PBGC releases Annual Report
The Pension Benefit Guarantee Corporation (“PBGC”), the Federal agency that insures pensions for both single employer and multiemployer plans, issued its annual report on November 18, 2013. This report provided an update on the PBGC’s funding, including audit results, and described some of the work that the PBGC has been involved in this year, including preserving several pension plans of employers going through bankruptcy.
Most significantly, the report showed that the PBGC’s funding deficit has worsened. The total deficit rose to nearly $36 billion. The deficit associated with multiemployer plans, which provide benefits to more than 10 million people, grew from $5.2 to $8.2 billion this year. PBGC has had a deficit since 2002, as illustrated below:
These deficits are primarily due to the low rate of premiums coming into the PBGC:
Although PBGC currently has a large reserve of money to pay benefits, current estimates predict that it will become insolvent within 10 to 15 years if additional funding is not provided. Therefore, the PBGC report indicated that it will likely seek Congressional approval for increasing premiums, or potentially seeking other funding.
PBGC provides insurance to plans covering 42 million Americans, and directly pays benefits to 1.5 million people. PBGC gets no funding from taxpayers, so ensuring strong pension funds will help to protect the ability to pay these benefits.
For more information about the PBGC, please contact your trust fund counsel.
By Daniel Brome | November 25, 2013