Airlines and steel companies have accounted for much of the challenge. Topping the list of claims was Pan American , whose claims in 1991 and 1992 totaled more than $841 million, followed by Eastern Air Lines , while Wheeling Pitt Steel , Sharon Steel and LTV Republic Steel round out the top 5 , according to the PBGC.
Since its inception in 1975, the PBGC has handled 2,864 terminations of underfunded single-employer plans, with total claims of $6.4 billion. Those annual claims have ranged from the $30 million in 1994 to more than $1.5 billion in 1991.
Last year alone the PBGC made periodic payments to more than 225,000 payees and lump sum payments to almost 20,000 participants. Moreover, an additional 314,000 individuals are eligible for future PBGC benefit payments.
According to the Pension Insurance Data Book 2000, the single-employer program ran a deficit from its formation until 1996. The highest reported deficit was $2.9 billion in 1993. Its largest surplus was last year’s $9.7 billion.
The Employee Retirement Income Security Act of 1974 established the PBGC to ensure that participants in defined benefit pension plans receive their pensions even if their plans terminate without sufficient assets to pay promised benefits.
Separate insurance programs protect participants in single-employer and multiemployer plans.
In 2000 the maximum annual guarantee was $40,704.60, up from $38,659.08 last year ? and up from $22,909.08 in 1988.
In addition to a fixed per-participant annual premium, the PBGC charges a variable-rate premium based on the level of a plan?s unfunded liabilities ? the excess of projected pensions over the amount of assets available to fulfill that obligation. Relatively few participants (7% of the total) are in plans paying the variable-rate premium (roughly 20% of total plans covered).
The PBGC insurance premium was $1 per participant for all programs from the inception of the agency until 1978, when it was raised to a flat $2.60 per participant ? a level it maintained until the end of 1985. For the next two years it was a flat $8.50 per participant but rose to $16.00 each in January 1988.
The current flat rate premium of $19 per participant was introduced in 1991 along with a variable component based on the level of unfunded vested benefits. Today that variable component is $9 per $1,000 of unfunded vested benefits, with no cap.
The total number of single-employer plans insured by the agency has declined substantially in the past fifteen years, primarily as a result of the large number of terminations among small plans. Last year the PBGC insured almost 36,000 single-employer defined benefit plans, down from an all-time high of 112,000 plans in 1985.
While the total number of participants that PBGC covers has grown over time, the percent that are active workers has fallen from 77% two decades earlier to just 54% in 1998.
The PBGC’s multiemployer program has run a surplus since 1982, while the total number of multiemployer plans insured by PBGC has declined slowl