Multiemployer Program

There were a total of 10 pre-MPPAA terminations, 9 of which were granted discretionary coverage under the provisions of ERISA as passed in 1974.  The remaining plan terminated when coverage under Title IV was mandatory (from August 1, 1980 until September 25, 1980).  PBGC calculated the liability for these 10 terminations under the seriatim at FYE method using the same assumptions as for the single-employer program.

The post-MPPAA portion of the liability represented the present value, as of September 30, 2004, of net losses that PBGC expected to incur from non-recoverable future financial assistance to 67 pension plans, that were, or were expected to become, insolvent. The liability for each plan was calculated (using the cash flow method) as the present value of future guaranteed benefit and expense payments, net of the present value of future employer contributions and withdrawal liability payments. This liability was determined as of the later of September 30, 2004 and the actual or projected date of insolvency, and then discounted back to September 30, 2004 using interest only. The most recent available actuarial reports and information provided by representatives of the affected plans served as the basis for the valuations.

Projected benefit payments were estimated based on liabilities, current benefit payments and estimated average ages for actives, terminated vesteds and retirees from the most recent actuarial reports, combined with assumptions of retirement ages and of future rates of mortality and termination.  Projected expense payments were estimated as a constant percentage of the projected benefit payments; this percentage is equal to the ratio of current expense payments to current benefit payments.  The projected date of insolvency was then established using a cashflow model with initial assets, expense payments, contributions, projected benefit and withdrawal liability payments as inputs, estimated when necessary.

The post-MPPAA liability as of September 30, 2004 is about $45 million higher than it was a year earlier. In addition to a small net increase due to the passage of time, data changes, and the changes in the liability discount rate and mortality assumptions, this increase in liability is mostly attributable to a net increase of five plans in the post-MPPAA probable plans in FY 2004.

Back to Actuarial Report Index | PDF version of PBGC's 2004 Actuarial Report as printed | Back to WWW.PBGC.GOV