| Abstrakt: |
The Pension Benefit Guaranty Corporation (PBGC) is a government corporation established by the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406). It was created to protect the pensions of participants and their beneficiaries covered by private sector defined benefit (DB) plans. These pension plans provide a specified monthly benefit at retirement, usually either a percentage of salary or a flat dollar amount multiplied by years of service. Defined contribution (DC) plans, such as 401(k) plans, are not insured. PBGC is chaired by the Secretary of Labor, with the Secretaries of the Treasury and Commerce serving as board members. PBGC runs two distinct insurance programs: one for single-employer pensions and a second for multiemployer plans. Single-employer pension plans are sponsored by one employer and cover eligible workers employed by the plan sponsor. Multiemployer plans are collectively bargained plans to which more than one company makes contributions. PBGC maintains separate reserve funds for each program. A firm must be in financial distress to end an underfunded single-employer plan and for PBGC to become the trustee of the plan. PBGC does not become trustee of multiemployer plans. An insolvent multiemployer plan is one that does not have sufficient resources from which to pay promised benefits. PBGC provides financial assistance to insolvent multiemployer plans in the form of loans, although PBGC does not expect the loans to be repaid. In FY2022, PBGC insured about 25,000 DB pension plans covering approximately 33 million people. PBGC became the trustee of 32 newly terminated single-employer pension plans and began providing financial assistance to an additional six multiemployer pension plans. At the end of FY2022, 963,097 participants were receiving monthly benefits in the single-employer program, and 5,031 single-employer pension plans were trusteed or pending trusteeship. PBGC paid $7.1 billion in benefits to participants in the single-employer program in FY2022. In the multiemployer program, 115 plans received $217 million in financial assistance in FY2022. There is a statutory maximum benefit that PBGC can pay. Participants receive the lower of their benefit as calculated under the plan or the statutory maximum benefit. If a participant's benefit is higher than the statutory maximum benefit, the participant's benefit is reduced. Participants in single-employer plans that terminate in 2023 and are trusteed by PBGC may receive up to $81,000 per year if they begin taking their pension at the age of 65. The single-employer maximum benefit is adjusted depending on the age at which the participant begins taking the benefit and on the form of the benefit (e.g., the maximum benefit is lower for a joint-and-survivor annuity). The maximum benefit for participants in multiemployer plans that receive financial assistance depends on the number of years of service in the plan. For example, a participant with 30 years of service may receive up to $12,870 per year. Currently, most workers in singleemployer plans taken over by PBGC and multiemployer plans that receive financial assistance from PBGC receive the full pension benefit that they earned. At the end of FY2022, PBGC had a total surplus of $37.7 billion, which consisted of a $36.6 billion surplus from the single-employer program and a $1.1 billion surplus from the multiemployer program. PBGC's single-employer and multiemployer programs are funded by premiums set by Congress and paid by the private sector employers that sponsor DB pension plans. Other sources of income for the single-employer program are assets from terminated plans taken over by PBGC, investment income, and recoveries collected from companies when they end underfunded pension plans. Another source of income for the multiemployer program is investment income on its revolving fund assets. The American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) authorized the Special Financial Assistance (SFA) program, which provides financial assistance to eligible financially troubled multiemployer DB plans and represents a new source of financing outside of PBGC's revolving fund. SFA is administered by PBGC and financed by appropriations from Congress. Due to SFA, PBGC estimated that its multiemployer program is likely to remain solvent for the next 40 years. [ABSTRACT FROM AUTHOR] |
