In its newly released annual report, the Pension Benefit Guarantee Corporation (PBGC) shared the news that the agency is experiencing the largest deficit in its 38-year history: $34 billion. The news comes despite PBGC’s work to protect defined benefit pension plans across the nation, such as those found at companies like the struggling American Airlines and Houghton-Mifflin Harcourt Publishing.
“PBGC continues its work to preserve pensions and to provide some of the best service out there, but continuing financial deficits will ultimately threaten its ability to pay benefits,” said Josh Gotbaum, director of PBGC.
The agency did report on some success, such as PBGC’s work to ensure retirement benefits for some of American Airlines’ 130,000 employees. An additional 40,000 employees continue to receive retirement benefits even after their employers emerged from bankruptcy thanks to the efforts of the agency. So far in 2012, PBGC has paid almost $5.5 billion to nearly 900,000 retirees who were victims to failed pension plans. A further 614,000 future retirees will receive benefits once becoming eligible. The agency added 47,000 cases during 2012, as it assumed the responsibility for benefits for a number of newly failed plans.
Operating two distinct insurance programs, PBGC oversees the administration of both single-employer and multi-employer insurance programs with deficits of $29.1 billion for the former and $5.2 billion for the latter. PBGC is not supported by tax payers and receives income only on premiums paid by insured plans, investment income, and assets from recoveries.