“The Pension Benefit Guaranty Corporation’s (PBGC) Fiscal Year 2013 Projections Report will help Congress understand the clear distinction between single-employer and multiemployer pension plans, and confirms that premium increases for the single-employer program are not needed,” said Klein.
“We commend PBGC for this report, so Congress can pursue policies that are appropriate for each of the two guarantee programs that PBGC administers,” he added.
The PBGC’s “FY 2013 Projections Report” finds the financial condition of agency’s insurance program for single-employer plans, which covers about 30 million participants, is likely to improve over the next decade. Under current estimates, the fiscal year 2013 deficit of $27.4 billion is projected to narrow to, on average, $7.6 billion by fiscal year 2023.
The PBGC announced premium increases for 2014 last November, which employers are trying to have halted. “The enormous change in just one year underscores the inherent risk of evaluating long-term obligations, such as pensions, at a single point in time. Inevitably, a snapshot perspective skews the outlook, either positively or negatively,” Klein noted.
President Obama's proposed FY 2015 budget, and some lawmakers, also propose increasing premiums on single-employer plans. The Council recently commissioned an independent research report, which concluded “premium increases threaten the long-term viability of the defined benefit pension system and PBGC’s plan termination insurance program by driving away employers that present no risk to the system.”
While the PBGC noted it is highly unlikely the single-employer program will run out of funds in the next 10 years, its report shows multiemployer plans covering about 1.5 million people are severely underfunded, threatening benefit cuts for current and future retirees (see "PBGC Foresees Increased Risks to Multiemployer Plans").
House Education and the Workforce Committee Chairman John Kline (R-Minnesota) and Senior Democrat George Miller (D-California), and Health, Employment, Labor, and Pensions Subcommittee Chairman Phil Roe (R-Tennessee) and Senior Democrat John Tierney (D-Massachusetts) issued the following joint statement: “The latest PBGC report confirms in stark detail the significant challenges confronting the multiemployer pension system. The systemic crisis we face threatens countless workers, employers, and retirees, and could ultimately harm American taxpayers, as well. We have an obligation to advance reforms that will modernize the system, encourage employer participation, protect taxpayers, and offer new tools to help rescue troubled plans. We continue to work together to find common ground and a responsible legislative solution. The American people deserve nothing less.”