Shortfalls are growing for the insurance fund backing millions of pension plans, according to a government report released Wednesday.
According to a Washington Post report, the Pension Benefit Guaranty Corp., which insures private pensions, is $58.8 billion short of what it will need to cover benefits for multi-employer pension funds that are expected to go broke within a decade. That’s up from a reported $52 billion last year.
At the current pace, the fund will run dry by 2025 – if not sooner, according to the Post.
That puts pressure on Congress to raise the insurance premiums that companies pay into the fund. Currently, the rate is $27 per person – but the PBGC said in June that premiums would need a 360% hike to keep the program afloat. And any decision to raise premiums has to come from Congress.
“The longer they wait to act, the quicker they’ll have to raise premiums,” PBGC Director Tom Reeder told the Post.
And reducing benefits may not be on the table. Earlier this year, the Treasury Department rejected a plan to reduce retiree benefits in the Central States Pension Fund, the largest troubled fund backed by the PBGC. If something isn’t done, that fund, which provides benefits to former truck drivers and their families, will also run dry by 2025, the Post reported.
Still, a 2014 passed in an attempt to prop up the PBGC law allows funds to cut retiree benefits. At least four proposals to do so are currently under review, according to the Post. So far, however, the Treasury hasn’t approved any requests to cut benefits.