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The Pension Benefit Guaranty Corporation’s (PBGC) projections report for Fiscal Year 2013 included some critical and alarming information. The PBGC reports that current multi-employer pension system (which covers approximately 10 million union members) is “under severe stress” and indicating that “absent changes in current law, many plans are likely to fail.” Specifically, the PBGC noted that approximately 15 percent of the participants in multi-employer plans participate in plans that are severely underfunded, which the PBGC identified as being funded at less than the 40 percent level.

More alarming, the PBGC indicated that at its current premium levels (which means that the PBGC would not be required to pay for any more pension benefits), the PBGC’s multi-employer program is on a course to become insolvent (with a significant risk of running out of money) in as little as five years. Even based on conservative projections, the PBGC is projected to become insolvent in 2021.

This Report (which can be found here) is required reading for employers that participate in multi-employer pension plans.

Please contact Andy Martone, if you would like to discuss withdrawal liability or related issues.