PBGC Issues FY 16 Annual Report
The Pension Benefit Guaranty Corporation (PBGC) has issued its fiscal year (FY) 2016 annual report,
a compilation that provides data on the agency’s activities, its health and the assistance it has provided to retirement plans in FY 2016.Overview of the Year
The PBGC made benefit payments of $5.8 billion in FY 2016. It report that its actions to help preserve plans and protect plan participants in FY 2016 included:
- helping to protect over 55,000 people by taking various actions in the bankruptcy process to encourage companies to keep their plans when they emerged from bankruptcy;
- reaching an agreement that returned two terminated pension plans to the sponsor, required the sponsor to restore full benefits to the plan’s 1,350 steelworkers, and mandated back payments to retirees for benefits not guaranteed by the PBGC;
- paying $113 million in financial assistance to 65 insolvent multiemployer plans;
- through its Early Warning Program (1) negotiating almost $3 billion in financial assurance to protect more than 367,000 people in plans at risk from corporate events and transactions, and (2) monitoring more than 1,500 companies to identify transactions and events that potentially posed risk to the people covered under their pension plans;
- Conducting compliance reviews of plan sponsor calculations for plans that ended through standard terminations, resulting in almost 940 participants receiving corrected benefit amounts with a value of $4.5 million;
- assuming responsibility for more than 46,000 people in 76 trusteed single-employer plans;
- reviewing more than 200 transactions and, where appropriate, arranging agreements for suitable protections to safeguard participant benefits;
- starting benefits payments to almost 35,000 retirees in single-employer plans;
- paying $5.7 billion to nearly 840,000 retirees from more than 4,700 failed single-employer plans; and
- nearly cutting the number of open audit recommendations in half.
While the PBGC’s single-employer program is still running a deficit, the shortfall shrank in 2016, which the PBGC says is primarily due to investment and premium income and a low level of plan terminations. The deficit in FY 2016 was $20.6 billion, $3.5 billion less than the 2015 deficit of $24.1 billion.
In FY 2016, the agency paid $5.7 billion in benefits to nearly 840,000 retirees from more than 4,700 failed single-employer plans. In FY 2015, the PBGC paid $5.6 billion to approximately 826,000 retirees.Multiemployer Program
The PBGC's multiemployer program’s deficit grew by $6.5 billion from FY $52.3 billion to $58.8 billion in FY 2016. During FY 2016, PBGC provided $113 million in financial assistance to 65 insolvent multiemployer plans. In 2015, the PBGC paid $103 million to 57 plans.
The PBGC is not optimistic about the future of its multiemployer program. In the report, it says that its “obligations to provide financial assistance will increase dramatically in the coming years, when more and larger multiemployer plans run out of money and require PBGC assistance to provide benefits at the guarantee level set by law.”