PBGC Deficit Grows to $36B

The annual report of the Pension Benefit Guaranty Corporation (PBGC) puts the agency’s deficit at about $36 billion for the 2013 fiscal year.

The report attributes most of this deficit to the declining financial condition of multiemployer plans (see “PBGC Warns of Trouble for Multiemployer Program”). At the same time, the report notes that the PBGC continues to get high scores for customer satisfaction.

“Pension plans continue to provide retirement security for tens of millions,” says Josh Gotbaum, director of the Washington, D.C.-based PBGC. “We should not let the problems of a few plans overshadow the reliable retirement security provided by the majority, but neither can we ignore them.”

Gotbaum adds, “Our agency stands ready to help, but the PBGC’s growing deficit is a reminder that our current resources are inadequate. Without adequate funding we can’t pay benefits or preserve pensions.”

Multiemployer retirement plans provide lifetime income to more than 10 million people in 1,400 plans, working for hundreds of thousands of businesses. Because more plans will fail within the next decade, according to PBGC research, the deficit of the agency’s multiemployer insurance program rose to more than $8.2 billion, compared with $5.2 billion last year (see “PBGC Reports Record Deficit for 2012”).

The deficit in the program for single-employer pension plans narrowed to about $27.4 billion, down from $29.1 billion in 2012. The program insures the pensions of nearly 32 million workers and retirees in 23,000 ongoing plans sponsored by private-sector employers. The single-employer program’s potential exposure to future pension losses from financially weak companies was estimated at about $292 billion compared to about $295 billion last fiscal year.

Gotbaum points out that retirees receiving benefits continue to rate the PBGC as one of the best in government for its commitment to customer service. The agency ranks in the top 3% in a survey measuring 154 categories of customer responsiveness. Retirees gave the PBGC a score of 90 on the American Customer Satisfaction Index, more than 20 points above the government average. A score of 80 or higher is considered excellent, whether for a government agency or a private business.

The PBGC’s financial statements are prepared in accordance with generally accepted accounting principles in the U.S. and the financial statements for fiscal year 2013 received an unmodified audit opinion from CliftonLarsonAllen LLP. The PBGC annual report can be found here.