The Pension Benefit Guaranty Corporation (PBGC) has released its Fiscal Year (FY) 2021 Annual Report, which shows its multiemployer plan insurance program has a positive net position of $481 million at the end of FY 2021—a sharp contrast to the program’s deficit of $63.7 billion at the end of FY 2020.
The agency’s multiemployer plan program is now likely to remain solvent for more than 30 years, due to the enactment of the American Rescue Plan Act (ARPA) of 2021, PBGC said in an announcement. ARPA created a special financial assistance (SFA) program, which PBGC estimates will provide funding to more than 250 severely underfunded pension plans covering more than 3 million Americans.
PBGC issued an interim final rule addressing the SFA program in July. Following a comment period, industry stakeholders are awaiting a final rule. PBGC is taking applications for the program prior to a final rule being published.
Prior to the enactment of ARPA, PBGC’s multiemployer program was projected to become insolvent in FY 2026. Its dramatic improvement in net position results from a significant reduction in program liabilities due to the “unbooking” of the liability for plans that were expected to fail and call on PBGC for assistance in the next decade, the agency said.
Single-Employer Program Continues Improvement
Meanwhile, PBGC’s single-employer plan insurance program also saw year-over-year improvement. It had assets of $150.7 billion and liabilities of $119.8 billion as of September 30. The positive net position of $30.9 billion reflects an improvement of $15.4 billion from its $15.5 billion net position in FY 2020.
PBGC said that during FY 2021, the agency paid more than $6.4 billion in benefits to nearly 970,000 retirees in terminated single-employer plans. PBGC also assumed responsibility for the benefit payments of nearly 34,000 workers and retirees in 47 single-employer plans that were trusteed during FY 2021.
“For the first time in 20 years, PBGC’s insurance programs are both reporting positive net financial positions,” says PBGC Director Gordon Hartogensis. “The solvency of PBGC’s multiemployer insurance program—which was facing a near-term crisis—has been extended by decades into the future. We are working expeditiously on implementing the program to ensure that over 3 million of America’s workers, retirees and their families receive the pension benefits they earned through many years of hard work.”