Academy Highlights Potential Benefits of Congress Revising Currently Mandated PBGC Single-Employer Premium Structure

WASHINGTON—Following the Jan. 27 release of the Pension Benefit Guaranty Corporation’s (PBGC) Fiscal Year 2025 Annual Report, American Academy of Actuaries Vice President of Retirement Bruce Cadenhead praised the agency’s financial stewardship of its two major insurance programs and highlighted the potential benefits of Congress considering changes to the premium structure it currently mandates for the agency’s program insuring single-employer (SE) defined-benefit pension plans.

“As expected, the PBGC’s Annual Report and Projections Report provides good news for the financing of retirement income protections provided by both PBGC programs, which is critical to achieving one part of the PBGC’s mission,” said Cadenhead. “The improvement in the status of the multiemployer system is particularly encouraging in that it makes it less likely that beneficiaries will face a future reduction in benefits.

“It’s worth noting that the single-employer program’s growing surplus due to the current, legally mandated SE premium structure, continues to be far out of proportion to the SE system’s risk. This premium structure, which Congress controls, works against the other two elements of PBGC’s mission, related to encouraging maintenance of defined benefit plans and keeping premiums at a minimum. From an actuarial perspective, the SE program’s surplus of $54.2 billion is clearly excessive given that the overall level of underfunding across all insured single-employer plans has declined to only $85 billion as of 2024, and PBGC is unlikely to become responsible for more than small fraction of that amount. The ongoing high level of premiums, which is projected to grow PBGC’s surplus to more than $100 billion over the next 10 years, is a major factor in discouraging employers from continuing to offer benefits through defined benefit plans. The American Academy of Actuaries has outlined these problems and several options Congress could take up for consideration, to keep the single-employer program financially strong, based on sound actuarial principles, while reducing existing barriers to employers maintaining plans.”

Learn more about the Academy’s retirement policy work at actuary.org.  

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The American Academy of Actuaries is a 20,000-member professional association whose mission is to serve the public and the U.S. actuarial profession. For more than 60 years, the Academy has assisted public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.