PBGC Report Forecasts Higher Deficits

November 10, 2011 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) has released its long-term exposure report, which shows financial deterioration in some pension plans and increased deficits for the agency.

The exposure report provides projections on the future status of private pension plans and their effect on PBGC’s financial status. The projection, as of September 30, 2010, in PBGC’s single employer program was for a deficit of $24 billion in 2020, an increase from the program’s $21.6 billion deficit on that date. None of the computer simulations projected the program to run out of money in the next 10 years.  

For the multiemployer program, the deficit was projected in the same period to reach $9.4 billion up from $1.5 billion. Projections in the report show a nearly 30% chance that PBGC’s multiemployer program will run out of money entirely within 20 years.  As of FY 2010, the multiemployer program had $1.6 billion in assets to cover $3.1 billion in existing liabilities.  

PBGC emphasizes that its projections, though using the best models available, retain all the limitations of long-term financial projections. The agency’s modeling system can’t account for all factors that affect the financial condition of traditional pension plans, including employer decisions about whether to keep current pension plans or change to other forms.   

The projections were made as part of PBGC’s FY2010 annual report, based on economic and financial conditions at that time. PBGC will release its annual report next week and will update its exposure report in the near future.  

The recent exposure report is available at http://www.pbgc.gov/documents/2010-Exposure.pdf.