The Pension Benefit Guaranty Corporation (PBGC) reports that the financial condition of its single-employer program continues to improve. And while it still projects that the multiemployer program is on the road to insolvency, it projects that will occur one year later than it had been expecting.
The data comes in the PBGC’s annual report for fiscal year (FY) 2020, released on Dec. 10. “As the FY 2020 Annual Report illustrates, PBGC's two insurance programs are in dramatically different financial positions,” notes PBGC Director Gordon Hartogensis in his message accompanying the report.
Single-Employer Program
Hartogensis attributes the improved financial condition of the single-employer program to:
- the PBGC’s investment policies;
- “robust management” of the portfolio, which he says resulted in a return greater than 10.5%; and
- implementation of the PBGC's liability-driven investment strategy.
More specifically, the single-employer program financial position is as follows:
Single-Employer Program Assets and Liabilities, 2019-2020
| Fiscal Year | Assets | Assets, Change from Previous Year | Liabilities | Liabilities, Change from Previous Year | Net | Net, Change from Previous Year |
| 2019 | $128.1 billion | -- | $119.4 billion | -- | $8.7 billion | -- |
| 2020 | $143.5 billion | +$15.4 billion | $128.0 billion |
+$8.6 billion | $15.5 billion | +6.8 billion |
During FY 2020, the PBGC paid $6.1 billion in benefits to more than 984,000 retirees in single-employer plans.?The PBGC also reports that it assumed responsibility for the benefit payments of an additional 56,405 workers and retirees in 69 single-employer plans that were trusteed during FY 2020. Those results are similar to those in FY 2019, when it paid more than $6 billion in benefits to just under 1 million retirees and became responsible for 51 single-employer plans with more than 103,000 current and future retirees.
Despite the good news, Hartogensis in his message included a reminder that the single-employer program “remains exposed to more than $176 billion in underfunding in pension plans sponsored by financially weak companies that could potentially become claims to PBGC.”
Multiemployer Program
The multiemployer program remains severely underfunded, says the PBGC. Following are specifics of its condition:
Multiemployer Program Deficit, 2017-2020
| Year | Deficit | Change in Deficit from Previous Year |
| 2017 | $65.1 billion | -- |
| 2018 | $53.9 billion | -$11.2 billion |
| 2019 | $65.2 billion | +$11.3 billion |
| 2020 | $66.9 billion | +$1.7 billion |
The report adds that not only are there liabilities of $66.9 billion, the multiemployer program had only $3.1 billion in assets as of Sept. 30, 2020.
Multiemployer Program Benefits, 2017-2020
| Year | Assistance Paid | Change in Assistance Paid from Previous Year | Multiemployer Plans Helped | Change in Plans Helped from Previous Year |
| 2017 | $141 million | -- | 72 | -- |
| 2018 | $153 million | +$12 million | 81 | +9 |
| 2019 | $160 million | +$7 million | 89 | +8 |
| 2020 | $173 million | +$13 million | 95 | +6 |
The multiemployer program “continues to face a crisis that threatens the retirement security of millions of Americans,” says Hartogensis, adding “It remains clear that legislative reform is necessary to avert insolvency and PBGC continues to provide technical support to policymakers, stakeholders, and plan sponsors.”
Despite the bad news, there was one glimmer of good news: the report says that the PBGC now projects that the multiemployer program will not go insolvent until 2026, one year later than it had anticipated.
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