When the program's cash reserves are exhausted in 2025, PBGC will only be able to insure a fraction of what it now guarantees from the revenue drawn on annual premium receipts.

PBGC does not assume control of plan assets when multiemployer plans go insolvent, as it does with assets in its single-employer insurance program when plan sponsors go bankrupt.

Loans made by PBGC are “rarely” repaid

Rather, PBGC furnishes insolvent multiemployer plans with loans that allow plan trustees to pay participants the benefits guaranteed by the agency. By the program's design, the loans continue until a plan no longer needs assistance or all of the guaranteed benefits have been paid. According to PBGC's report, the loans are “rarely” repaid.

PBGC segments its liabilities in two groups: plans that are already receiving loans, and “probable” plans that have either terminated or are expected to be insolvent in the next 10 years.

By the end of FY 2018, 78 multiemployer plans were receiving PBGC loans, accounting for $2.4 billion in liabilities to the program. Seven plans, covering about 1,100 participants, became insolvent in 2018.

Another 64 plans have terminated but have yet to start receiving loans, accounting for $1.7 billion in liabilities.

But the source of the existential threat to PBGC is found in the probable plans expected to go insolvent in the next decade.

According to the report, 42 multiemployer plans will be in need of assistance within 10 years, accounting for $52.1 billion of the program's current liabilities.

Improved net position won't delay when PBGC burns through assets

Improved interest rates helped PBGC in two ways over FY 2018.

They accounted for a nearly $6 billion decrease in the cost of its future liabilities. And four multiemployer plans that had previously been classified as probable insolvencies were removed from that list, largely because of their improved balance sheets from strong investment returns.

Updated data on plan demographics resulted in another reduction of $2 billion to the multiemployer program's liabilities. The agency also actualized $1.6 billion more in returns on its assets than it previously projected.

The four plans that were removed from the probable list accounted for a $1.6 billion reduction in the program's liabilities.

Nevertheless, the overall reduction in liabilities does not change the impending exhaustion of PBGC's cash reserves, or its timing.

The agency's FY 2017 Projections Report shows the chances of insolvency rise to greater than 90 percent by the end of FY 2025, or seven years from now, and greater than 99 percent of 2026.

“The Corporation has sufficient liquidity to meet its obligations for a number of years; however, barring changes, the Multiemployer Program will certainty not be able to fully satisfy its long-term obligations to plan participants,” the report says.

On November 30, a bipartisan Joint Select Congressional Committee is scheduled to release a report on the impending insolvency of multiemployer plans and the PBGC.