When multiemployer plans go insolvent, PBGC provides loans that allow plan trustees to pay participants the pension benefits guaranteed by the agency – loans that are “rarely” repaid. (Photo: Shutterstock)
The Pension Benefit Guaranty Corp.'s multiemployer insurance program's deficit decreased by $11.18 billion in FY 2018, largely due to increases in the interest rates used to project the cost of future liabilities, according to the federal agency's annual report.
The multiemployer program insures the pensions of 10.6 million participants in 1,400 collectively bargained pensions. The program's total liabilities were $56.15 billion at the end of the year, down from $67.3 billion at the end of last year.
The program's total assets remained largely unchanged, at $2.3 billion, putting the program's funding deficit at $53.9 billion. In 2018, PBGC collected $292 million in premium income from multiemployer plans, the most it has received in the past decade, and 300 percent more than was collected in 2009.
Out of cash reserves by end of 2025
In spite of the improvement in the program, the multiemployer program is still projected to run out of cash reserves by the end of 2025, if Congress doesn't act.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
