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CCH® PENSION — 12/06/10

PBGC helped preserve pensions for 360,000, as deficit widened in FY 2010

In the past year, the Pension Benefit Guaranty Corporation (PBGC) took over failed pension plans covering nearly 109,000 workers and retirees, and helped prevent the termination of plans covering about 250,000 others, according to the Agency's fiscal year 2010 annual report. At the same time, the PBGC's deficit widened to $23 billion during the fiscal year, an increase from $22 billion in fiscal year 2009.

The report also noted that in the 2010 fiscal year the PBGC paid $5.6 billion in benefits to 801,000 retirees whose plans had failed. Nearly 700,000 other participants in those plans will receive benefits when they reach retirement age. The PBGC annual report provides both performance and financial information for fiscal year 2010, which ended September 30, 2010.

Increase in deficit reported

In the 2010 fiscal year, the PBGC took in $2.3 billion in premiums and had $7.8 billion in investment income. For the year, the PBGC realized a 12% annualized return on total invested funds, excluding transition accounts. However, the agency's total obligations (including benefit payments that will be paid out over decades) increased by $11.5 billion. The PBGC has $79.5 billion in combined assets to cover obligations that total $102.5 billion. The resulting combined deficit of $23 billion is an increase from $22 billion in the 2009 fiscal year.

The PBGC operates separate programs for single-employer pension plans and for multiemployer plans. The single-employer program posted a $21.6 billion deficit for 2010, compared with $21.1 billion in 2009. The deficit for the separate multiemployer pension program was $1.4 billion in 2010, compared to $869 million in 2009.

Source: PBGC News Release No. 11-12, November 15, 2010.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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