Pension Insurance Fund Gap Falls to a 15-Year Low

The deficit in the government’s single-employer pension insurance fund fell by $925 million last year to the lowest level since 1981, the Pension Benefit Guaranty Corp. said Wednesday.

In its annual report to Congress, the government’s pension insurance agency attributed the improvement to a record $2 billion in investment earnings and the absence of any new major pension plan termination.

“The federal insurance program protecting pensions of the nation’s work force has been restored to a level of financial strength unseen in more than a decade,” Labor Secretary Robert Reich, the agency’s board chairman, said in a statement.

The program insures about 33 million pensions in plans sponsored by a single employer each.

Still, Reich noted that the decline in the deficit reflects economic conditions that are subject to change, and he urged officials to remain vigilant in assuring a sound pension insurance system.

The deficit in the single-employer program was $315 million, including assets of $10.4 billion and liabilities of $10.7 billion. It was the smallest imbalance since the gap between assets and liabilities was $189 million in 1981.

The deficit totaled $1.24 billion in 1994 and $2.9 billion in ‘93, when it peaked.

The PBGC also said its multi-employer program covering 9 million people had a net surplus of $192 million last year.

The agency said its improved financial condition mirrors a similar gain among the pension plans it insures. Underfunding of such plans dropped to about $31 billion from $71 billion a year earlier.

PBGC paid about $763 million in benefits to more than 182,000 people last year, an increase of about 5% over 1994.

It said it received $860 million in revenue from the insurance premiums paid by companies with covered pension plans. The agency receives no funds from general tax revenue.

Including those people receiving benefits, the agency was responsible for the pensions of about 392,000 people in 2,094 terminated plans.