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PBGC Releases Annual Management Report for Fiscal Year 2009

November 13, 2009

WASHINGTON- The Pension Benefit Guaranty Corporation (PBGC) ended fiscal year 2009 with an overall deficit of $22 billion, according to the agency's Annual Management Report submitted to Congress today. The result compares with the $11.2 billion deficit recorded at the previous fiscal year-end on September 30, 2008.

The deficit in the PBGC's insurance program for single-employer pension plans widened to $21.1 billion for the year, $10.4 billion more than the prior-year's $10.7 billion shortfall. The separate insurance program for multiemployer pension plans posted a deficit of $869 million, exceeding last year's $473 million shortfall by $396 million.

In an interim report to Congress in May, the agency showed a record deficit of $33.5 billion, based on unaudited numbers at the fiscal year mid-point on March 31.

The Annual Management Report classified 27 large pension plans with total underfunding of $1.64 billion as probable losses on the PBGC balance sheet. The report also shows that the agency's potential exposure to future pension losses from financially weak companies increased to about $168 billion from the $47 billion booked in fiscal year 2008.

"Exposure to possible future terminations means that we could face much higher deficits in the future," said Acting Director Vincent K. Snowbarger. "We won't fail to meet our obligations to retirees, but ultimately we will need a long-term solution to stabilize the pension insurance program."

The main factors for the year-over-year decline in the single-employer program's net position included a $10.6 billion charge due to an unfavorable change in interest factors, $4.2 billion in losses from completed and probable terminations, a $3.9 billion charge due to passage of time, and $383 million of administrative and other expenses. These amounts were offset by $6.3 billion in investment income, $1.8 billion in net premium income, and a credit of $573 million from actuarial adjustments. The PBGC's investment rate of return was 13.2 percent.

As of September 30, the single-employer program reported assets of $68.7 billion and liabilities of $89.8 billion. During the year, the single-employer program took in 144 newly terminated pension plans. The program is directly responsible for the benefits of almost 1.5 million workers and retirees in some 4,000 pension plans. Overall benefit payments in 2009 totaled $4.5 billion, up from $4.3 billion a year ago. The program insures the pensions of 33.6 million Americans in about 27,600 ongoing plans sponsored by private-sector employers.

The insurance program for multiemployer plans has about $1.5 billion in assets to cover about $2.3 billion in liabilities. The PBGC does not become trustee of multiemployer plans, but instead offers financial assistance to insolvent plans. In 2009 such assistance totaled $86 million to 43 plans. Overall, the multiemployer program insures the pensions of more than 10.4 million Americans in some 1,500 plans.

PBGC's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The financial statements for fiscal year 2009 received an unqualified audit opinion for the 17th consecutive year. Clifton Gunderson LLP performed the audit under contract with the Corporation's Inspector General, who oversees the audit.

PBGC is a federal corporation created under ERISA. It currently insures the basic pension benefits of about 44 million American workers and retirees in more than 29,000 private-sector defined benefit pension plans. The Corporation receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns.

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PBGC No. 10-05