The Pension Benefit Guaranty Corporation (PBGC) reported that in 2017, it paid out more than $5.6 billion to 868,000 retirees in failed, single-employer plans in all 50 states and US territories.
The PBGC, which is the government-sponsored lifeboat for struggling pensions, noted that the amount paid has remained the same over the past three years, while the number of retirees receiving the benefits has risen. In 2016, the agency paid out approximately $5.6 billion to nearly 861,000 retirees in failed plans, while the same amount was paid to 840,000 retirees in 2015.
For the second straight year, Ohio, Pennsylvania, and Florida had the most benefits paid. Retirees in failed plans in those states alone accounted for more than $1.4 billion, or 25% of all benefits paid out by the PBGC.
In 2017, the PBGC paid 78,109 Ohio retirees $543.9 million, compared to the $557 million paid to 78,929 Buckeye retirees in 2016. It paid 79,325 Pennsylvania retirees $462.2 million, versus last year, when it paid just under $465 million to 79,687 Keystone state retirees; and it paid a little under $419 million to 58,740 Florida retirees in 2017, only slightly up from the 57,874 Sunshine State retirees who received $414.9 million in benefits the previous year.
Following Florida was Michigan, which had 48,852 retirees receiving $397.6 million; California, which had 44,247 retirees being paid $351.3 million; New York, which had 51,871 retirees receiving $339.9 million; and Illinois, where 43,698 retirees were paid $304.6 million. The PBGC also paid $290.8 million to 33,082 Indiana retirees in failed plans, and $202.1 million to 43,400 North Carolina retirees.
Combined, the top nine states receiving benefits accounted for $3.2 billion, or nearly 60% of all the benefits paid by the PBGC last year.
According to the agency, the total number of PBGC-insured single-employer pension plans has declined to approximately 22,500 from 112,208 in 1985; it also covers about 27.5 million people, as opposed to 28.4 million people in 2016. The PBGC said it is likely this decline will continue as sponsors are increasingly interested in so-called risk transfers, where retirees are offered lump sums or annuities, instead of lifetime income, or benefits are frozen and new entrants barred.
Although the PBGC projects the agency’s multiemployer program (run by unions) will run out of money by the end of 2025, it expects the single-employer program, whose deficit shrank to $10.9 billion in 2017 from $20.6 billion the previous year, will turn into a surplus over the next 10 years.