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|Michelle Dimarob, or Sarah Swinehart (202) 226-4774|
Camp: Workers at Risk in Crumbling Pension Program
Reports Show PBGC’s Single Employer Insurance Program Remains in Poor Shape, while Insolvency Looms for Multiemployer Program
Washington, DC – Today, upon the release of three separate Administration reports on the private sector defined benefit pension system, Ways and Means Committee Chairman Dave Camp (R-MI) criticized the Obama Administration for failing to bring forward a plan to protect the pensions of American workers. The FY 2012 Exposure Report details the current and projected financial positions of the Pension Benefit Guaranty Corporation’s (PBGC’s) single and multiemployer insurance programs. The Administration also issued two overdue reports on the multiemployer pension plan system that had previously been requested by Camp and other Members of the House and Senate. Camp issued the following statement upon release of the reports.
“It is clear from these reports that the pensions of hardworking Americans are at risk. After almost thirteen months of delay, we finally have an updated picture of the pension system’s fiscal health. However, today’s report doesn’t include any proposals from the Administration as to how we can shore up the multiemployer program and protect American workers.
“The Obama Administration’s delay in issuing these reports may result in many retirees seeing larger reductions to their retirement benefits than had the reports been issued in a timely manner. Prior PBGC projections showed the program to be in far better shape. Today’s PBGC analysis reveals that both their single and multiemployer programs face serious financial difficulties, with the multiemployer program in particularly bad shape. Both programs are running substantial deficits, and the multiemployer program is projected to run out of funds to pay retirees in the next ten to twenty years.”
Key Findings from the Reports
Single-employer program: The FY 2012 single-employer program liabilities of $112.1 billion and assets of $83.0 billion result in a net deficit of $29.1 billion. The average (mean) and median projected results for FY 2022 are deficits of $29.9 billion and $32.5 billion respectively.
Multiemployer program: The FY 2012 multiemployer program liabilities of $7.0 billion and assets of $1.8 billion result in a net deficit of $5.2 billion. In comparison, the deficit was $2.8 billion in FY 2011 and $1.4 billion in FY 2010. For FY 2013 (less than eight months from now), the projected deficit is approximately $40 billion. The mean and median projected results for FY 2022 are deficits of $26.2 billion and $23.9 billion respectively. PBGC simulations project a 36 percent chance that PBGC’s multiemployer program will run out of assets to pay statutorily mandated benefits to retirees by FY 2022 and a 91 percent chance by FY 2032. The previous report projected just a 6 percent chance that PBGC would run out of assets in ten years and a 30 percent chance in twenty years. Multiemployer plans were collectively underfunded by $391 billion as of the start of the 2010 plan year. As of 2009, more than half of all participants in multiemployer plans were in either critical or seriously endangered plans.