Pension-backing agency says looming insolvency delayed for one of its insurance programs
The Multiemployer Insurance Program's insolvency is now projected to occur during fiscal year 2026 rather than fiscal year 2025.
A government agency that provides financial help when pension plans fail has reported an extension to the timeframe in which its Multiemployer Insurance Program is expected to become insolvent.
"The Pension Benefit Guaranty Corporation insures and guarantees private sector workers' pensions," according to usa.gov.
The agency says that while its Multiemployer Insurance Program's liabilities still massively outweigh assets, the situation has improved slightly since a year ago and the program's anticipated insolvency is now expected to hit during fiscal year 2026 rather than during fiscal year 2025.
"The Multiemployer Program remains severely underfunded with liabilities of $66.9 billion but only $3.1 billion in assets as of September 30, 2020," a press release noted. "This resulted in a deficit (negative net position) of $63.7 billion, compared to $65.2 billion a year earlier. The decrease in the program’s deficit is primarily due to the enactment of the Bipartisan American Miners Act of 2019, which is expected to help the United Mine Workers of America 1974 Pension Plan avoid insolvency. This development resulted in a delay in the program’s projected insolvency from sometime in FY 2025 to sometime in FY 2026."
The agency's Single-Employer Insurance Program is in better financial shape with assets exceeding liabilities.
"The Single-Employer Program had assets of $143.5 billion and liabilities of $128.0 billion as of September 30, 2020," the release said. "The positive net position of $15.5 billion reflects an improvement of $6.8 billion during FY 2020. However, the program’s exposure increased to $176.2 billion in underfunding in pension plans sponsored by financially weak companies that could potentially become claims to PBGC."
The press release noted that this improvement was "driven primarily by investment income and premium income."
PBGC says that it does not get any taxpayer money.
"The agency’s two insurance programs are legally separate and operationally and financially independent," the press release says. "PBGC is directly responsible for the benefits of more than 1.5 million participants and beneficiaries in failed pension plans and receives no taxpayer dollars. The Single-Employer Program is financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans. The Multiemployer Program is financed by insurance premiums and investment income but is expected to become insolvent due to the failure of severely underfunded multiemployer pension plans. PBGC insures multiemployer plans that, according to PBGC’s latest Data Book, are $673 billion underfunded in aggregate."
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