The Pension Benefit Guaranty Corp.'s single employer program continues to improve, while the slight gain in the agency's struggling multiemployer program is unlikely to keep it from becoming insolvent, according the agency's fiscal year 2020 annual report released Thursday.
The two programs "are in dramatically different financial positions," PBGC Director Gordon Hartogensis said in a message attached to the report.
Mr. Hartogensis attributed part of the single employer program's continued improvement to PBGC's investment policy that led to a return of 10.55%, and its liability driven investment strategy. The program ended the fiscal year with $15.5 billion as of Sept 30, $6.8 billion more than the previous fiscal year.
The single employer program remains exposed to more than $176 billion in underfunding in pension plans that could potentially become claims to PBGC. In fiscal 2020, the agency paid $6.1 billion in benefits and assumed responsibility for 69 single-employer plans.
By contrast, the PBGC multiemployer insurance program "continues to face a crisis" and is highly likely to become insolvent in 2026. Mr. Hartogensis said in the message.
The multiemployer program deficit improved slightly over the fiscal year, going from a negative net position of $63.7 billion this year, compared to a net deficit $65.2 billion in fiscal 2019.
The slight improvement in fiscal 2020 was a result of Congress passing legislation in 2019 to address the imminent insolvency of the United Mine Workers of America 1974 Pension Plan, Washington, which delayed the program's projected insolvency by one year to 2026.
During fiscal 2020, the agency provided $173 million in financial assistance to 95 multiemployer plans, compared to $160 million to 89 plans in fiscal 2019.
The multiemployer program will need additional legislative reform to avert insolvency, Mr. Hartogensis said, "and PBGC continues to provide technical support to policymakers, stakeholders and plan sponsors."