It’s not just the Central States Pension Plan that might go broke. The federal agency that insures these disastrous plans is saying it will go broke in the next decade.
The Pension Benefit Guaranty Corporation said today that its multiemployer pension program is projected to go insolvent by 2026.
In 2014, Congress passed legislation that allowed trustees of financially troubled multiemployer pension plans to cut vested benefits if doing so would prevent the plan from going insolvent. So far, only one multiemployer plan has cut vested benefits.
According to the PBGC, if no plans choose to cut vested benefits or to partition, the PBGC’s average projected deficit will amount to $78.8 billion in nominal dollars by fiscal year 2026. Even if some plans chose to cut vested benefits or to partition, the projected deficit will still amount to $77.8 billion in nominal dollars by fiscal year 2026.
By contrast, the PBGC’s single employer program is expected to improve financially. The PBGC projects the program will eliminate its deficit by the end of fiscal year 2022 have a surplus of $9.6 billion in 2026, up $7 billion from the agency’s previous report.