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Sept. 28 — The projected insolvency date for the Pension Benefit Guaranty Corporation's multiemployer pension plan termination insurance program has been pushed back three years to 2025, according to projections from the agency.
In its FY 2014 PBGC Projections Report, released Sept. 28, the PBGC said the risk of the multiemployer plan program's insolvency has decreased over the near term, due primarily to new premium revenues anticipated under the Multiemployer Pension Reform Act of 2014.
According to a PBGC press release, the projections report now expects that the assets of the program, which the PBGC said covers 10 million people, likely won't be depleted before 2025, three years later than the estimated depletion date of 2022 in last year's report.
In its latest projections, the PBGC said it updated its model and incorporated premium increases and other provisions under the MPRA. The PBGC's projected 2024 multiemployer deficit averages $44.3 billion discounted to today’s values. Consequently, the agency projects that the fund is more likely than not to run out of money in 2025 rather than 2022. The risk of insolvency increases thereafter, reaching 92 percent by 2034, according to the PBGC.
Projections for the PBGC's insurance program for single-employer plans, which the agency said covers about 30 million people, show that the program's financial condition is likely to improve and isn't expected to run out of funds in the next 10 years.
Under current estimates, the program's actual fiscal year 2014 deficit of $19.3 billion would shrink to, on average, $4.9 billion at fiscal year 2024 (measured in present value). This year's projections, the agency said, follow on the improving trend noted in last year's report, which projected, on average, a deficit of $7.6 billion at FY 2023. However, the PBGC said a wide range of outcomes remain possible, ranging from large deficits to surpluses.
According to the PBGC, the projections report is the agency's annual actuarial evaluation of its future operations and financial status. The agency said the projections aren't predictions, but rather provide 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
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The text of the PBGC's 2014 projections report is at http://src.bna.com/o8. The text of the PBGC's press release is at http://www.pbgc.gov/news/press/releases/pr15-09.html.
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