The Pension Benefit Guaranty Corporation (PBGC) expects that both of its pension insurance programs—for single employers and for multiemployer plans—will remain not only solvent but robust for years to come. 
The good news is contained in its FY 2022 Projections Report, which it released on Aug. 2. And it affects more than ledgers—together the programs protect the pensions of more than 33.5 million employees and retirees.
Single-Employer Program
The PBGC expects that the Single-Employer Insurance Program, which covers 22.3 million participants, will continue to strengthen.
The PBGC says that the program will remain strong throughout the 10-year period the projections cover. Not only that, says the PBGC, there are no scenarios in which the Single-Employer Program would exhaust its funds during that time. The projected growth in the net financial position over the upcoming 10-year period is due primarily to expected claims trending lower due to improved plan funding.
The PBGC projects that in 2032, the program will have a net of $63.6 billion in 2022 dollars, more than $10 billion higher than the projection it made in 2022 regarding what the program would have in 2031 in 2021 dollars.
Multiemployer Program
The new projections for the Multiemployer Insurance Program, which covers 11.2 million participants in about 1,360 plans, are even better than those in the report the PBGC released in 2022. This is because the sharp increase in interest rates in 2022 resulted in a “significant” increase in the plan asset returns the PBGC expects—which the PBGC says “more than offset” plan asset losses in 2022.
The PBGC expects that the Multiemployer Insurance Program will be solvent for more than the next four decades. Further the PBGC expects such long-term solvency under 60% of possible scenarios, better than the 56% it reported in the projections it issued in 2022.
A caveat, however—the PBGC says that the projections show “a high degree of uncertainty,” and that there are some pessimistic scenarios that warn of a risk of insolvency in the mid-2030s.
Effect of the American Rescue Plan Act of 2021
The March 11, 2021 enactment of the American Rescue Plan Act of 2021 (ARP) led to a dramatic turnaround of the fortunes of the PBGC’s Multiemployer Insurance Program. Before its enactment, that program was expected to become insolvent by 2026; now it is expected to be solvent for 40 years, if not more.
A key part of the reason ARP has had that effect is the Special Financial Assistance (SFA) Program, which enables severely underfunded multiemployer pension plans to pay full benefits for many years to come.
ARP enables eligible multiemployer plans to apply to the PBGC for SFA funds in the amount the plan needs in order to be able to pay benefits due through plan year 2051, calculated by the plan using specified assumptions generally defined by statute and PBGC regulations. SFA payments do not have to be repaid to the PBGC.
The Bottom Line
“These projections clearly reflect the positive impact ARP has made on the multiemployer pension system and on the pension security of millions of workers and retirees covered by troubled multiemployer plans,” said PBGC Director Gordon Hartogensis in a press release. “And the positive outlook for PBGC insurance programs is good news for the defined benefit pension system overall.”
About the Projections Report
The projections report is the PBGC’s annual actuarial evaluation of its future operations and financial status. It provides a range of estimates of the future status of insured pension plans and their effect on the PBGC's financial condition based on hundreds of different economic scenarios. The report provides a 10-year projected financial outlook for the agency’s single employer and multiemployer plan insurance programs. It also provides additional projections over 40 years for the Multiemployer Program.
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