PBGC Single-Employer Insurance Fund Tracking for $71.6B Surplus in 2033
What’s more, the Pension Benefit Guaranty Corporation’s multiemployer fund should remain solvent for at least 40 years.
The Pension Benefit Guaranty Corporation projects lasting solvency for both its single and multiemployer pension insurance systems, per a projections report released on July 19.
The PBGC maintains two insurance programs, one for single employer defined benefit plans and another for multiemployer funds. The programs are funded by premiums. For 2024, single employer plans pay $101 per participant and $52 per $1,000 of their unfunded vested benefits. Multiemployer plans pay $37 per participant and do not have a variable rate premium.
According to the report, the single employer plan will remain solvent over the next 10 years, even in the most cynical and dire of economic and market simulations: “Even under the most extreme downside economic scenarios, the single-employer program does not fall into deficit during the projection period.”
The single employer program currently has a net surplus of $44.6 billion, and this is expected to grow to $71.6 billion by October of 2033.
The projection for the multiemployer fund was also positive, but not as significantly. The projection period for the multiemployer program is 40 years, and the fund remains solvent over that time period in 61% of projections. However, the most pessimistic projection shows the fund becoming insolvent as early as 2037.
The report credits grants through the federal Special Financial Assistance Program for the health of the multiemployer fund. In the absence of the SFA Program, which gives cash grants to struggling multiemployer plans to shore up their solvency through 2051, the multiemployer fund, which otherwise would have had to fund them, would have become insolvent in 2026.
John Lowell, a partner in pension consulting firm October Three, says the report is “so positive for the single employer program that PBGC has sought out suggestions that might even include changes to the premium structure in order to encourage the adoption and continuation of more private sector pensions. [The] PBGC might consider proposing that premium levels be decreased and perhaps provide additional decreases for certain plan designs that inherently represent lower risk to PBGC,” such as risk-sharing pensions.
Lowell also notes that for the multiemployer fund, “the projections are highly volatile” because it is harder to forecast economic conditions for the industries, and therefore the employers, represented in multiemployer plans.