In a press release on its annual Performance and Accountability Report, the PBGC said, as of September 30, the single employer program reported assets of $56.5 billion and liabilities of $79.2 billion. Accounting standards also required the PBGC to disclose the change in net position that would have occurred as a result of subsequent events. If events subsequent to the fiscal year had occurred prior to year end, the deficit in the single-employer program would have been $25.7 billion.
The insurance program’s finances were helped by $3.9 billion in investment income and a $2.3 billion reduction in liabilities due to higher interest rates, leading to an overall net gain of $529 million. However, for the fiscal year, the PBGC incurred $4 billion in losses from completed and probable pension plan terminations while collecting only $1.5 billion in premiums. The single-employer program took in 120 terminated pension plans with a total of $10.5 billion in assets and $21.2 billion in liabilities, for an average funded ratio of 50% , according to the news release.
The PBGC assumed responsibility for the pension benefits of an additional 235,000 workers and retirees in 2005, bringing the total number owed a benefit to 1.3 million. The amount of benefits paid increased from $3 billion in 2004 to $3.7 billion in 2005 and is projected to rise to $4.4 billion in 2006.
The 2005 financial statements show PBGC’s reasonably possible exposure, an estimate of the amount of unfunded vested benefits in pension plans sponsored by companies at greater risk of default, reaching a record $108 billion, up from $96 billion in 2004 and $82 billion in 2003. The PBGC’s estimate of the total shortfall in insured single-employer plans remained in excess of $450 billion.
The PBGC’s separate insurance program for multiemployer pension plans posted a net loss of $99 million in fiscal year 2005, resulting in a fiscal year-end deficit of $335 million compared to $236 million for 2004.
The multiemployer program covers 9.9 million participants in nearly 1,600 plans. The PBGC’s estimate of total pension underfunding in the multiemployer system exceeded $150 billion in 2004 and exceeds $200billion in 2005. Additionally, the PBGC reported that the program faces $418 million in reasonably possible exposure to pension plans that may require financial assistance in the future, up from $108 million in 2004.