https://crsreports.congress.gov
March 27, 2025
PBGC and Its Single-Employer Insurance Program’s Surplus
The Pension Benefit Guaranty Corporation (PBGC) is a
government corporation established by the Employee
Retirement Income Security Act of 1974 (ERISA, P.L. 93-
406). It was created to protect the pensions of participants
and beneficiaries by paying participants’ benefits (up to a
statutory maximum) if the pension plan is unable to do so.
PBGC insures only private sector single-employer and
multiemployer defined benefit (DB) pension plans. These
plans provide a specified monthly benefit at retirement,
usually either a percentage of salary or a flat dollar amount
multiplied by years of service. Single-employer pension
plans are sponsored by one employer and cover eligible
workers employed by the plan sponsor. Multiemployer
plans are collectively bargained plans to which more than
one employer makes contributions. Defined contribution
(DC) plans, such as 401(k) plans, are not insured. PBGC
operates two distinct insurance programs: one for single-
employer plans and another for multiemployer plans. This
In Focus discusses only PBGC’s single-employer insurance
program.
Background on PBGC
In FY2024, PBGC’s single-employer program insured
approximately 23,000 DB pension plans with 19.4 million
participants and paid or owed benefits to 1.5 million
participants. PBGC has taken over (i.e., become the trustee
of) a total of 5,154 terminated DB plans since 1974. ERISA
requires PBGC’s insurance programs to be self-supporting.
These programs do not receive appropriations from general
revenue, and ERISA states that the “United States is not
liable for any obligation or liability incurred by the
corporation.”
The two primary sources of funding for PBGC’s single-
employer program are (1) the premiums set by Congress
and paid by the private sector employers that sponsor DB
pension plans and (2) the assets from plans trusteed by
PBGC. The premiums are placed into an on-budget
revolving fund so that receipts and disbursements are
counted as federal revenues and expenses. The premium
rates in 2025 are (1) a flat-rate premium of $106 per
participant, (2) a variable-rate premium of $52 per $1,000
of unfunded vested benefits (the amount of benefits owed to
plan participants for which the plan has insufficient assets
to pay), and (3) a termination premium of $1,250 per
participant for three years after certain involuntary and
distress terminations. Other sources of income for the
single-employer program are the assets from terminated
plans taken over by PBGC (which are placed in a
nonbudgetary trust fund), investment income from its
revolving fund and trust fund assets, and recoveries
collected from companies when they end underfunded
pension plans.
Current Financial Position
PBGC’s single-employer program’s net financial position is
the difference between its assets and its liabilities. At the
end of FY2024, PBGC’s single-employer program’s assets
(consisting of accumulated premium revenue and the assets
of trusteed plans) were $146.1 billion. The program’s
liabilities were $92.0 billion, of which $78.7 billion was the
present value of future benefit obligations owed to
participants in trusteed plans. PBGC’s single-employer
program’s FY2024 net financial position was $54.1 billion
surplus.
Single-Employer Program: Current and
Projected Financial Position
Figure 1 shows PBGC’s single-employer program’s
financial position from FY2014 through FY2024. Since
FY2018, the program has had a surplus, increasing from
$2.4 billion at the end of FY2018 to $54.2 billion at the end
of FY2024. The two main factors contributing to the
increasing surpluses have been (1) increases in the amount
of assets (primarily due to higher-than-expected investment
returns) and (2) decreases in the present value of future
benefit obligations (primarily due to unexpected increases
in interest rates). While the premium rates that plan
sponsors pay have increased over the past 10 years, the total
dollar amount of premiums collected over the past 10 years
($54.3 billion) was less than the total amount of benefits
paid ($60.3 billion).
PBGC’s FY2023 Projections Report estimated the
program’s financial condition in 10 years using a model
with a variety of economic assumptions to conduct 5,000
simulations. The simulations produced an average surplus
in FY2033 of $71.6 billion. In 15% of the simulations, the
FY2033 surplus was less than $60.9 billion, and in 15% of
the simulations the surplus was larger than $82.5 billion.
PBGC also conducted a stress test of its financial position
that examined the program’s surplus under extreme
economic conditions (such as large drops in equity values
and increases in plan sponsor bankruptcies). PBGC reported
the present value of the projected FY2033 financial position
to be $49.4 billion under these conditions. PBGC noted that
while its liabilities would increase as a result of additional
plan terminations, assets would be supplemented by the
assets of trusteed plans and increases in variable rate
premiums. While the present value of future benefit
obligations would rise if interest rates fell, it might not have
a large effect on PBGC’s surplus. PBGC noted that its
investment strategy “seeks to hedge a certain percentage of
its interest rate risk.”
