Breaking News: New PBGC Director

W. Thomas Reeder Jr. became the 15^th director of the Pension Benefit Guaranty Corporation (PGGC) in October, 2015. This Thursday he will be the only witness at a hearing of the Joint Select Committee on the Solvency of Multiemployer Pension Plans to examine the state of the PBGC (which happens to be approaching bankruptcy). This could be Mr. Reeder’s last act as PBGC director.

PBGC Strategic Plan

The Government Performance and Results Act Modernization Act of 2010 requires federal agencies to develop a new strategic plan every four years. The Pension Benefit Guaranty Corporation (PBGC) just released its Plan for 2018-2022. Some excerpts:

EA18 (8) Highway to PBGC Premium Explosion

Per Pension & Investments:

Sharply higher Pension Benefit Guaranty Corp. [PBGC] premiums resulting from the new federal budget deal will push more employers to shrink or terminate their defined benefit plans, moves that also will further erode the agency’s shaky finances, industry observers said.

Two session at the 2018 Enrolled Actuaries meeting touched on that subject.

EA18 (5) PBGC Reaction to ‘Segal Blend’ Rejection

In a challenge to the use of different factors for calculating withdrawal liability for multiemployer plans than are used for funding, the U.S. District Court for the Southern District of New York ruled last month:

[T]he fund’s “use of the Segal Blend rate when assessing the Times’ withdrawal liability was, in this instance, improper, and the Arbitrator’s finding to the contrary is reversed.” Third, the fund’s calculation of the Times’ second partial liability was ruled to be improper. Lastly, the court ruled the Arbitrator “correctly determined that the Times was entitled to interest on overpaid withdrawal liability, and [the Arbitrator’s] conclusion as to the applicable interest rate has not been rebutted.”

At today’s ‘Dialogue with the PBGC’ session the first audience question was on this ruling and how the five panelists, all from the PBGC, expected the PBGC to react.

PBGC Primer

In FY2017, the Pension Benefit Guaranty Corporation (PBGC) insured about 24,000 DB pension plans covering approximately 40 million people. PBGC became the trustee of 82 newly terminated single-employer pension plans and began providing financial assistance to an additional 7 multiemployer pension plans. PBGC paid benefits to nearly 840,000 participants in 4,845 single-employer pension plans and more than 63,000 participants in 72 multiemployer plans.

All this according to PBGC: A Primer. More excerpts:

PBGC Looking For Ideas

On their blog the Pension Benefit Guaranty Corporation (PBGC) expressed interest in ideas on what information to make available.

• What PBGC data or content should be more readily available?
• Which PBGC online service or data would you like to be easier to use?
• Which PBGC service would you like to use on your mobile device?

You can submit your feedback to Opengov@pbgc.gov. Here is mine.

PBGC Claiming Westinghouse MTIA Worthless?

The reporter recently contacted me on this story:

WILMINGTON, Del. (Reuters) – Employees of U.S. nuclear power firm Westinghouse Electric Co LLC, which is bankrupt and reeling from a failed reactor project, got a nasty surprise recently: in the eyes of the U.S. government’s pension insurer, its retirement plan has a massive shortfall.

While bankrupt companies often have big pension deficits, the vast majority flag the underfunding years in advance of filing for Chapter 11. By contrast, the Westinghouse Electric Co Pension Plan, which has about 9,700 participants, appeared fully funded in its most recent report to the Department of Labor in 2015.

That was the question and this is what I found out (and did not find out):