Modeling the Costs of the Pension Benefit Guaranty Corporation’s Multiemployer Program: Working Paper 2017-04

By Wendy Kiska, Jason Levine (both of CBO), and Damien Moore (formerly of CBO)

The Pension Benefit Guaranty Corporation (PBGC), a government-owned corporation, insures the pension benefits of more than 10 million participants in multiemployer defined benefit pension plans. Multiemployer plans are typically offered, as part of collective bargaining agreements, by multiple unrelated employers that are jointly responsible for funding the plan. In recent years, many multiemployer plans have experienced underfunding, and some plans now face insolvency. Many beneficiaries of insolvent plans are likely to receive less than their insured benefits, because PBGC cannot pay insurance claims that exceed the accumulated value of the premiums it has collected under the multiemployer program (plus interest earnings on its assets).

This paper describes the simulation model that CBO uses to inform its baseline budget projections for the multiemployer program. That model is also useful for analyzing the budgetary effects of legislative proposals related to the program and for providing additional information about plans, participants, and PBGC’s finances.

Corrections and Updates: On June 24, 2020, CBO posted an updated version of Figure A-1 and the data underlying it as supplemental information. The data now cover the 1999–2018 period.