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PBGC’s Balance Sheet Sees Slight Improvement

Pension Benefit Guaranty Corporation (PBGC) saw its financial condition improve for the Fiscal Year 2018, ended 9/30/18. PBGC oversees two insurance programs, one for single-employer plans and the much more troubled multi-employer program. The single-employer program posted a surplus of $2.4 billion as of 9/30/18, with total assets of $109.9 billion covering $107.5 billion in total liabilities. This was its first such surplus since 2001 and represented an improvement from a “deficit” position of $10.9 billion last year. Higher interest rates, a stronger economy and the absence of new large claims contributed to the improved financial condition. The single-employer program covers 861,000 retirees and paid out $5.8 billion in benefits over the last year. Despite its improved standing, the strength of the program continues to be tied to the overall performance of the economy as well as market-specific factors.

The multiemployer program, despite an improvement from last year, continues to project a deficit of $53.9 billion. The program has assets of just $2.3 billion and liabilities of $56.2 billion. The program is expected to run out of money in just 7 years, in FY2025, as more large multiemployer plans are expected to run out money and become insolvent. In that case, absent any changes, the program will be able to pay out only a small portion of the promised benefits.