The most recent projections report, issued by the agency in June of 2016, said the multiemployer insurance program is likely to run out of funds by the end of 2025, and estimated a “considerable risk” that the program could become insolvent before then.

In a press call, PBGC Director Thomas Reeder said between 10 and 15 percent of the more than 10 million workers with pensions insured by the multiemployer program are enrolled in plans expected to run out of money in the next 20 years or less. The multiemployer program covers about 1,400 collectively bargained multiemployer plans.

By law, Congress sets premium levels PBGC assesses in both its multiemployer and single employer programs. The Obama administration has proposed premium increases to the multiemployer program, but not the single employer plan.

Congress has yet to act on the Obama administration’s proposed premium increases, which analysis from the administration and independent actuaries say are necessary to assure the long-term solvency of the program.

Reform needed

“Reform is urgently needed to extend the solvency of the multiemployer program,” said Reeder in the call. The agency is committed to working with Congress to implement the necessary premium increases and funding structure to assure its commitments can be met in the long-term, he added.

Time is of the essence, underscored Reeder. The longer Congress waits to implement premium reform, the higher and more immediate the increases will have to be if the program is to survive beyond 2025, he said.

Under the Employee Retirement Income Security Act, the PBGC director severs a five-year term. Reeder was appointed by President Obama and began his term in October of 2015.

He expressed hope that the prospect of new premium structure for the multiemployer plan is gaining traction in Congress.

“Retirement security has traditionally been a nonpartisan issue and people on both sides of the aisle agree PBGC is a high priority,” he said.

The multiemployer program collected $282 million in premium revenue in 2016, the most over the past 10 years. In 2015 it collected $212 million. As recently as 2012, premium revenue was as low as $92 million.

The program earned another $143 million in investment income.

New liabilities

But the $425 million in total revenue to the program paled in comparison to new liabilities, which were $6.8 billion.

Of the assistance paid to 65 multiemployer plans in 2016, 10 were newly insolvent and cover the pensions of about 10,000 participants.

The multiemployer program protects a substantially lower portion of pension benefits relative to the single-employer program.

For the multiemployer program, the agency determines insured benefits by factoring an individual participant’s years of service to the employer and the generosity of promised benefits in the plan.

The maximum guarantee for a participant with 30 years of service in a plan with moderately high benefits is $12,870 a year.

For a worker with 20 years of service, PBGC’s maximum guarantee is $8,580 in annual benefits; for a worker with 10 years of service the maximum is $4,290.

PBGC’s multiemployer program has total assets of $2.2 billion, against $61 billion in liabilities.

Of the $61 billion in liabilities, 65 insolvent plans account for $2.1 billion in liabilities, and 63 plans that are terminated and expected to be insolvent account for almost $2 billion.

But the brunt of the program’s liabilities is with the 40 ongoing plans that are projected to be insolvent in the next 10 years—those plans account for nearly $57 billion of the program’s record liabilities.

The $113 million in paid guarantees to participants was the second highest over the past decade. In 2011, $115 million in benefits were paid out.

The 65 plans that received assistance in 2016 were the most over the past decade.

Single-employer plan continues improvement

PBGC’s single-employer insurance program has continued to improve, thanks in part to consistent and substantial increases in employer premiums over the past five years.

In 2016 the single-employer plan had a deficit of $20.6 billion—assets were $97.3 billion against liabilities of $117.9 billion. The deficit decreased nearly $3.5 billion from the previous year.

More than $6.4 billion in premiums were paid to the single-employer program, by far the most over the past 10 years.

In 2015, the single-employer program collected $4.1 billion in premiums. Premium revenue has tripled since 2011, when the program collected less than $2.1 billion

The single-employer program realized more than $8.6 billion in investment income.

PBGC paid $5.7 billion in benefits to participants in failed single-employer plans in 2016, accounting for almost 840,000 retirees in more than 4,700 failed pension plans.

Three single-employer plans underfunded by a total of $249 million were newly classified as probable terminations.