U.S. pension insurer runs record deficit

WASHINGTON - The federal agency that insures pensions for about 41 million Americans saw its deficit nearly double in the latest fiscal year. The agency said the worsening finances of some multiemployer pension plans mainly caused the increased deficit.

At about $62 billion for the budget year ending Sept. 30, it was the widest deficit in the 40-year history of the Pension Benefit Guaranty Corp., which reported the data Monday. That compares with a $36 billion shortfall the previous year.

Multiemployer plans are pension agreements between labor unions and a group of companies, usually in the same industry. The agency said the deficit in its multiemployer insurance program jumped to $42.4 billion from $8.3 billion in 2013.

By contrast, the deficit in the single-employer program shrank to $19.3 billion from $27.4 billion as the economy strengthened, the PBGC said.

The agency did not name the multiemployer plans that it expects to run out of money within the next 10 years or how many are involved. It said they represent a minority of the total 1,400 or so multiemployer pension plans covering about 10 million workers.

But it said that without changes, its multiemployer insurance program will be insolvent within 10 to 15 years. "Plans covering over one million participants are substantially underfunded, and without legislative changes, many of these plans are likely to fail," PBGC acting Director Alice Maroni said in a statement.

The Obama administration has proposed raising the insurance premiums, which are set by Congress, and tailoring them to the size of companies and their level of financial risk.

The agency has now run deficits for 12 straight years. The gap grew wider in recent years because the weak economy triggered more corporate bankruptcies and failed pension plans.

If the trend continues, the agency could struggle to pay benefits without an infusion of taxpayer funds.

The PBGC reported that its pension obligations grew by $30.9 billion in fiscal 2014, to $151.5 billion. Assets used to cover those obligations increased by only $4.9 billion, to $89.8 billion.

The agency said in its annual report that it has "sufficient liquidity to meet its obligations for a number of years."