PBGC Update

[imoldernu]

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WASHINGTON — The Pension Benefit Guaranty Corporation today released its Annual Report, which showed that PBGC’s deficit increased to about $62 billion in Fiscal Year 2014, largely due to the declining condition of a few multiemployer plans. The financial condition of the single-employer program improved with a deficit of about $19.3 billion, down from $27.4 billion in the previous year. The increase in PBGC’s deficit in the Annual Report is consistent with the estimates included in the FY 2013 Projections Report that was released in June. The FY 2013 Projections Report found that the insolvencies of a minority of multiemployer plans have become both more likely and more imminent.

PBGC Annual Report Shows Improvement in Single-Employer Program and Deterioration in Multiemployer Program

Details on reasons for MultiEmployer plan increases in insolvency while Single Employer plans benefited from a market improvement.
Information on guaranty limits and a ten year outlook.

[imoldernu]

I watched a "money " show that discussed this. The comments indicated that the defaulted multi employer pension programs would begin earlier than expected, becoming common in the next five years.

PBGC Sends Financial Assistance to Struggling Multiemployer Plans

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Unlike the agency's program for single-employer pensions, PBGC doesn't assume responsibility for insolvent multiemployer plans. Instead, the agency sends financial assistance so the plans can pay benefits at no more than the PBGC guarantee level. Coverage for people in multiemployer plans is based on years of service and the rate that benefits are earned. For example:

[ERD50]

When I was researching PBGC, I also found that stuff on the multi-employer plans scary. But since I don't belong to that group, I didn't go any further. Not sure what the deal is - do they have other backups?

-ERD50

[imoldernu]

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Originally Posted by ERD50 When I was researching PBGC, I also found that stuff on the multi-employer plans scary. But since I don't belong to that group, I didn't go any further. Not sure what the deal is - do they have other backups? -ERD50

Yeah... I confess I don't know as much as I'd like about this, but the potential scares me. I'm on the PBGC mailing list, so I get the notices of changes.

The part I don't like is that the PBGC itself is underwater, and despite legislative changes and increased payments into the funds, the debt is overwhelming. Alll Public Pensions alone are underfunded 2 Trillion dollars... those are state employees... In Illinois alone, the public pension funds are $111 Billion in debt.

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Pension debt in the Land of Lincoln is a big problem. So big, in fact, that it would take three years of a complete government shutdown, during which the entire general fund went toward pensions, just to break even. No funding for schools, no money for public safety and nothing for health care and human services.

Federal pensions are guaranteed by the FED, as I understand it.
Single employer pensions have improved recently, because of investing heavily in the market since last October.

This article about Detroit Pensions show concern about the administration of funds, and a Google search brings up many more articles that question the consultants in other municipal governments.
http://dealbook.nytimes.com/2014/10/...-pension-plan/

While I don't pretend to know much about pensions, I became concerned when my son, who told me a year ago that his pension was safe and 110% funded, recently said that, while it was still safe, funding was at about 80%...
That still doesn't make sense to me, and so my concern.

This PBGC page lists the funds that are being handled by trustees. Some interesting companies on the list.

http://www.pbgc.gov/wr/trusteed/plans.html

[rodi]

I was under the impression public entity pensions were not covered by PBGC. Am I wrong?

I know the PBGC required my former employer to kick in more $$ in 2009/2010 (about the time they froze our paltry pension) due to underfunding. It's now funded over 90$ (was as low as 60% at one time.) That's due to increased funding and market improvement.

[steelyman]

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Originally Posted by rodi I was under the impression public entity pensions were not covered by PBGC. Am I wrong?

I don't know about all public employees, but as a state employee I have no PBGC coverage.

[MichaelB]

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Originally Posted by rodi I was under the impression public entity pensions were not covered by PBGC. Am I wrong?

You are correct. Only private sector plans are covered.

