WASHINGTON (AP) — The federal watchdog agency overseeing the nation's pension protection system reported Monday that it's running a $62 billion deficit — almost double last year's shortfall — mostly due to the poor financial condition of a few large multi-employer pension plans.
Despite a strengthening U.S. economy, plans that now protect the pensions of up to 1 million workers and retirees "are likely to run out of money" in the next 10 years, the U.S. Pension Benefit Guaranty Corporation said in a report.
Overall, the agency insures the retirement pension benefits for more than 41 million individuals in private defined-benefit pension plans; 401(k) retirement accounts are not included.
Agency officials called for Congress to enact legislation submitted by President Barack Obama designed to shore up the program's finances.
Labor Secretary Thomas Perez said fixing the problem is vital to the retirement security of the nation's middle-class.
The report said that multi-employer plans, which are collectively bargained retirement plans maintained by more than one employer, are most at risk of failing. Multi-employer plans cover more than 10 million people in over 1,400 plans, the agency said.
"The deficit in our multi-employer program has increased dramatically because of ongoing financial challenges in a minority" of those plans, said Alice C. Maroni, acting director of the agency.
The agency's $62 billion deficit for fiscal 2014, which ended September 30, is up from $36 billion from the year before.
The size of the deficit matches a projection the agency made in June.
PBGC officials who briefed reporters on the report declined to publicly identify any of the at-risk pension plans it deems most likely to fail unless helped.
Monday's report showed that the deficit in the agency's multi-employer insurance program increased by $8.3 billion in the past year to $42.4 billion. At the same time, the financial condition of the single-employer program improved over the same period, posting a $19.4 deficit for 2014, down from $27.4 in 2013.
Rep. John Kline, R-Minn., chairman of the House Education and Workforce Committee, called the multi-employer insurance program "a ticking time bomb that will inflict a lot of pain on workers, employers, taxpayers and retirees if Congress fails to act."
He said congressional leaders have been trying to reach consensus on a package for months so far to no avail.
Meanwhile, Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, said: "While the PBGC provides a modest guarantee, this report makes clear that the multi-employer insurance program is in serious danger and may not be there to pay all the guaranteed benefits....I urge my colleagues to work in a bipartisan way to address this issue and take the steps needed to ensure the retirement security of middle class families across the country."
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