PBGC Deficit Hits Record High; Multiemployer Woes Highlighted

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By David B. Brandolph

Nov. 17 — The deficits for the PBGC's multiemployer and single-employer insurance programs increased substantially in fiscal year 2015, with the shortfall for the multiemployer side hitting a record high, the agency said in its annual report.

The multiemployer program's deficit rose 23 percent to a record-high $52.3 billion, from $42.4 billion in FY 2014, according to data in the Pension Benefit Guaranty Corporation report, released Nov. 17. The increase was largely due to “interest factors” that increased liabilities, the agency said in a news release.

The interest factors are used to measure the value of future benefit payment obligations, and are calculated using a mortality table and recent annuity prices. The agency also cited its identification of 17 additional multiemployer plans that are newly terminated or projected to run out of money within 10 years.

The shortfall in the single-employer deficit increased by 25 percent to $24.1 billion, from $19.3 billion in the prior year. That increase was also largely due to interest factor changes that boosted liabilities, the PBGC said. However, the single-employer program is considered to be in a lot stronger shape than the one for the financially troubled multiemployer plan system.

The agency's combined deficit of $76.3 billion is also a record high, the report said.

The agency will seek to buttress its multiemployer plan program by issuing regulations, such as a final rule on plan partitions that is currently being reviewed by the Office of Management and Budget and a proposed rule on multiemployer plan mergers on tap to be issued in December or January, a PBGC official said in a conference call with reporters. Agency officials spoke during the call on the condition of anonymity.

Single-Employer Program 

In its FY 2014 PBGC Projections Report, released in September, the PBGC said the assets of its multiemployer plan insurance program was likely to be insolvent by 2025. By contrast, the agency projected that it was “highly unlikely” that the single-employer plan's assets would be depleted by that time.. And that was before Congress approved increases in single-employer premiums in October, the third hike passed since 2012.

Discussing the steep increase in the single-employer program's deficit, a PBGC official said short-term fluctuations in the single-employer program deficit aren't expected to dramatically affect the trajectory of future projections reports.

To contact the reporter on this story: David B. Brandolph in Washington at dbrandol@bna.com

To contact the editor responsible for this story: Phil Kushin at pkushin@bna.com

A copy of the annual report is at http://src.bna.com/7n.