WASHINGTON (AP) — The deficit racked up by the federal agency that insures pensions for about 40 million Americans has increased 23 percent to $76.4 billion. The agency's program for so-called multi-employer pension plans continues to account for a large share of the deficit, $52.3 billion.
Multi-employer plans are pension agreements between labor unions and a group of companies, usually in the same industry. They cover about 10 million workers.
The deficit reported Tuesday for the year ended Sept. 30 was the widest in the 41-year history of the Pension Benefit Guaranty Corp. It has now run shortfalls for 13 straight years.
But the rate of increase slowed from last year when the deficit nearly doubled to $62 billion from $36 billion in the previous fiscal year.
The gap widened in recent years because the weak economy triggered more corporate bankruptcies and failed pension plans. If the trend continues, some experts say the agency could need an infusion of taxpayer funds to pay retirees, who are guaranteed their pensions by law.
The PBGC also said it paid $5.7 billion to about 800,000 people in failed pension plans, close to the amount paid out in fiscal 2014.
The agency said the increased deficit for the latest fiscal year was due largely to worsening finances of some multi-employer pension plans. However, the agency said, the risk of its multi-employer program running out of money declined because of increased insurance premiums paid by multi-employer plans. Congress stepped in and mandated the higher premiums in legislation enacted in December.
That law also allows cuts for current retirees in multi-employer pension plans.
The PBGC estimates that the risk of insolvency for the multi-employer program is more than 50 percent in 2025 and 90 percent by 2032.
In the latest year, 17 multi-employer pension plans were terminated or were deemed to be likely to become insolvent within the next 10 years, the agency said. It didn't identify the plans. There are in total about 1,400 multi-employer pension plans, covering the 10 million workers.
The deficit in the single-employer program increased to $24.1 billion from $19.3 billion in fiscal 2014.
The PBGC was created in 1974 as a government insurance program for traditional employer-paid pension plans, which have become much less common in recent decades as most employers turn to retirement accounts such as 401(k)s. The traditional plans are most prevalent in industries such as auto manufacturing, steel and airlines.
If an employer can no longer support its pension plan, the PBGC takes over the assets and liabilities, and pays promised benefits to retirees up to certain limits.
The PBGC has been in the red for 34 of its 41 years of operation. It did have surpluses in some years in the late 1990s and early 2000s, when fewer companies failed.