The United States Government Accountability Office (GAO) released a 684-page report that “identifies government operations with greater vulnerabilities to fraud, waste, abuse, and mismanagement or the need for transformation to address economy, efficiency, or effectiveness challenges.”
The section on the Pension Benefit Guaranty Corporation (PBGC) covered ten pages with these highlights that included one rather curious recommendation:
We designated the single-employer program as high risk in July 2003 and added the multiemployer program in January 2009. Since fiscal year 2013, PGBC’s financial deficits have more than doubled. At the end of fiscal year 2016, PBGC’s net accumulated financial deficit was over $79 billion—an increase of about $44 billion since 2013. At the same time, PBGC estimated that its exposure to future losses for underfunded plans was nearly $243 billion. The single-employer program, composed of about 22,200 plans, accounted for $20.6 billion of PBGC’s overall deficit. The multiemployer program, composed of only about 1,400 plans, accounted for about $59 billion. According to PBGC, these dramatic increases were attributable to broad economic factors and financial conditions of the plans PBGC insures.
PBGC continues to face long-standing funding challenges for its single-employer insurance program as well, due to an overall decline in the defined benefit pension system. While tens of thousands of companies continue to offer traditional defined benefit plans, the total number of plans has declined significantly, as has participation in those plans. Since 1985, there has been a 79 percent decline in the number of plans insured by PBGC to 23,769 plans in 2014 and more than 11 million fewer workers are actively participating in these plans. As a result, PBGC’s premium base has been eroding over time as fewer sponsors are paying premiums for fewer participants.
Although Congress and PBGC have taken significant and positive steps to strengthen the agency over the past 3 years, concerns persist related to the multiemployer program and challenges related to PBGC’s overall funding structure and governance. While changes were made with passage of MPRA, PBGC officials believe there is a 50 percent chance that the multiemployer program will be insolvent by the year 2025, and after that, the risk of insolvency rises rapidly—reaching 90 percent by 2032. Further, the premium structure for PBGC ’s single-employer program continues to result in rates that do not align with the risk the agency insures against and the effectiveness of PBGC ’s board remains hampered by its size and composition.
Proactive Monitoring of Multiemployer Plans. To implement better and more effective oversight practices, we recommended that PBGC develop a more proactive approach to monitoring multiemployer plans, such as assigning case managers to work with the plans that pose the greatest risk to the agency and providing non-financial assistance to troubled plans on an ongoing basis before the plans became insolvent.
Here is a government agency that the GAO believes is very soon headed for insolvency for a variety of reasons that the GAO also believes should be dispensing non-financial assistance on how to avoid insolvency.