WASHINGTON (AP) — The federal agency that insures pensions for more than 40 million Americans last year ran the widest deficit in its 38-year history.

The Pension Benefit Guaranty Corp. said Friday that its deficit grew to $34 billion for the budget year that ended Sept. 30. That compares with a $26 billion shortfall in the previous year.

Pension obligations grew by $12 billion to $119 billion last year. Assets used to cover those obligations increased by only $4 billion to $85 billion.

The agency has now run deficits for 10 straight years. The gap has grown wider in recent years because the weak economy has triggered more corporate bankruptcies and failed pension plans.

If the trend continues, the agency could struggle to pay benefits without an infusion of taxpayer funds.

Agency Director Josh Gotbaum said continued deficits "will ultimately threaten" the PBGC's ability to pay pension benefits to retired workers.

"There's no imminent threat that we're going to stop cutting checks," Gotbaum said during a conference call with reporters. However, he said, Congress must act "long before 10 years from now" to increase the insurance premiums that companies pay to the agency.

The Obama administration has proposed raising the premiums and tailoring them to the size of companies and their level of financial risk. Under the plan, bigger companies and those at greater risk of failing would pay larger premiums. The fees haven't been raised in six years.

Companies whose pension plans failed in the latest year, with the agency taking them over, included Friendly Ice Cream Corp., law firm Dewey & LeBoeuf and Olan Mills. Inc.

The PBGC joined with unions at American Airlines earlier this year to oppose the company's plan to terminate its pension plans. The move would have dumped billions of dollars of new obligations on the agency. American ended up freezing pensions for most workers instead of terminating them.

The American Benefits Council, which represents businesses, called the $34 billion deficit figure misleading and said it was based on faulty math.

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"The public should not be led to believe the PBGC is in danger of a bailout, and Congress and the Obama administration should not use this number as a pretext to raise (insurance) premiums," the group said in a statement. The group has been critical of the PBGC.

The PBGC was created in 1974 as a government insurance program for traditional employer-paid pension plans. If an employer can no longer support its pension plan, the agency takes over the assets and liabilities, and pays promised benefits to retirees up to certain limits.

The agency backs defined-benefit plans, which are most prevalent in auto manufacturing, steel, airlines and other industries.

The number of companies offering traditional pension plans has shrunk dramatically in recent decades. U.S. employees increasingly have turned to defined-contribution plans such as 401(k)s to fund their retirement.

The PBGC has been in the red for 31 of its 38 years of operation. It did have surpluses in some years in the late 1990s and early 2000s, when fewer companies failed.