PBGC Solvency Improves in 2016

By John Iekel • May 11, 2017 • 0 Comments
The Pension Benefit Guaranty Corporation (PBGC), the agency created to address the problem of insolvent pension plans, has had solvency problems of its own. But its condition improved somewhat in 2016, according to new data.

The PBGC has released data concerning its assets, liabilities premiums and payouts, updated to include information from fiscal years 2015 and 2016. The PBGC has issued such information every year since 1996.

The State of Things

The PBGC had good news about the condition of its single-employer program. While its assets slid by $2.3 billion from 2014 to 2015, they jumped by $11.6 billion from 2015 to 2016, a 13.5% increase. While liabilities grew more from 2015 to 2016 than they did 2014 to 2015 — an 8% increase in the most recent fiscal year — the net financial position still improved since growth in assets outstripped the increase in liabilities.

The net position of the single-employer program increased from 2015 to 2016 by almost $4 billion, a 16.5% improvement. That was even more striking since the net financial position from 2014 to 2015 had worsened by $4.7 billion.

Premiums vs. Benefits

PBGC premium revenue for the single-employer program jumped by more than $2 billion, a 48% increase over the revenue from 2015. Premium revenue rose by much less from 2014 to 2015 — $326 million, a 19% increase from one year to the next.

The PBGC paid $89 million more in benefits in 2016 than it did in 2015, a bigger increase than it reported for 2014-15, when the payout increased $48 million from one year to the next.

So sharp was the gap between premium revenue and benefits payments in 2016 that for the first time since 1997 — 19 years — the PBGC took in more than it paid out. In fact, the $276 million positive balance was the highest in the 36 years the PBGC has been compiling such figures.