PBGC deficit grows to $58.8 billion
The deficit incurred by The Pension Benefit Guaranty Corporation continues to grow. In its Fiscal Year 2016 Annual Report, the multiemployer plan insurance program’s deficit rose by $6.5 billion to a record of $58.8 billion since last year.
In a conference call this week, PBGC Director Tom Reeder said the plan could become insolvent by 2025 or sooner unless Congress acts to protect the pension safety net program. Reeder cited 11 additional plans that are expected to lose money within the next 10 years and the decreases in interest rate factors that are used to calculate the program’s liabilities as reasons for the 12.4% increase in the deficit.
“First and foremost, we need to protect the promises that have already been made to workers and retirees,” Redder said in a statement. “We are committed to working with Congress on long-term solutions that include increasing multiemployer premium revenues and reforming the premium structure.”
On the bright side, PBGC’s single-employer insurance program saw a diminishment in its deficit from $24.1 billion at the end of fiscal year 2015 to $20.6 billion at the end of fiscal year 2016. Increased investment and premium income and a low number of plan terminations were the primary reasons for that improvement.