The single-employer program suffered its largest one-year financial loss in the 28-year history of the Corporation largely due to record losses from completed and probable plan terminations. The net loss of $11.4 billion for the year caused the program to swing from a surplus position of $7.7 billion in 2001 to a deficit position of $3.6 billion in 2002. However, the program’s total assets of $25.4 billion assure the Corporation’s ability to meet its obligations for the foreseeable future.
With PBGC’s termination and trusteeship of the LTV pension plans, the Corporation absorbed the largest single loss (about $1.9 billion) and number of plan participants (83,000) in its history. PBGC continues to face significant exposure from troubled companies with underfunded pension plans, especially in the air transportation and steel sectors, the termination of which could produce additional substantial losses.
PBGC paid more than $1.5 billion in benefits during the year, nearly 50 percent more than the record amount it paid during the previous year.
In fiscal year 2002, PBGC became trustee of 144 terminated single-employer plans covering 187,000 people, up from 104 plans and 89,000 participants in fiscal year 2001. This represented the largest one-year increase in the number of people owed guaranteed benefits by the Corporation. In fiscal year 2003, PBGC projects another record number of participants coming into its system following the expected termination of several sizeable plans. This would be the third straight year of large increases in PBGC’s responsibility and workload.
At year-end, PBGC was responsible for the pensions of 783,000 participants, including those who have not yet retired. Despite its increasing workload, the Corporation further reduced the average time needed to issue final benefit determinations, approaching its annual performance target.
PBGC responded to an unprecedented influx of new participants in recently trusteed plans with innovations that improved the quality of the Corporation’s customer service. PBGC also prepared to test its first fully electronic business transactions as it continued its drive to establish an Internet-based electronic government operation.
Despite losses from equity investments, PBGC’s total return on investments was a positive 2.1% in 2002 compared to a negative 3.3% in 2001.
The multiemployer program remained financially sound with net income of $42 million, which improved the program’s net financial position to $158 million.
PBGC’s annual performance report (pp. 30-34) describes gains in both productivity and customer satisfaction.
Table - Financial and Operational Highlights
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