Also, the PBGC now estimates that it will end up giving $79.7 billion in special financial assistance to 211 plans under the program. The updated estimate incorporates data from plan applications and is lower than the PBGC's previous estimate of $82.7 billion and lower than the Congressional Budget Office's September estimate of $90.4 billion, the PBGC said in a news release.
Prior to the American Rescue Plan's passage, the multiemployer program was projected to become insolvent in 2026. Now, consistent with last year's report, its median projected insolvency is after 2062, the end of PBGC's projection period.
As of Sept. 30, 2022, the multiemployer program's financial position improved to a surplus of $1.1 billion, up from $481 million the year prior. But the report projects that its mean net position over the next 10 years will drop to a deficit of $7.1 billion. The reason for the drop in the mean projection is because the "magnitude of potential deficits in the worst scenarios is significantly greater than the magnitude of potential positive net positions in the most favorable scenarios," the PBGC said. And while the mean of all scenarios shows a negative net position for fiscal year 2032, the majority of scenarios project a positive net position for fiscal year 2032, the PBGC noted.
The PBGC's single-employer program, with a net financial position of a $36.6 billion surplus as of Sept. 30, 2022, has been growing steadily. It was up $5.7 billion over the previous year primarily due to a decrease in liabilities resulting from rising interest rates that exceeded the decrease in assets due to rising interest rates and poor equity returns, according to the report.
The program's projected mean position at the end of fiscal year 2032 is now a surplus of $63.6 billion.
In light of the report, the ERISA Industry Committee is urging Congress to re-examine the premiums paid by companies that sponsor pension plans.
"PBGC's single-employer insurance program has been overfunded for years, yet the law provides for automatic annual premium increases, which impose expenses on retirement plan sponsors that are completely unnecessary," said Andy Banducci, senior vice president for retirement and compensation policy at ERIC, in a statement. "Current premium levels are clearly inflated and altogether unnecessary for PBGC's insurance program to be sustainable. Any additional increases are unwarranted and will not provide additional benefits or protections for employees."
