The PBGC's single-employer pension plan program had a $21.6 billion deficit as of Sept. 30, up 2.4% from a year earlier, while its multiemployer plan program had a deficit of $1.4 billion, 61% above the previous year, according to the agency's annual report issued Nov. 15.
The Pension Benefit Guaranty Corp. also said it returned 12.1% on its investments for the fiscal year ended Sept. 30, leaving the agency with total investible assets of $66.8 billion. Its remaining combined assets from both the single-employer and multiemployer plans are from failed plans that have yet to be invested.
The single-employer plan program had assets of $77.8 billion and liabilities of $99.4 billion as of Sept. 30, compared to assets of $68.7 billion and $89.8 billion in liabilities a year earlier. The multiemployer plan program had assets of $1.6 billion and liabilities of $3 billion as of Sept. 30, compared to $1.45 billion in assets and $2.32 billion in liabilities 12 months prior.
In the Nov. 15 report, PBGC Director Joshua Gotbaum attributed the agency's deficit in part to “inadequate plan funding and misfortunes that have befallen plan sponsors.”
“In part, it is a result of the fact that the premiums PBGC charges are insufficient to pay for all the benefits that PBGC insures, and other factors,” Mr. Gotbaum added, in the report.
On May 20, 2009, the agency told Congress that the agency's deficit had reached an all-time high of $33.5 billion as of March 31, 2009.
The fiscal 2010 deficit was smaller than the PBGC anticipated because several plan takeovers expected when it calculated the $33.5 billion deficit didn't happen, Marc Hopkins, a PBGC spokesman, said in an interview. “That was an unaudited midyear report to Congress which they requested,” Mr. Hopkins said. “It's not something we do ordinarily.”
According to the report, 31.1% of the PBGC's portfolio was in equities as of Sept. 30, down from 37.2% at the end of the previous fiscal year. Cash and fixed income represented about 66% of the total investible assets at the end of the fiscal year, up from 60% at the end of the previous fiscal year, the report said. The remainder was invested in alternatives, including private equity, private debt and real estate.
The equity portfolio reduction was in response to a temporary investment policy established by the agency's board in October 2009 to “prudently rebalance the portfolio and reduce PBGC's investment in public equities to no more than 26.5%,” the percentage held as of March 31, 2009, the agency‘s annual report explains. The reduction will continue.
The PBGC board had previously suspended its policy under the Bush administration, approved on Feb. 12, 2008, calling for target allocations of 45% each in equities and fixed income, with the remaining 10% in alternatives, including private equity and real estate.
A new investment policy is still being developed by Mr. Gotbaum and the agency's board, Mr. Hopkins said.