the real issue is that they have a major structural problem that is just going to get worse over time," he said.

The PBGC's finances this year have been battered by the weak economy, which put it on the hook for 144 new pension plans that failed during the year ended Sept. 30. That compares with 67 in the previous year.

Low interest rates added to the sea of red ink, because the PBGC can't count on inflation driving down the value of future payouts. It also faced losses on stock investments made by investment advisers and by the pension funds it's taken over — though the recent market rally has helped the corporation net an investment return of 13.2 percent for the year.

The PBGC is responsible for the benefits of 1.5 million Americans. It sends checks each month to 740,000 pensioners. It is funded entirely by fees on the companies whose pensions it insures.

But Congress sets those fees, and it's been reluctant to raise them in the face of opposition from business and labor groups. Because the fund isn't expected to run out for a decade or more, there is little impetus to raise rates.

That has led to growing shortfalls. The PBGC has been in the red for 29 years in its 35 years of operation. The fund still has plenty of money to operate now. But unless pension funds adopt less risky investment strategies or Congress raises insurance premiums, it eventually will run out of money to pay the pensioners it supports.

That would force Congress to choose between bailing out the fund and depriving more than a million people, many of them elderly, of a key income source. Experts say an eventual bailout is almost inevitable.

"The only loser in all this is the taxpayer," Elliott said.

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