The federal agency that insures pension benefits ran a record deficit of $62 billion in Fiscal 2014, up from $36 billion in 2013, and is warning of difficult times ahead.
In its recently released annual report, the Pension Benefit Guaranty Corp. (PBGC) emphasized the problems facing some “substantially underfunded” multi-employer plans that cover more than a million people and — without legislative changes — are likely to fail over the next 10 years.
The PBGC collects insurance premiums from employers and steps in to at least partly protect retirement benefits if their plans become insolvent. Agency officials have urged lawmakers to approve legislation that would strengthen the PBGC’s finances, in part through higher premiums.
Multi-employer pension plans are often jointly managed by employers and unions. The PBGC insures roughly 1,400 such plans. In addition, it has a larger program for single-employer plans.
Despite the strengthening economy, problems in some plans caused the PBGC to run a deficit in its multi-employer program of more than $42 billion in Fiscal 2014, an all-time high that is up from only $8.3 billion in 2013.
Alice Maroni, the agency’s acting director, said the “expected insolvency” of more plans over the next decade could put the PBGC’s entire multi-employer program at risk.
External links:
2014 Annual Report of the Pension Benefit Guaranty Corp.
U.S. Pension Insurer Ran Record $62 Billion Deficit in 2014 (Associated Press)
Rising Life Expectancy Means Higher Retirement Costs (Concord Coalition)
