PBGC Reports Additional Strengthening of Financial Condition, Customer Service in 2000
FOR IMMEDIATE RELEASE
March 29, 2001
The Pension Benefit Guaranty Corporation's (PBGC) financial position has never been stronger, the federal pension insurance agency said in its 2000 Annual Report, released today. The Report also describes the agency's continuing focus on providing premier service to its customers.
Significantly higher earnings from investments and low losses from plan terminations were the main factors for the financial improvement, PBGC said. As of September 30, 2000, PBGC's single-employer program had assets of $20.7 billion and liabilities of about $11 billion, resulting in a positive net position of $9.7 billion. This program covers more than 34 million people.
Secretary of Labor Elaine L. Chao, Chairman of PBGC's Board of Directors, said, "PBGC plays a key role in ensuring the retirement security of millions of workers and their families."
The insurance program recorded its fifth yearend surplus after more than 20 consecutive years of deficits that reached $2.9 billion in 1993. Because the program remains vulnerable to long-term risks, the surplus will provide a cushion to protect the insurance program in the event of an economic downturn.
"We have laid a firm foundation for the future. Our greatest challenge may now lie in the arena of customer service. We are working to keep up with the advances in technology and customer service expectations to meet that challenge," said PBGC Acting Executive Director John Seal.
Through focus groups and surveys, PBGC routinely asks its customers about the quality of the agency's service and how that service can be improved. Teams of PBGC employees then translate the focus group and survey findings into service improvements. For 2000, these included benefit estimates for participants in PBGC-trusteed plans within 15 days of their request, new customer-focused materials to improve communications with participants in newly trusteed plans, a letter reminding participants of the approach of their retirement date, simplified premium payment forms, and changes to premium payment requirements to simplify procedures and ease burdens for plan administrators. The agency also revised its criteria for taking action under the early warning program and published explicit guidance on the program.
The agency's separate insurance program for multiemployer plans, in surplus since 1982, remained financially strong with net income of $68 million and a positive net position of $267 million. The multiemployer program has assets of $694 million and liabilities of $427 million and covers more than 9.1 million people in about 1,750 insured plans.
Through the two insurance programs, PBGC paid a total of $903 million in benefits to 226,700 people during 2000. The agency is responsible for the pensions of about 541,000 people, including those who will retire in the future, and 2,874 terminated pension plans.
Total investment income exceeded $2.46 billion due to strong returns from both fixed-income and equity investments. Premium income declined by $94 million as variable-rate premium payments fell for the fourth year in a row.
The Annual Report also includes the annual performance report required by the Government Performance and Results Act. The report details PBGC's progress in meeting the performance goals set under the agency's five-year strategic plan.
PBGC's financial statements received an unqualified audit opinion for the eighth consecutive year. The audit was performed by PricewaterhouseCoopers LLP under the direction and oversight of PBGC's Inspector General.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 43 million American workers and retirees participating in private-sector defined benefit pension plans. PBGC insures nearly 38,000 pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
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PBGC No. 01-26