The lowered number of participants is particularly troubling to the PBGC, the nation’s private pension insurer. With the decline, the ratio of active to inactive workers has fallen to roughly 1-to-1 in the defined benefit pension system, down from more than 3.5-to-1 in 1980, according to the latest edition of the Pension Benefit Guaranty Corporation’s Pension Insurance Data Book.
Examining the data from another angle, the PBGC found the share of active workers in single-employer pension plans reached an all-time low of 51% in 2001, down from 78% in 1980. Additionally, multiemployer plans are seeing many of the same trends, with the share of active workers falling to 50% in 2001 from 76% in 1980.
“In a pension system that is fully advance funded, demographic trends are less significant,” said PBGC Executive Director Brad Belt. “But when defined benefit plans are underfunded by $400 billion, the declining ratio of active to inactive workers puts additional pressure on the system.”
While the number of participants may be down, so too is the number of standard terminations, reaching 1,119 in 2003, the PBGC found. However, not lower is the number of claims. The PBGC said the recent claims experience has been the worst in the agency’s 30-year history, with $11.2 billion – or 63% – of all claims having been filed within the past three years alone.
Examining the claims, the PBGC found more than 55% of the dollar claims against the insurance program – and more than half of all plan terminations – arose from plans less than 50% funded. Only $586 million of the $17.6 billion in total claims were from plans with funded ratios of 75% or higher.
As of September 30, 2003, the PBGC said the single-employer program had assets of $34.016 billion and liabilities totaling $45.254 billion, resulting in an accumulated deficit of $11.238 billion. The multiemployer program had assets of $1 billion and liabilities of $1.261 billion, leaving an accumulated year-end deficit of $261 million, the program’s first deficit in more than 20 years.
During fiscal year 2003, PBGC paid nearly $2.5 billion in benefits to more than 459,000 retirees. By the end of that year, PBGC was responsible for the benefits of 934,000 people, including 100,000 people in multiemployer plans that were receiving financial assistance from PBGC.
The Data Book is available on PBGC’s Web site at http://www.pbgc.gov/publications/databook .