June 23, 2016
PBGC Issues Two Reports on Financial Status of Insurance Programs
On June 17, 2016, the Pension Benefit Guaranty Corporation (PBGC) issued two reports on the financial status of its insurance programs:
- The MPRA Report, a one-time report required by the Multiemployer Pension Reform Act of 2014 (MPRA), addresses premium sufficiency for the multiemployer insurance program. It addresses whether current premium revenue is sufficient to meet the PBGC’s future financial assistance obligations to multiemployer plans for 10- and 20-year periods beginning in 2015. Because premiums are not sufficient, the Report also addresses the additional premiums that will be necessary for the agency to meet its obligations. It projects that, to meet its average projected financial assistance obligations through 2035, premiums will need to increase to over 4.5 times the premiums that are expected under current law.
- The FY 2015 Projections Report covers the projected financial status of each of its insurance programs, multiemployer and single-employer, separately. The PBGC releases annual Projection Reports for its multiemployer and single-employer insurance programs using simulations of the economy and alternative scenarios. The 2015 Projections Report shows that the PBGC’s multiemployer deficit is projected, on average, to be $55.5 billion by 2025 (in today’s dollars) if no plans receive partitions and/or suspensions. Even if plans use partitions and/or suspensions, the average deficit is projected to be $53.4 billion. The comparable numbers last year were $11.2 billion and $9.7 billion less, respectively. The projections also show that the multiemployer program is likely to run out of money by 2025 whether or not there are partitions and/or suspensions. The parallel single-employer analysis shows the single-employer program will on average have a projected surplus of $2.6 billion in 2025. This is an increase of $7.5 billion from last year’s Report.
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