On November 16, 2023, the Pension Benefit Guaranty Corporation (PBGC) released its Fiscal Year (FY) 2023 Annual Report, which reviews the operations and finances of the PBGC’s insurance programs for single-employer and multiemployer defined benefit (DB) plans for the FY ending September 30, 2023. This Alert summarizes the report’s findings.

Single-employer insurance program has a positive and growing net financial position

The single-employer insurance program’s net financial position grew to $44.6 billion by FY end, up from $36.6 billion last year, and is projected to continue this upward trend over the next 10 years. The annual improvement was primarily driven by premium income, investment gains, and lower liabilities due to higher interest rates.

Notable activities over the fiscal year include:

• Paying $6.0 billion in benefits to about 920,000 participants. 26 plans were trusteed during FY 2023, covering about 4,500 participants.
• 1,868 plans covering about 316,000 participants filed standard terminations with the PBGC, which was 12% more than the average number of filings received over the previous five years.
• 1,510 plans covering more than 226,700 participants completed standard terminations in FY 2023 by settling plan obligations through annuities or lump sums.
• The PBGC completed 232 standard termination audits in FY 2023, which resulted in $2.3 million in additional benefits being paid to about 1,300 individuals in these plans.

The single-employer insurance program covers about 20.6 million participants in about 23,500 DB plans.

Special Financial Assistance Program is the driving force behind the positive net position of the multiemployer insurance program

The multiemployer insurance program’s net financial position reached $1.5 billion as of September 30, 2023, up from $1.1 billion last year. The latest projections indicate the program is expected to remain solvent beyond the next 40 years. The report notes that the program would still be in a deficit position if the Special Financial Assistance (SFA) Program under the American Rescue Plan Act of 2021 had not been enacted.

Noteworthy actions during this last fiscal year include the following:

• As of September 30, 2023, the agency has approved 100 applications for $53.5 billion in SFA, $45.6 billion of which was paid during the 2023 FY to 64 plans.
• $176 million in traditional financial assistance was paid to 100 plans covering about 122,000 participants. The PBGC audited seven insolvent plans to make sure they were following the regulations and that benefits were paid to participants in a timely manner. Due to the SFA Program, the number of participants relying on traditional financial assistance declined by approximately 13,000.
• The PBGC approved two requests to adopt an alternative method for allocating unfunded vested benefit liability (UVB) in determining withdrawal liability.
• The agency received 15 notices of plan mergers during FY 2023.

The multiemployer insurance program covers about 11.0 million participants in about 1,360 plans.

Please contact your Milliman consultant with any questions.