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PSCA Executive Reports

November 30, 2018

Pension Benefit Guaranty Corporation (“PBGC”) Annual Report

The PBGC’s annual report shows improvement in the financial condition of the agency’s single-employer and multiemployer programs, largely due to higher interest rate assumptions. The report marks the first time in nearly two decades that the PBGC’s single-employer program projects a surplus, which should reduce the incentive for Congress to raise single-employer plan premiums. However, the report also demonstrates that PBGC’s multiemployer program has very significant funding challenges, which may lead lawmakers participating in the Joint Select Committee on Multiemployer Plans to propose substantial premium increases.

The report projects that PBGC’s single-employer program will have a positive balance of $2.4 billion at the end of the 2018 fiscal year, a material improvement from the program’s deficit of $10.9 billion at the end of the 2017 fiscal year. The single-employer program’s improved financial outlook largely is due to rising interest rates. PBGC projects that the multiemployer program’s deficit will decrease from $65 billion to $53.9 billion over the 2018 fiscal year. Despite the improvement, PBGC projects that the multiemployer program will be insolvent by the end of the 2025 fiscal year, potentially putting millions of participants’ and beneficiaries’ benefits at risk. Earlier this year, Congress created the Joint Select Committee on Multiemployer Plans to craft legislative recommendations to address the crisis facing the multiemployer pension system. The Committee is tasked with producing a report with findings and legislative recommendations, if any, by November 30, 2018.

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