The projected insolvency date for the insurance program for multiemployer pension plans, which cover more than 10 million Americans, has been delayed by 3 years, according to the FY 2014 Projections Report released on September 28 by the Pension Benefit Guaranty Corporation (PBGC).
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Get Your Report Now!In a written statement, PBGC reports that the risk of more immediate program insolvency has decreased primarily due to the new premium revenues anticipated under the Multiemployer Pension Reform Act of 2014 (MPRA).
PBGC is now projecting that the program's assets will be depleted in 2025; last year’s report indicated a date of 2022. (Once the program’s assets are depleted, of course, the risk of insolvency rises rapidly.)
Additionally, things are looking even brighter for the PBGC's insurance program for single-employer plans, which cover about 31 million people. PBGC numbers indicate that the program's financial condition will probably continue to improve, and that the program is highly unlikely to run out of funds in the next 10 years.
How unlikely? PBGC modeled 5,000 simulations for the 2014 Projections Report, and none showed that the program would be unable to pay the benefits it owes in 2025. That’s good news for the employees covered by these single-employer plans.
The Projections Report is PBGC's annual actuarial evaluation of its future operations and financial status. Its projections are not predictions, PBGC notes. Rather, they provide a range of estimates of the future status of insured pension plans and their effect on PBGC's financial condition, based on hundreds of different economic scenarios.