The federal insurer tasked with preserving benefits for underfunded multiemployer plans ran a $65 billion deficit this year. And the bleeding isn’t expected to stop anytime soon.
In his first annual report, Pension Benefit Guaranty Corporation Director Gordon Hartogensis confirms that the self-funded agency’s ability to cover benefit payments from distressed corporate pensions is unlikely to extend beyond 2025.
“Without reforms, PBGC’s Multiemployer Insurance Program will run out of money. That will leave about 1.5 million participants and beneficiaries in already-failing plans with much less than the PBGC’s guaranteed level of benefits,” Hartogensis wrote in the report. “The alarm bells are ringing, and legislative changes are necessary.”
The strained multiemployer program, which the PBGC estimates supports 10.8 million participants in 1,400 retirement plans, drained about $11 billion more from the agency’s coffers than last year ($53.9 billion). Meanwhile, the single-employer program came out $8.7 billion ahead after covering $119 billion in liabilities.
Tax writers spent the better part of 2018 trying to hammer out a pension solvency proposal including some sort of relief for the PBGC but never reached an agreement. Nothing has changed in the current Congress.
“This report should prompt Congress to pursue real and workable solutions immediately,” ERISA Industry Committee retirement policy professional Aliya Robinson said in a press release.