Financially Healthier PBGC Calls for Strengthening of Defined Benefit Pension System
FOR IMMEDIATE RELEASE
March 29, 1999
The Pension Benefit Guaranty Corporation (PBGC) today released its financial results for 1998, showing continued improvement in its financial condition and calling for strengthening of the private defined benefit system.
As of September 30, 1998, PBGC's single-employer program had assets of $17.6 billion and liabilities of $12.6 billion, resulting in a positive net position of $5 billion. This marked the program's third consecutive yearend surplus after more than 20 consecutive years of deficits that reached $2.9 billion in 1993.
"While PBGC is financially healthier than ever before, we must remember that we have built the surplus under ideal economic conditions. We must also be concerned with the shrinking percentage of the workforce that has the benefit of defined benefit plans. My primary objective this year will be to strengthen and expand the defined benefit system," said PBGC Executive Director David M. Strauss.
Investment income, largely from fixed-income investments, exceeded $2.1 billion. Premium income declined by $100 million as variable-rate premium payments fell for the second year in a row.
The agency's separate insurance program for multiemployer plans, which has maintained a surplus since 1982, also recorded a financial gain. With the gain, the multiemployer program reported a positive net position of $341 million, based on assets of $745 million and liabilities of $404 million. The multiemployer program covers about 8.7 million people, and the single-employer program covers about 33 million people.
"We must build on PBGC's encouraging progress to increase private pension coverage and ensure retirement security for this and future generations of working Americans," said Alexis M. Herman, Secretary of Labor and Chairman of PBGC's Board of Directors.
PBGC paid $848 million in benefits to 209,300 people during 1998. Including people who have not yet retired, the agency is responsible for the pensions of about 472,000 people and 2,665 terminated pension plans.
A total of 35 settlements obtained through the Early Warning Program protected the insurance program and about 257,000 workers and retirees from nearly $1.1 billion in pension losses. In the area of enforcement, the agency had 132 active litigation cases in state and federal courts and 830 bankruptcy cases.
The Report also highlights PBGC's five-year Strategic Plan and reports the agency's performance measures and results for 1998.
PBGC's financial statements received an unqualified audit opinion for the sixth 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 about 42 million American workers and retirees participating in private-sector defined benefit pension plans. PBGC insures more than 44,000 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.
— ### —
PBGC No. 99-18