The Pension Benefit Guaranty Corporation (PBGC) on June 17 issued reports on the health and prospects for its multiemployer program and its single-employer program. The upshot: one needs help in order to be solvent, and the other may be so in the not-so-distant future.
Multiemployer Program
How high? On average, across all simulations, the MPRA report shows a projected deficit of $53.4 billion in today's dollars by 2025. “PBGC’s Multiemployer Program does not have sufficient assets to provide for average anticipated financial assistance through 2025,” says the report.
The PBGC says in the report that it “looks forward to engaging with Congress, other agencies in the Administration and the multiemployer community in a cooperative process, to develop a supportive, financially-sound insurance program and to help preserve the multiemployer plans that provide lifetime retirement security for more than 10 million participants and their families.
“Substantial increases in premium revenue will be needed to avoid cuts in multiemployer insurance program guarantees,” says the PBGC. The agency also says that in order for it to meet its average projected financial assistance obligations through 2035, premiums will need to increase to more than four and one half times the premiums that are expected under current law.
Single-Employer Program
The Fiscal Year 2015 PBGC Projections Report says that the single-employer simulations continue to show that improvements in the program’s net position “are likely, but by no means guaranteed,” through 2025.
In marked contrast to the prospects for the multiemployer program, the projections report says that the single-employer program has a mean projected present value surplus of $2.6 billion for 2025. It includes the caveat that this financial good news for the program is “likely but not certain” and that “there is significant variation around this mean outcome.”
Multiemployer Program
In the MPRA report, the PBGC reports on the status of its multiemployer program, which guarantees a portion of pension benefits for over 10 million participants — roughly one-quarter of private sector pension participants. The report says that the program is likely to run out of money by the end of 2025, and that there is considerable risk that it could run out before that date. It also says that the program’s deficit will remain high.
How high? On average, across all simulations, the MPRA report shows a projected deficit of $53.4 billion in today's dollars by 2025. “PBGC’s Multiemployer Program does not have sufficient assets to provide for average anticipated financial assistance through 2025,” says the report.
The PBGC says in the report that it “looks forward to engaging with Congress, other agencies in the Administration and the multiemployer community in a cooperative process, to develop a supportive, financially-sound insurance program and to help preserve the multiemployer plans that provide lifetime retirement security for more than 10 million participants and their families.
“Substantial increases in premium revenue will be needed to avoid cuts in multiemployer insurance program guarantees,” says the PBGC. The agency also says that in order for it to meet its average projected financial assistance obligations through 2035, premiums will need to increase to more than four and one half times the premiums that are expected under current law.
Single-Employer Program
The Fiscal Year 2015 PBGC Projections Report says that the single-employer simulations continue to show that improvements in the program’s net position “are likely, but by no means guaranteed,” through 2025.
In marked contrast to the prospects for the multiemployer program, the projections report says that the single-employer program has a mean projected present value surplus of $2.6 billion for 2025. It includes the caveat that this financial good news for the program is “likely but not certain” and that “there is significant variation around this mean outcome.”
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