PBGC Issues Annual Report for Fiscal Year 2009

WASHINGTON—In its 2009 Annual Report issued today, the Pension Benefit Guaranty Corporation reports results from the first year of its new Multiemployer Pension Insurance Modeling System (ME-PIMS), which tracks risk to the PBGC's multiemployer pension insurance program.

The system produces hundreds of economic simulations, and from them generates a range of outcomes for multiemployer pension plans over the next 10 years. While not predictions, the ME-PIMS results show the scale of the multiemployer program's exposure to risk. From the simulations, the program's median net financial position in 2019 is a deficit of $2.4 billion (in 2009 dollars). That is, half of the simulations showed either a surplus or a deficit smaller than $2.4 billion, and half showed a larger deficit. The mean (or average) outcome is a deficit of $4.0 billion (in 2009 dollars) for 2019.  

"As the multiemployer program's exposure to loss continues to grow, we are ramping up efforts to better monitor and manage risk,” said Acting Director Vince Snowbarger.  "This new modeling system will help us understand what's out there. It also will be a useful tool for Congress and other policymakers considering ways to strengthen our ability to protect the multiemployer pensions of almost 10 million Americans.”

In the PBGC's fiscal year 2009 financial statements, released in November 2009, the multiemployer program posted a record $800 million deficit. The program's exposure to possible losses from future pension plan insolvencies soared to $326 million from $30 million in FY 2008. 

Multiemployer pension plans are sponsored by unrelated employers that usually share a common industry. Unlike the PBGC's protection of plans sponsored by a single employer, the agency does not take over failed multiemployer plans, but instead sends financial assistance to insolvent plans. The plans use this assistance to pay benefits at amounts guaranteed by law. Currently the PBGC gives assistance to 42 insolvent multiemployer plans, which cover approximately 94,000 workers and retirees.

In addition to the ME-PIMS study, the 2009 Annual Report contains the modeling results for the PBGC's separate single-employer pension insurance program, as well as the previously released 2009 Annual Management Report. The PBGC's two pension insurance programs posted a combined deficit of $22 billion as of September 30, 2009. 

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. Through its separate insurance programs for single-employer and multiemployer pension plans, the PBGC guarantees basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.