The outlook for private single employer pension plans has brightened. But don’t pop the cork just yet.
The Pension Benefit Guaranty Corporation, which guarantees these plans, reported Friday that last year’s projections for its single employer defined benefit insurance fund have morphed from a $4.9 billion deficit by 2025 into a $2.6 billion surplus.
But it’s not cause for celebration, says a PBGC official, because most of that $7.5 billion turnaround ($6.3 billion) stems from actuaries predicting people will die sooner than they thought they would.
Meanwhile, forecasts for union multiemployer pension plans continue to be as gloomy as they have been since the financial crisis.
The agency said funding shortfalls for the multiemployer insurance fund could threaten the retirement security of 1.5 million workers and their families.
The continuing deterioration of union plans means that employer premium increases of up to 552 percent would be needed to keep the multiemployer fund solvent for the next 20 years, the PBGC warned.
Employer premium hikes of 59 percent to 85 percent are needed to pay projected benefits fully for 10 years and hikes from 363 percent to 552 percent are needed to pay for 20 years.
The current annual premium for an employer per participant is $27.
Congress would have to approve the increase.
Under the PBGC’s projections, the agency’s multiemployer fund will use up all of its assets by 2025.