NEWS RELEASE

June 30, 2014
NR 2014-11

For additional information:
Jason Hammersla
office 202-289-6700 / cell 202-422-4652

New PBGC projections confirm health of single-employer pension guarantee program

Further evidence that premium increases are not needed

WASHINGTON, DC — WASHINGTON, D.C. -"The Pension Benefit Guaranty Corporation's (PBGC) Fiscal Year 2013 Projections Report will help Congress understand the clear distinction between single-employer and multiemployer pension plans, and confirms that premium increases for the single-employer program are not needed," said Council president James A. Klein. "We commend PBGC for this report, so Congress can pursue policies that are appropriate for each of the two guarantee programs that PBGC administers," said Klein.

According to the Projections Report, the PBGC's reported single-employer program $27.4 deficit in FY 2013 is projected to narrow to, on average, $7.6 billion by FY 2023. The PBGC itself notes that this is a significant improvement just from last year's report, which projected an average deficit of $32.5 billion for FY 2022. PBGC attributes the dramatic ally better projection to improved market conditions and higher interest rates, as well as premium increases that have already been imposed on employer pension plan sponsors.

"The enormous change in just one year underscores the inherent risk of evaluating long-term obligations, such as pensions, at a single point-in-time. Inevitably, a snapshot perspective skews the outlook, either positively or negatively," Klein noted.

The Obama Administration, in its proposed FY 2015 budget, and some lawmakers, recently proposed increasing premiums on single-employer plans - on top of nearly $17 billion in increases over the past two years. The Council recently commissioned an independent research report, Further PBGC Premium Increases Pose Greatest Threat to Pension System, which concluded "premium increases threaten the long-term viability of the defined benefit pension system and PBGC's plan termination insurance program by driving away employers that present no risk to the system."

"We hope today's report puts to rest any further attempts to increase premiums for the single-employer program," Klein said.

"While we are heartened by PBGC's revised evaluation of the health of the single-employer program, the report conveys a very sobering message regarding the multi-employer plan program. In that regard, we are encouraged by the statement issued today by the bipartisan leaders of the House Education and the Workforce Committee resolving to help those multiemployer plans facing serious challenges," Klein concluded.

Single-employer pension plans - those maintained by only one employer - make up the vast majority of pension plans, while multiemployer plans - those maintained by more than one employer, and jointly administered by management and union trustees - constitute a much smaller, but important segment of plans whose benefits are guaranteed by the PBGC. According to the most recent Department of Labor statistics, in 2011 there were 43,814 single-employer plans and 1,442 multiemployer plans.

For more information on PBGC premium policy and defined benefit plans, or to arrange an interview with Council staff, please contact Jason Hammersla, Council director of communications, at jhammersla@abcstaff.org or by phone at 202-289-6700 (office) or (202) 422-4652 (cell).

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.