On November 18, 2024, the Pension Benefit Guaranty Corporation (PBGC) released its Fiscal Year (FY) 2024 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 fiscal year ending September 30, 2024. 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 $54.2 billion by FY-end, up from $44.6 billion last year, and is projected to continue this upward trend over the next 10 years. Premiums for the fiscal year were $5.9 billion.

Notable activities over the fiscal year include:

• The PBGC paid $5.8 billion in benefits to about 912,000 participants; 22 plans were trusteed during FY 2024, covering about 6,400 participants.
• There were 2,103 plans covering about 369,000 participants that filed standard terminations with the PBGC, which was 22% more than the average number of filings received over the previous five years.
• There were 1,778 plans covering more than 321,000 participants that completed standard terminations in FY 2024 by settling plan obligations through annuities or lump sums.
• The PBGC completed 238 standard termination audits in FY 2024, which resulted in $2.1 million in additional benefits being paid to 1,134 individuals in these plans.

The single-employer insurance program covers about 19.4 million participants in about 23,000 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 $2.1 billion as of September 30, 2024, up from $1.5 billion last year. The latest projections indicate the program is expected to remain solvent beyond the next 40 years, primarily due to the Special Financial Assistance (SFA) Program under the American Rescue Plan Act of 2021. Premiums for the fiscal year were $0.4 billion.

Noteworthy actions and events during this last fiscal year include the following:

• As of September 30, 2024, the agency has approved 127 applications for $68 billion in SFA, $14.5 billion of which was approved during FY 2024.
• A total of $163 million in traditional financial assistance was paid to 98 plans covering about 89,000 participants. The PBGC audited four insolvent plans to make sure they were following the regulations and that benefits were paid to participants in a timely manner.
• Census data for 64 plans that previously received SFA are being compared to the Social Security full death master file to find any deaths not previously identified and to recalculate SFA. As of September 30, 2024, four plans did not need any adjustment to their SFA, another 20 plans were sent repayment letters (of which 17 have repaid the requested amounts), and the remaining plans are in review.
• Two lawsuits related to SFA were noted. The first relates to the denial of the SFA application for the Bakery Drivers Local 550 and Industry Pension Fund because the plan terminated by mass withdrawal in 2016 and the PBGC determined the plan was not eligible for SFA. The court ruled in favor of the PBGC, and the case is currently in appeal. The second case relates to the phase-in of SFA when calculating withdrawal liability following receipt of SFA in the bankruptcy case involving Yellow Corporation. The court upheld the phase-in approach, saying that “regulation was within the PBGC’s authority.”
• The PBGC approved one request to adopt an alternative method for allocating unfunded vested benefit (UVB) liability in determining withdrawal liability. Three other requests are pending.
• The agency received 11 notices of plan mergers during FY 2024.

The multiemployer insurance program covers about 11 million participants in about 1,335 plans.

Please contact your Milliman consultant with any questions.