[ERD50]

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Originally Posted by rodi I was under the impression public entity pensions were not covered by PBGC. Am I wrong? ...

Others already answered, I just wanted to point out that this phrase in the OP might have led to some confusion:

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Federal pensions are guaranteed by the FED, as I understand it.

I think what he meant by 'the FED', was not the PBGC ( an independent agency ), but just guaranteed by the FED in general, in the same way any other FED payment is guaranteed - like treasury bills, tax refunds, etc.

-ERD50

[imoldernu]

Michael is right... I led the subject astray, when I introduced State, Local Municipal and Federal Pensions, which are not covered by the PBGC..
It happened as I looked at the size of the underfunded pension obligations as a whole, and was stunned to see the timeline for the current funding end-time.

In digging around in the subject I did find something that I didn't realize about government (small g) pensions. It came up when I looked at my son's corporate structure. While his company has a title that infers that it is a government entity, it really isn't. Digging in further, I discovered something (that you probably knew) that makes we look harder at that difference between government workers and private companies.

Apropos of nothing to do with the thread, an interesting look at what part of government (at any level) is public, and what is private.

And so I wonder who has government (Federal or State/Local) pensions, and who doesn't.
As in schools... Teachers, Janitors, Bus Drivers, Psychologists, Nurses...
Police Departments... Police car fleet, computer and tech management...
Public works... Snow plow drivers, plumbers, electricians, water, sewer and waste management...
Add things like insurance, legal, medical and the thousands of other positions required to make our government work.

Back to the original PBGC subject as it may relate... From a quick look at our local situation, it appears that many of the persons who might be considered government employees, are really not, and it seems are more likely covered by multi-employer plans.

Nothing is simple.

[youbet]

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Originally Posted by imoldernu Michael is right... I led the subject astray, when I introduced State, Local Municipal and Federal Pensions, which are not covered by the PBGC..

Yes.

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Apropos of nothing to do with the thread, an interesting look at what part of government (at any level) is public, and what is private. And so I wonder who has government (Federal or State/Local) pensions, and who doesn't. As in schools... Teachers, Janitors, Bus Drivers, Psychologists, Nurses... Police Departments... Police car fleet, computer and tech management... Public works... Snow plow drivers, plumbers, electricians, water, sewer and waste management... Add things like insurance, legal, medical and the thousands of other positions required to make our government work.

I think you're over-thinking this. Non-gov't employees do not get gov't pensions. Don't over-complicate it. Private school teacher - no gov't pension. Mechanic who is employed by a private firm which maintains police cars for the city - no gov't pension. Etc.

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Back to the original PBGC subject as it may relate... From a quick look at our local situation, it appears that many of the persons who might be considered government employees, are really not, and it seems are more likely covered by multi-employer plans. Nothing is simple.

Only gov't employees get gov't pensions. The trend for gov'ts to contract out work to private firms might complicate this at first glance, but not really if you give it a moments thought. An important point of gov'ts contracting out work to private firms is to eliminate the obligation to contribute to the public employee pension fund on behalf of the employee.

Let's get back to the PBGC discussion which is always interesting. It does seem that private pensions are growing a bit riskier as the PBGC financial picture continues to detiorate.

[imoldernu]

A new final PBGC ruling on 401K rollovers to Traditional Pensions.

PBGC Publishes Final Rule on 401(k) Rollovers to Traditional Pensions

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The Pension Benefit Guaranty Corporation is publishing a final rule that makes it easier for participants in 401(k) plans with rollover options to get lifetime income by moving their funds into traditional pensions. The agency hopes to encourage people to get lifetime income by removing potential barriers to moving their benefits from defined contribution plans to defined benefit plans. The final rule, slated for publication in the Federal Register on Tuesday, removes the fear that the amounts rolled over would suffer under guarantee limits should PBGC step in and pay benefits.

Wonder if this is common, or as I'd expect... rare. Seems that the idea of a guaranty would be very attractive incentive.