The Pension Benefit Guaranty Corp. said its multiemployer pension program - serving nearly 9 million workers - is financially sound, but benefit guarantees should be increased.
In its five-year report to Congress, the agency said Congress should act on its recommendation to increase the maximum current benefit guarantee to $12,870 annually for retirees with 30 years of service. The maximum current amount - $5,850 - has not been changed since it was set in 1980. The annual multiemployer premium of $2.60 per participant would not change.
The program has had a surplus for the past 14 years, the report showed. The surplus is currently at $192 million, with assets of $477 million and liabilities of $285 million. In 1995, the agency paid $4 million to nine insolvent plans; overall, the PBGC has helped only 14 plans with $28 million in assistance, the report showed.
The PBGC projected the liabilities and surplus to the multiemployer plans for 15 years, starting in 1992 and ending in 2007. In its longest projection period ever studied, the agency found that in the worst case scenario - which would include a 10% participant decline, a 5% valuation and asset return rate and a 20% asset decline - the program would have a deficit of $1.9 billion by the year 2007, using the current guarantee structure.
But if the program continued on its course of interest rate changes and gradual participant changes, the surplus would grow to $566 million in 2007.
If the benefit increase were approved, the surplus would be $392 million.
The increase to the benefit guarantee was unveiled April 11 in President Clinton's Retirement Savings and Security Act.
