The federal agency that insures pension benefits for more than 44 million Americans said yesterday that its deficit shrunk slightly to $22.8 billion at the end of the government's latest fiscal year, down from the previous year's record $23.3 billion.

Observers said the report, which comes as Congress wrestles with reforms aimed at putting the Pension Benefit Guaranty Corp. on sounder footing, failed to account for more recent bankruptcies that made the situation much worse than the latest figures suggest.

But while proponents of a thorough overhaul that would hold companies to tougher pension funding standards viewed the report as an unmistakable call to action, industry groups said the improvement in the PBGC's standing shows that rash action may do more harm than good.

As of Sept. 30, the end of the government fiscal year, the PBGC said it had assets of $56.5 billion and liabilities of $79.2 billion. The agency noted that the shortfall would have grown to $25.7 billion if pension problems that emerged after Sept. 30 were included.

The agency did not identify what those problems are, but many believe they may be related to billions of dollars in unfunded pension liabilities at Delta Air Lines, Northwest Airlines and Delphi Corp., the auto parts supplier that filed for bankruptcy protection last month.

Although the number of underfunded pension plans terminated last year fell to 102 vs. 192 the previous year, the agency's exposure to future losses from troubled corporate pension plans increased to a record $108 billion, up from $96 billion the previous year and $82 billion two years ago.

"The financial health of the PBGC is not improving," executive director Bradley D. Belt said.

The PBGC provides retirement benefits to retirees and workers of distressed companies that terminate their pension plans.

No taxpayer money is involved. The benefits are funded by employer-paid premiums, earnings on the agency's investments and assets from pension plans taken over by the PBGC.

The agency's health is of prime importance in rust belt states, where chronic losses have forced debilitated industrial companies to dump pension plans on the PBGC.

Pennsylvania residents collected $514.9 million in benefits from the agency last year, more by far than any other state, reflecting the wreckage of failed steelmakers and other manufacturers over the years.

Nationwide, the number of retirees receiving benefits and workers eligible for them increased 22 percent last year to 1.3 million, the PBGC said. The agency said it paid $3.7 billion in benefits, 23 percent more than in the prior year.

Congress is faced with the delicate task of forcing companies put up the cash to pay for their pension promises without making regulations so onerous that more unprofitable companies dump their liabilities onto the agency.

That would force healthy companies to pay the premiums that help finance benefit payments once the PBGC takes over.

National Association of Manufacturers director Bob Shepler said 42 percent of the plans insured by the PBGC are better than 100 percent funded and only 15 percent are less than 70 percent funded,

"Quite simply, the pension sky is not falling," Mr. Shepler said. "Onerous and inflexible new funding obligations won't help employers or employees."

A key Congressional Democrat seized on Mr. Belt's assessment of the agency's finances in urging quick action on pension reform.

"More and more companies are treating the federal government as a dumping ground for the pension promises they made to their workers and don't want to keep," warned Rep. George Miller of California, the senior Democrat on the House Education and Workforce Committee. "With each passing day, the likelihood of a taxpayer bailout of the agency increases."

Douglas Elliott, president of the Center for Federal Financial Institutions, was expecting the PBGC to report a deficit of about $33 billion. His estimate was based on assumptions that the agency would have to take on about $15.3 billion in liabilities from underfunded pension plans sponsored by Delta, Northwest and Delphi.

"This really was an accounting decision," Mr. Elliott said. "The reality doesn't change because of the accounting."

He said the agency's figures include $4.7 billion of probable losses from pension plans that have yet to be terminated. But, he added, it's impossible to say how much of that belongs to the three companies.

It is possible that the PBGC decided not to include Delta and Northwest losses because provisions in some reform proposals would give airlines up to 20 years to fund their retirement obligations. If those provisions become law, Delta and Northwest would be less likely to terminate their pension plans, according to Mr. Elliott

He said this year's shortfall does not include liabilities the agency assumed this year when it took over pension plans sponsored by US Airways and United. Virtually all of those liabilities were included in the $23.3 billion deficit recorded last year, he said.

The PBGC's $22.8 billion deficit covers 34.2 million workers and retirees in about 28,800 so-called single employer plans, mostly sponsored by such large companies as General Motors, U.S. Steel and Alcoa. About 17.2 million Americans currently on the job are covered by those plans, down from the peak of 22.2 million eligible for pension benefits in 1988, according to the Employee Benefit Research Institute.

The agency also insures multi-employer pension plans, which cover about 9.9 million workers, most of them union members, in about 1,600 pension plans. The multi-employer plan had a $335 million deficit as of Sept. 30, vs. a $236 million shortfall the year before.