WASHINGTON-In the past year, the Pension Benefit Guaranty Corporation (PBGC) took over failed pension plans covering nearly 109,000 workers and retirees, and helped prevent the termination of plans covering about 250,000 others.
The agency's annual report, released today, also noted that in FY 2010 the PBGC paid $5.6 billion in benefits to 801,000 retirees whose plans had failed-and nearly 700,000 other participants in those plans will receive benefits when they reach retirement age. In total, the PBGC is responsible for the retirement benefits of nearly 1.5 million Americans whose pension plans have failed.
"In tough economic times, Americans count on the PBGC to protect the pension benefits they worked so hard to earn," said PBGC Director Josh Gotbaum. "When companies cannot make good on their pension commitments, we're a safety net. We make sure that retirement checks don't stop when pension plans do."
The PBGC annual report provides both performance and financial information for fiscal year 2010, which ended Sept. 30.
Working to Preserve Pension Plans
The PBGC works with companies, in and out of bankruptcy, to preserve their plans. When bankrupt companies reorganize, the PBGC works to keep their pensions ongoing. In FY 2010, 38 companies had their operations emerge from bankruptcy with ongoing plans, keeping about $4 billion in obligations off the agency's books, and preserving benefits for more than 250,000 workers and retirees. Among them: LyondellBasell Industries, Lear Corp., and Smurfit-Stone Container Corp.
Paying Benefits When Plans Fail
If a plan does fail, the PBGC steps in. In FY 2010, the PBGC assumed responsibility for additional plans covering 109,000 people. Those who were already receiving payments were transferred to the PBGC without interruption.
Despite the rising number of participants who receive benefits from the PBGC, the agency has made on time, uninterrupted payments to pensioners for the past 36 years.
The report also includes the agency's financial statements:
In FY 2010, the PBGC took in $2.3 billion in premiums and had $7.8 billion in investment income (total return on investments was 12 percent).
However, the agency's total obligations (including benefit payments that will be paid out over decades) increased by $11.5 billion. The PBGC has $79.5 billion in combined assets to cover obligations that total $102.5 billion. The resulting combined deficit, $23 billion, is an increase from $22 billion in 2009.
The PBGC operates separate programs for single-employer pension plans and for multiemployer plans. The single-employer program posted a $21.6 billion deficit for 2010, compared with $21.1 billion in the year-earlier period. The deficit for the separate multiemployer pension program is $1.4 billion, from $869 million in 2009.
The report can be found at www.PBGC.gov/about/annreports.html.
The PBGC is a federal agency that guarantees payment of private pension benefits when companies and pension plans fail. It protects some 44 million Americans in over 27,500 private defined benefit pension plans. The PBGC pays benefits using insurance premiums and assets and other recoveries from failed plans and their sponsors; it receives no taxpayer funds.