The financial condition of the Pension Benefit Guaranty Corp.'s multiemployer program continued to worsen in fiscal 2017, while the single-employer program continued to improve, according to the agency's projection report released Thursday.
The annual report, which is based on actuarial evaluations, forecasts the two programs' future financial condition.
Like the fiscal year 2016 report, the multiemployer program is projected to be insolvent by the end of fiscal year 2025. The new projections show a narrower range of years for the likely date of insolvency, with a 90% chance of it happening before fiscal 2025, and less than a 1% chance that it will remain solvent after fiscal 2026. The program includes plans covering more than 10 million participants.
Over the next decade, PBGC officials project an average deficit of $89.5 billion in future dollars, an increase of $11.7 billion from last year. About 130 multiemployer plans covering 1.3 million people are expected to run out of money over the next 20 years. If the PBGC's multiemployer program does run out of money, the PBGC would have to decrease guaranteed benefits to a fraction of current values, which is less than $13,000 per year for someone with 30 years of service.
The single-employer program is likely to emerge from its smaller deficit sooner than previously anticipated, according to the report. It covers 28 million participants.
The previous projection report said the program could emerge from deficit by fiscal 2018 and was likely to emerge by 2022. This year's report shows a larger chance by 2018, and likely emergence by 2019. The 10-year projections show a wide range of potential outcomes, including a deficit of more than $100 billion, but the average is a net surplus of $26 billion in future dollars. The single-employer program has improved over the 10-year period because of PBGC premiums are projected to exceed claims and because pension plans are better funded, the PBGC said in a statement.