WASHINGTON - The Pension Benefit Guaranty Corporation today released its Annual Report, showing the agency paid $5.7 billion to more than 800,000 people in failed pension plans, similar to the amount of payments PBGC made in FY 2014. PBGC also continued its high standard of customer service with a retiree satisfaction score of 91. The ranking comes from a survey of retirees who receive monthly benefits from PBGC.
Multiemployer Program Deficit Widens to $52.3 Billion
PBGC's multiemployer insurance program reported a negative net position or "deficit" of $52.3 billion, compared with $42.4 billion last fiscal year-end. The larger deficit is due to changes in interest factors that increased multiemployer program liabilities. PBGC's interest factors are used to measure the value of future benefit payments. The deficit increase was also driven by the identification of 17 additional multiemployer plans that are newly terminated or are projected to run out of money within the next 10 years.
The multiemployer program insures the benefits of more than 10 million workers and retirees in about 1,400 plans. When multiemployer plans fail, PBGC provides financial assistance so the plans can pay benefits at no more than the statutory benefit guarantee level. In FY 2015, the agency paid $103 million in financial assistance to 57 multiemployer pension plans covering the benefits of 54,000 retirees compared to $97 million in FY 2014.
Last year, Congress passed the Multiemployer Pension Reform Act of 2014 (MPRA). The new law increased multiemployer plan premiums and provided new options for troubled multiemployer plans to avoid insolvency.
No plans have completed the processes required to use MPRA options; therefore PBGC's FY 2015 financial results do not show any effect due to the use of those options.
PBGC estimated in its recent Projections Report that the risk of multiemployer program insolvency exceeds 50 percent in 2025 and reaches 90 percent by 2032. The risk of insolvency decreased over the near term due primarily to the new multiemployer premium revenues enacted as part of MPRA.
Single-employer Program Deficit Rose to $24.1 Billion
The single-employer program deficit increased to $24.1 billion, up from $19.3 billion reported in the previous year. The increased deficit is due largely to changes in interest factors that increased the value of single-employer program liabilities.
In FY 2015, the agency paid $5.6 billion in benefits to 826,000 retirees in terminated single-employer plans compared to $5.5 billion in FY 2014.
In FY 2015, the agency assumed responsibility for more than 25,000 additional people in 65 trusteed single-employer plans. However, as in recent years, PBGC did not incur any large losses from completed or probable plan terminations.
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.