PBGC Releases Five-Year Report on Multiemployer Insurance Program
Pension Benefit Guaranty Corporation (PBGC) recently released its Quinquennial Report on its Multiemployer Insurance Program. Every five years, PBGC is required to review the program to determine the premiums needed to maintain the current benefit guarantee levels, along with whether the benefit guarantee levels may be increased without increasing PBGC premiums.
Before enactment of the American Rescue Plan in March 2021, PBGC projected that its Multiemployer Program would become insolvent by the end of fiscal year 2026. This is partly due to a few large, severely underfunded plans that are expected to become insolvent shortly and will therefore require financial assistance from PBCG. Under the American Rescue Plan, PBGC will provide Special Financial Assistance in the form of a single, lump-sum payment to certain underfunded multiemployer plans. This payment is calculated to allow the plan to pay all benefits due through the end of 2051, avoiding insolvency.
Because of this new program, there is a high degree of uncertainty related to the solvency of these financially troubled plans and thus of the Multiemployer Insurance Program itself. However, PBGC now projects that current premiums will be adequate until at least the mid-2030s and likely into the 2050s.