The bleak financial snapshot, in a report obtained by The Associated Press, raises new fears that a federal bailout eventually will be needed for the Pension Benefit Guaranty Corporation. The beleaguered agency is being saddled with the underfunded pension plans of companies going bankrupt in the worst economic slump since the Great Depression.

A rare midyear financial update requested by Congress shows the $11.1-billion deficit the agency posted at the end of its fiscal year on September 30 has swelled by $22.5 billion to its highest level in the agency's 35-year history.

The agency's acting director says, however, that the more than 640 thousand people who currently receive cheques from the agency need not worry about the deficit.

The agency does not insure 401(k) plans, but its fate is important not only to the workers covered by more than 29,000 employer-sponsored benefit pension plans but to all taxpayers who could be asked to foot the bill on a bailout if the agency ever becomes insolvent.

Its balance sheet has taken heavy hits in recent years. Nine of the 10 largest pension plan terminations in its history, including United Airlines, Bethlehem Steel and Kaiser Aluminum, have occurred since 2001.

Created by Congress in 1974, the agency quietly operates in a brick office building a few blocks from the White House. When a company's pension plan is terminated, the agency takes over and pays benefits to the retired workers covered by the plan - although retirees don't always get 100 per cent of what their employer promised. The maximum guaranteed amount currently is $54,000 a year for a person retiring at age 65.

The agency is closely monitoring the auto, retail, financial services and health care industries, all in financial distress. The Corporation estimates that pension underfunding in the auto sector alone is $77 billion.

To view this video, click here.