Pension insurance plan could soon go bankrupt
Issue:Winter 2015 : Nuts & Bolts
The government agency that insures employee pension programs and assumes control over those that have gone bankrupt might soon go bankrupt itself.
“Despite the improving economy, an increase in probable multiemployer plans insolvencies has dramatically worsened the financial position of the multiemployer [pension insurance] program,” writes Secretary of Labor Thomas Perez in the introduction to the Pension Benefit Guaranty Corporation’s Annual Report.
The PBGC’s acting director Alice Maroni also uses the word “dramatic” when describing the increasing deficit for the PBGC’s multiemployer pension insurance program, which covers 10 million people in 1,400 plans. Currently, plans that cover 1 million people “are substantially underfunded and without legislative changes many of these plans are likely to fail,” Maroni notes. “The program’s increased deficit is largely due to the expected insolvency of additional multiemployer plans within the next decade. When the program becomes insolvent, PBGC will be unable to provide financial assistance to pay guaranteed benefits for insolvent plans.”
In its fiscal year 2014 ending in September, the agency said it assumed responsibility for the benefits of 53,000 people involved in 97 failed single-employer plans. It started paying benefits to 28,000 retirees in single-employer plans and it paid $5.5 billion to 813,000 retirees in more than 4,600 failed singleemployer plans. There are an additional 595,000 people who will receive benefits from the PBGC when they retire.
Articles in THE LINE are reprinted with permission from
Manufacturers & Technology News.