April 7, 2016
The Pension Benefit Guaranty Corporation (PBGC) has issued its statutorily-required Five Year Report to Congress on the multiemployer insurance program. The Report, which is an actuarial evaluation of the insurance program, relies heavily on previously issued PBGC projections.
The Report concludes that there is a greater than 50% probability of the multiemployer insurance program becoming insolvent by 2025. The Report also concludes that increasing premiums would allow the PBGC to do more partitions and facilitations of mergers under the Multiemployer Pension Reform Act of 2014, which would defer the agency’s insolvency. The PBGC suggests Congress consider alternatives to increasing the existing per-participant premium, such as the alternatives proposed by the President in his Fiscal Year 2017 Budget Proposals. The President proposed giving the PBGC authority to assess a new variable rate premium tied to underfunding and an exit premium paid by withdrawing employers (in addition to existing withdrawal liability paid to the plan).
For more information on the PBGC’s previously issued projections and the President’s Budget Proposals, see the following Hot Topics:
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