The Pension Benefit Guaranty Corporation (PBGC) reports a surplus of $7.7 billion for the year ended Sept. 30, 2001, in its insurance program for single-employer defined benefit pension plans.
The program protects the pensions of about 35 million people.
Secretary of Labor Elaine L. Chao, Chairman of PBGC's Board of Directors, said, "PBGC's record of accomplishment during a difficult year is encouraging and exemplary. American workers, retirees and their families can be assured that PBGC will continue to protect their interests with diligence and energy in the years ahead."
Also commenting on the results, PBGC Executive Director Steven A. Kandarian said that PBGC is well-positioned to meet future challenges. "The Corporation stands ready to protect the retirement security of American workers and the interests of our nation's private defined benefit pension system," he said.
As of Sept. 30, 2001, PBGC's single-employer program had assets totaling nearly $21.8 billion and liabilities of about $14 billion. The program retained a positive net position of $7.7 billion despite a net loss of almost $2 billion for the year. The loss resulted from a combination of underfunded plan terminations, a loss on equity investments, and actuarial charges.
Nevertheless, this marked the sixth consecutive year that the single-employer program reported a year-end surplus after more than 20 consecutive years of deficits that reached $2.9 billion in 1993. The surplus, though diminished, provides the Corporation with some financial cushion against the significant exposure that continues to exist from troubled companies with underfunded pension plans.
The PBGC's separate insurance program for multiemployer plans, which has reported a surplus since 1982, remained financially sound with a positive net position of $116 million despite a loss of $151 million. This program's loss was attributable to an increased allowance for probable losses from future financial assistance. At year-end the multiemployer program had assets of $807 million and liabilities of $691 million and covered about 9.4 million people in more than 1,700 insured plans.
Through its two insurance programs, PBGC paid more than $1 billion in total benefits to nearly 269,000 people during 2001, making this the first year in PBGC's history in which annual benefit payments topped $1 billion. The Corporation is responsible for the pensions of about 624,000 people, including those who will retire in the future, and 2,975 terminated pension plans.
During 2001 PBGC became trustee of 104 terminated single-employer plans covering nearly 89,000 people. While this was the largest one-year increase in the population of plan participants owed guaranteed benefits in the history of the insurance program, the record may not stand long.
PBGC projects about 180,000 new participants in 2002, more than double last year's total, as a result of the termination of the pension plans of LTV Corporation and other terminations.
