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Billions in Payments, Bigger Deficits for PBGC in FY 2015

The Pension Benefit Guaranty Corporation (PBGC) has issued its annual report, which shows that in federal fiscal year (FY) 2015 the agency paid millions of dollars to support multiemployer pension plans and billions to people covered by pension plans that failed. The report also shows that the PBGC’s multiemployer program and its single-employer program ran deeper into the red in FY 2015.

Multiemployer Program

Benefits Paid: In FY 2015, $103 million to 57 multiemployer pension plans covering the benefits of 54,000 retirees; in FY 2014, the PBGC paid $97 million.
Deficit: grew by almost $1 billion from $42.4 billion in FY 2014 to $52.3 billion in 2015.
Reason: changes in interest factors that increased multiemployer program liabilities, as well as the identification of 17 additional multiemployer plans that are newly terminated or are projected to run out of money within the next decade.

Single-Employer Program

Benefits Paid: In FY 2015, $5.6 million to 826,000 retirees in terminated single-employer plans; in FY 2014, the PBGC paid $5.5 billion. In addition, in FY 2015, the agency assumed responsibility for more than 25,000 additional people in 65 trusteed single-employer plans. However, as in recent years, the PBGC did not incur any large losses from completed or probable plan terminations.
Deficit: grew by almost $5 billion from $19.3 billion in FY 2014 to $24.1 billion in 2015.
Reason: largely due to changes in interest factors that increased the value of single-employer program liabilities.

Good News

The Multiemployer Pension Reform Act of 2014 (MPRA) increased multiemployer plan premiums and provides new options for troubled multiemployer plans to avoid insolvency. Its effects may begin to register in 2016, but they have not kicked in yet. No plans have completed the processes required to use MPRA options, the PBGC reports, which it says explains why the FY 2015 results do not show any effect due to the use of those options.

Another piece of good news for the PBGC: In FY 2015, retirees who receive monthly benefits from the PBGC gave it a satisfaction score of 91 out of 100.