The Pension Benefit Guaranty Corporation (PBGC) issued its study of revenues needed to continue to protect participants in multiemployer plans that will likely run out of money.
The multiemployer program’s current assets are only a small fraction of the amount needed to cover guaranteed benefits for more than 1 million people in plans expected to run dry in the next decade. “Without changes, the multiemployer insurance program is likely to run out of money by 2025,” says PBGC Director Tom Reeder. “This report offers vital information for Congress as it considers how to stabilize the program and put it on sound financial footing.”
While the Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA) increased premiums paid by multiemployer pension plans to the PBGC, the program is still deeply underfunded. The report illustrates the effects of increasing premium revenues on the PBGC’s continued solvency under a variety of scenarios reflecting different assumptions as to how many plans would suspend benefits or apply for partition under MPRA. In each scenario, the likelihood that the multiemployer program will be insolvent before 2034 exceeds 50%, even if premium revenues are doubled.
The administration’s fiscal year 2017 budget includes a proposal to further increase premium revenues for the PBGC’s Multiemployer Insurance Program.