PBGC fund could be tapped for multiemployer bailout

Per P&I:

Congress could tap the PBGC’s single-employer insurance program as a “quick fix” should the agency’s multiemployer program become insolvent, said Michael Kreps, Washington-based principal at Groom Law Group LLP during a keynote address Tuesday at Pensions & Investments West Coast Defined Contribution conference in San Diego.

In a subsequent interview Mr. Kreps elaborates:

The only way to solve this is for Congress to do something. Tapping the single-employer program, from a policy perspective, would be “horrible” potentially turning to the premiums paid by corporate sponsors to bail out the multiemployer program. That, in turn, could further accelerate the move of corporate plan sponsors to get out of the business of offering a defined benefit plan. When it comes to writing a big check [bailing out the multiemployer program, Congress] will be looking for pots of money.

It could happen since Congress does not honestly consider consequences when legislating these days and PBGC did recently announce a surplus of a sort:

Net Financial Position, PBGC Single-Employer Program
(Figures in Millions of Dollars)

Fiscal Year	Assets	Liabilities	Net Position	Net Position, Previous Year to Current Year
2015	85,735	109,800	-24,065	-4,727
2016	97,342	117,922	-20,580	+3,485
2017	106,196	117,110	-10,914	+9,666
2018	109,941	107,502	+2,439	+13,353

Premiums

The PBGC reports that the news in FY 2018 was not as good for the PBGC regarding premiums and payments as it was in the previous two years. Premium revenue had been consistently growing, but slipped in 2018; meanwhile, benefits payments the PBGC continued to rise.

Premium levels in the single-employer program are likely to continue to slip as the large companies backstopping the program restructure benefit plans to avoid paying punitive premiums as most employers still prefer giving money to their employees instead of the government if at all possible. Raiding the single-employer ‘surplus’ will only speed the exodus from Defined Benefit plans leaving the PBGC with mounting liabilities and nobody voluntarily stepping up to pay them off.