The PBGC is entirely self-financing and its budget is not rates. Accomplishments in 1978: Through the first quarter of FY 1978, PBGC had become trustee of 167 pension plans thus ensuring the continuation of benefit payments to over 10,000 pay status participants who receive almost $1,170,000 in total monthly benefit payments. In the first three months of FY 1978, PBGC has closed 1,281 termination cases (1,062 by issuing Notices of Sufficiency, thus allowing the plan administrator to wind up the plan, and 219 for administrative reasons). To date in FY 1978 PBGC has, through regulations, taken steps to simplify the reporting requirements that the pension community must meet under Title IV of ERISA. These improvements involve: (1) the timing of the annual premium declaration which eases the recordkeeping requirements; (2) combining annual report requirements with those of the Internal Revenue Service and the Department of Labor; and (3) making liberal use of PBGC's waiver authority concerning the requirement to notify PBGC of statutory reportable events. Objectives for 1979: PBGC objectives for FY 1979 include: (1) presenting proposals to Congress for amending ERISA as it pertains to multiemployer plan coverage and other appropriate areas; (2) improve case processing by refining policies, regulations and administrative procedures; (3) improve financial management reporting systems; and (4) expand technical assistance to the pension community. PENSION BENEFIT GUARANTY CORPORATION Activity 2: Benefit Payments and (1978 $20,292,000, Pos. NARRATIVE DESCRIPTION OF PROGRAM A. BASIC BENEFITS INSURANCE PROGRAM 1. Limits of Coverage Effective upon enactment of ERISA and subject to the PBGC is authorized but not required to guarantee benefits 2. Benefit Payments and Annuity Purchases The PBGC Board of Directors has determined that the B. ESTIMATED FY 1979 ACTIVITY By the end of FY 1978, it is estimated that there will be over 15,000 retired participants in pension plans for which PBGC is trustee, and more than 34,000 additional participants who have vested rights to pensions under those plans who are not yet in pay status. In FY 1979 the totals are projected to grow to more than 22,000 retired participants and more than 57,000 with deferred vested rights. The projected total benefits paid by PBGC will be $15,292,000 in FY 1978 and $26,172,000 in FY 1979. It is estimated that annuities will be purchased for over 500 vested participants in FY 1978 at a cost of $5,000,000 and for over 2,100 vested participants in FY 1979 at a cost of $20,000,000. This budget is based on the assumption that pension benefits and annuity purchases will be paid out of the PBGC revolving fund which will then be reimbursed by the PBGC trust fund for that portion of the liability attributable to the trust fund. Reimbursements of approximately $3,000,000 are to be made in FY 1978 and $25,600,000 in FY 1979. Through FY 1977 the trust fund had been paying a disproportionately high share of the benefits while various policy matters were pending. Thus, transfers from the trust fund to the revolving fund for benefit payments will not commence until FY 1979 when the revolving fund will have made benefit payments equal to its proportionate share of total benefit payments. For annuity purchases, which will commence in FY 1978, there will be no delay in the transfer of the trust fund's proportionate share. - 35 Purpose: Through direct benefit payments or through purchases of annuities, PBGC guarantees the payment of all basic benefits under a covered pension plan if the plan should terminate and be unable to satisfy such benefits. Explanation: When it becomes trustee of a terminating pension plan, PBGC may fulfill its obligation to vested participants by making the benefit payments directly or through the purchase of annuities under which private insurance carriers will pay benefits to such participants. The decision as to whether or not PBGC should purchase annuities depends upon financial and other program considerations. The maximum amount of the benefit guaranteed is the lesser of a plan participant's high consecutive five-year monthly gross income or $750 per month as adjusted after enactment for changes in the Social Security Act contribution and benefit base. The calendar year 1978 maximum guaranteeable monthly benefit is $1,005.68. Subject to this limit, a benefit increase resulting from adoption or amendment of a plan is fully guaranteed if it has been in the plan five or more years prior to the termination. A plan or plan admendment which is in force for less than five years before termination is insured 20 percent (or $20, if less) for each year of its existence. As represented in this budget plan, all benefit payments and annuity purchases will be made from the revolving funds. The trust funds will reimburse the revolving funds to the extent that plan liabilities are covered by plan assets and employer liability (i.e. for the trust funds' proportional share of the benefit payments and annuity purchases). Such reimbursement will be made at least annually and as frequently as feasible. Accomplishments in 1978: Through the first quarter of FY 1978, PBGC has become trustee of 167 pension plans. These cases involve over 10,000 retired participants now receiving about $1,170,000 in monthly benefits. To date no annuities have been purchased by PBGC. It is anticipated that such purchases will commence by the fourth quarter of FY 1978. Objectives for 1979: During FY 1979, PBGC expects to pay $26,172,000 in benefit payments to participants of terminating plans for which it becomes trustee, and purchase $20,000,000 in annuities for 2,100 participants. By September 30, 1979, it is estimated that more than 20,000 retired participants will be receiving benefit payments from PBGC. |