By Chris Adams

What do you do when the protector needs protection?

For the Pension Benefit Guaranty Corp., that is the central question of the day. The little-known agency with the tongue-twisting acronym – PBGC – is a vital part of the nation’s retirement system, providing a backstop for private pensions that cover about 37 million people. Behind those 37 million people are spouses and other family members – giving the PBGC has a big impact on the lives of millions of American families.

In a session with National Press Foundation fellows, PBGC Director Thomas Reeder laid out the precarious position facing the agency and the pension plans it supports.

Although the numbers are dropping, “there are lots of people who rely on defined benefit plans,” he said.

Reeder first explained how the PBGC works, collecting premiums from pension plans. Those include plans that cover single companies as well as multiemployer plans that coordinate retirement benefits for many companies, allowing employees to move from one company to another and not lose their pension status. The plans are prevalent in construction, trucking, mining, manufacturing and other industries.

The multiemployer plans are also where the problems lie.

“We’re facing a $54 billion shortfall, and we’re collecting a few hundred million dollars in premiums,” Reeder said about the multiemployer plans.

Of the nearly 11 million lives covered by multiemployer plans, Reeder said that 1.3 million of them are in plans that are in “critical and declining” status (“critical and declining” means they are going to run out of money in the next 20 years). About half of all multiemployer participants are in plans “not in distress,” while the other half face various degrees of peril.

The reason is simple: Big companies in some of those plans have gone belly-up and not enough in premiums have come in for the PBGC to perform its function and pay out pensions for plans that have failed. The PBGC’s multiemployer insurance program trust fund is projected to be depleted by 2025. When that happens, people may see their pensions cut to 10 percent of their expected levels.

Reeder also discussed plans on Capitol Hill to shore up those plans. There is also a special congressional committee that met throughout 2018 to devise a legislative fix for the problem.