Multiemployer pension funds caused a record deficit for the Pension Benefit Guaranty Corp., its annual report shows.
Improving conditions for the PBGC’s single-employer program, which saw its deficit shrink to $19.3 billion from $27.4 billion in fiscal year 2013, were offset by the multiemployer program deficit rising to $42.4 billion from $8.3 billion, said the report, which was released Monday.
Agency officials had braced for a record deficit among the PBGC’s multiemployer pension funds after a fiscal year 2013 projections report released in June warned of “more likely and more imminent” insolvencies of a minority of multiemployer plans. That report gave the multiemployer program a “greater than 50%” chance of being insolvent by 2022, and a 90% chance by 2025, unless Congress steps in.
Some multiemployer pension plan funding rules created by the 2006 Pension Protection Act, which let plan officials take steps to improve funding of plans less than 80% funded, will expire Dec. 31. The Senate Finance Committee has proposed a one-year extension as part of a package extending some tax rates expiring this year. “We continue to be very concerned with the further deterioration of the multiemployer pension program as conveyed in (the report). We’re committed to addressing the problems,” Committee Chairman Ron Wyden, D-Ore., and ranking minority member Orrin Hatch, R-Utah, said in a statement. House Education and the Workforce Committee Chairman John Kline, R-Minn., who is trying to reach a consensus on possible multiemployer pension reform, said in a statement that the situation “is a ticking time bomb that will inflict a lot of pain on workers, employers, taxpayers and retirees if Congress fails to act.”
Partnership for Multiemployer Retirement Security, a business and labor group that has proposed a package of multiemployer pension reforms, said in a statement that the latest PBGC report “underscores that time is of the essence and that fast action by Congress could mean the difference between insolvency and solvency for many of these at-risk plans.”