PBGC Report: Multiemployer Program will require significant Additional Premiums
FOR IMMEDIATE RELEASE
March 31, 2016
WASHINGTON - The Pension Benefit Guaranty Corporation today issued its study of revenues needed for PBGC to continue to protect participants in multiemployer plans that are likely to run out of money. (Insurance of Multiemployer Pension Plans: A Five Year Report)
“Without changes, the multiemployer insurance program is likely to run out of money by 2025,” said PBGC Director Tom Reeder. “This report offers vital information for Congress as it considers how to stabilize the program and put it on sound financial footing.”
The multiemployer program’s current assets are only a small fraction of the amount needed to cover guaranteed benefits for more than one million people in plans expected to run out of money in the next decade.
While the Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA) increased premiums paid by multiemployer pension plans to PBGC, the program is still deeply underfunded. The report illustrates the effects of increasing premium revenues on PBGC’s continued solvency under a variety of scenarios reflecting different assumptions as to how many plans would suspend benefits or apply for partition under MPRA. Under each scenario in the study, the likelihood that the multiemployer program will be insolvent before 2034 exceeds 50 percent, even if premium revenues are doubled.
The Administration’s FY 2017 Budget includes a proposal to further increase premium revenues for PBGC’s Multiemployer Insurance Program.
Every five years, PBGC is required by law to study the finances of its multiemployer insurance program and report to Congress.
PBGC protects the pension benefits of more than 40 million Americans in private-sector pension plans. The agency is directly responsible for paying the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums, investment income, and with assets and recoveries from failed single-employer plans. For more information, visit PBGC.gov.
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PBGC No. 16-04