The Pension Benefit Guaranty Corp.'s programs continued to diverge financially in fiscal 2019, with the single employer program improving and the multiemployer one facing a growing deficit, according to the Fiscal Year 2019 Annual Report released Monday.
The single-employer program, with assets of $128.1 billion and liabilities of $119.4 billion as of Sept. 30, saw an improvement of $6.2 billion during the latest fiscal year, when the PBGC became responsible for 51 single-employer plans that terminated without enough money to provide all promised benefits. While PBGC officials said the program is still exposed to a considerable amount of underfunding, it saw continued improvement during the year, due to premium and investment income, and a continued low level of losses from plan terminations.
The multiemployer program reached a record deficit of $65.2 billion, mostly due to interest rate changes that increased the value of PBGC's future payments to failed multiemployer plans. The program is highly likely to become insolvent during fiscal year 2025.
The multiemployer program had liabilities of $68 billion but only $2.9 billion in assets as of Sept. 30, leading to a deficit of $65.2 billion, up from $53.9 billion a year earlier, again primarily due to lower interest rates but also because of several multiemployer plans newly classified as probable insolvencies.
More and larger multiemployer plans expected run out of money are putting benefits for all participants at risk, PBGC officials said.
"The alarm bells are ringing, and legislative changes are necessary," PBGC Director Gordon Hartogensis said in a statement.
Aliya Robinson, senior vice president of retirement and compensation policy for the ERISA Industry Committee in Washington, said in a statement that the report “should prompt Congress to pursue real and workable solutions immediately.”
In addition to working with Congress on multiemployer pension reform, ERIC is advocating passage of the Pension Budget Integrity Act, legislation that would prevent Congress from raising PBGC premiums as a way to offset unrelated federal budget items.