Single-Employer Program
PBGC calculated the single-employer program's liability for benefits for each of the terminated plans and for each of the plans considered to be a probable termination using one of three methods:
In addition, PBGC included liabilities for incurred but not reported (IBNR) plans, for the Rettig Settlement, for the Missing Participants Program, and for the Collins Settlement.
The liability for each participant's benefit was calculated separately at FYE for plans for which PBGC had sufficiently complete and accurate data. This was termed the seriatim at FYE method. PBGC selected plans to be valued using the seriatim at FYE method according to two criteria:
For this valuation, these criteria were met by 2,952 pension plans (84% of the single-employer plans) representing $11,531 million (15%) in liabilities and about 374,000 (29%) participants. This was an increase of 127 plans over the 2,825 plans valued seriatim at FYE last year.
For the seriatim plans in the aggregate, PBGC's computer system contained almost 100 percent of the participant records. Approximately one percent of the benefit records had data fields containing critical errors. While the critical error rates for some pension plans were over 5 percent, the overall error rate for the group of 2,952 seriatim plans was under 1 percent.
There were 59 plans for which a final seriatim valuation as of date of plan termination (DOPT) had been completed, but the Insurance Operations Department of PBGC had not finished processing the case as of year-end (e.g., participant data had not been fully loaded into PBGC's computer database, or the data lacked too many critical elements to be valued by the seriatim at FYE method). When PBGC benefit calculations were finalized but not ready for seriatim valuation as of fiscal year-end, PBGC valued the plan's liability seriatim as of the plan's termination date and brought the total amounts forward to September 30, 2004 using the nonseriatim method outlined below. Because PBGC had finalized and valued these benefits for each participant and valued them using PBGC assumptions and regulations as of each plan's date of termination, these amounts are more accurate than similar calculations for plans whose benefits are not final.
If calculations of benefits guaranteed by PBGC were not final, PBGC based the liability calculation on the plan's most recent actuarial valuation performed before the termination date that is available to PBGC. For the 458 terminated plans valued nonseriatim, PBGC obtained the liability for each plan as of the most recent available actuarial valuation date for each category of participant: retired, active, or terminated vested. These liabilities were adjusted to reflect such factors as:
PBGC based the adjustment factors used in the nonseriatim procedure on its experience in routinely estimating the liability for benefits for administrative purposes.
For each of the 45 probable terminations, PBGC calculated the liability as of September 30, 2004 using the nonseriatim method with an assumed date of plan termination.
Distribution of FYE04 Single-Employer Liability by Method of Calculation - This pie chart shows how the total liability for benefits of $75,905 million is distributed based on the three different methods of calculation:
Distribution of FYE04 Single-Employer Plans by Method of Calculation - This pie chart shows how the 3,514 single-employer plans included in this valuation were distributed based on the three different methods of calculation:
The Rettig Settlement refers to the liability for benefits that PBGC incurred as a result of the settlement of a class action lawsuit in 1984. This settlement resulted in an increase in benefits for some participants and new benefits for other participants. The benefits provided to most participants under the Rettig Settlement are in the form of lump sum payments. The payment of these benefits typically results in an annual decrease in liability. Currently, since most of these benefits have been paid, the remaining unpaid benefits are valued seriatim.
The Missing Participants Program refers to a responsibility that PBGC has assumed under the Retirement Protection Act of 1994 to act as a clearinghouse for unlocated participants in standard plan terminations. As with other parts of the PVFB, only the liabilities are shown here. Because plan administrators have transferred a corresponding asset amount to PBGC, the net increase in liabilities of PBGC due to this program, if any, will be negligible.
The Collins Settlement refers to the liability for benefits that PBGC incurred as a result of the settlement of a class action lawsuit during fiscal year 1996. This settlement provides benefits for participants in plans which terminated between January 1, 1976 and December 31, 1981 without having been amended to conform to ERISA’s vesting requirements. The liability under this settlement is included in the nonseriatim portion of the liability.
Back to Actuarial Report Index | PDF version of PBGC's 2004 Actuarial Report as printed | Back to WWW.PBGC.GOV