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As stated in GAO's 2015 High Risk report, the Pension Benefit Guaranty Corporation’s (PBGC) financial portfolio is one of the largest of any federal government corporation, with more than $89 billion in assets. However, PBGC's financial future is uncertain, due in part to a long-term decline in the number of traditional defined benefit plans. Through its single-employer and multiemployer insurance programs, PBGC insures the pension benefits of more than 41 million American workers and retirees who participate in nearly 24,000 private sector defined benefit plans.

At the end of fiscal year 2014, PBGC's net accumulated financial deficit was $61.8 billion—an increase of over $26 billion from the end of fiscal year 2013—and PBGC estimated that its exposure to future losses for underfunded plans was $184 billion. This dramatic increase in PBGC’s deficit was attributable to a crisis in the multiemployer program, the smaller of its two programs: Since 2013, the deficit in the multiemployer program, composed of about 1,400 plans, had increased by over 400 percent. Meanwhile, the financial position of the larger single-employer program, composed of about 22,300 plans, had improved in recent years, but still accounted for $19.3 billion of PBGC’s overall deficit (see figure). GAO designated the single-employer program as high risk in July 2003, and added the multiemployer program in January 2009.

Figure: PBGC's Net Financial Position of the Single-Employer and Multiemployer Programs Combined

Various laws have been enacted to strengthen PBGC's financial position and governance. For instance, the Pension Protection Act of 2006 (PPA) strengthened pension funding requirements for plans, in 2012 the Moving Ahead for Progress in the 21st Century Act (MAP-21) included measures to increase premium rates and strengthen the PBGC board, and the Bipartisan Budget Act of 2013 increased premium rates again. More recently, the Highway and Transportation Funding Act of 2014 included a provision that has the effect of allowing companies to defer otherwise mandatory contributions to their defined benefit pension plans. To the extent that sponsors reduce contributions in the short term, they may increase plan underfunding and expose PBGC to greater risk. However, prompted by the dramatic increase in PBGC's deficit, the Multiemployer Pension Reform Act of 2014 (MPRA) was enacted in December 2014, with a number of provisions to enhance the long-term viability of the multiemployer program.

This High Risk Report is updated every two years, at the start of each new Congress. For more information on this High Risk Issue, see What We Found and What Remains to Be Done.

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