> 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 2021 and are trusteed by PBGC may receive up to
$72,409 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.
> However, among participants in
multiemployer plans that were terminated and likely to need financial assistance in the future,
49% have a benefit below the PBGC maximum guarantee and 51% have a benefit larger than the
PBGC maximum guarantee (and therefore, would see a benefit reduction).
At the end of FY2020, PBGC had a total deficit of $48.2 billion, which consisted of a $15.5
billion surplus from the single-employer program and a $63.7 billion deficit from the
multiemployer program. PBGC’s single-employer program has been on the Government
Accountability Office’s (GAO’s) list of high-risk government programs since 2003. PBGC’s
multiemployer program was added in 2009. PBGC projects the financial position of the singleemployer program is likely to continue to improve, but the financial position of the
multiemployer program is expected to worsen considerably over the next 10 years.
The shortfall will eventually be made up from the general fund, funded by taxpayers. But, we are in the weeds unnecessarily. The PBGC should be a last resort, based on the above context.
> 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 2021 and are trusteed by PBGC may receive up to $72,409 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.
> However, among participants in multiemployer plans that were terminated and likely to need financial assistance in the future, 49% have a benefit below the PBGC maximum guarantee and 51% have a benefit larger than the PBGC maximum guarantee (and therefore, would see a benefit reduction). At the end of FY2020, PBGC had a total deficit of $48.2 billion, which consisted of a $15.5 billion surplus from the single-employer program and a $63.7 billion deficit from the multiemployer program. PBGC’s single-employer program has been on the Government Accountability Office’s (GAO’s) list of high-risk government programs since 2003. PBGC’s multiemployer program was added in 2009. PBGC projects the financial position of the singleemployer program is likely to continue to improve, but the financial position of the multiemployer program is expected to worsen considerably over the next 10 years.
The shortfall will eventually be made up from the general fund, funded by taxpayers. But, we are in the weeds unnecessarily. The PBGC should be a last resort, based on the above context.