The federal agency that insures pensions for about 41 million Americans saw its deficit nearly double in the latest fiscal year. The agency said the worsening finances of some multi-employer pension plans mainly caused the increased deficit.
At about $62 billion for the budget year ending Sept. 30, it was the widest deficit in the 40-year history of the Pension Benefit Guaranty Corp., which reported the data Monday. That compares with a $36 billion shortfall the previous year.
Multi-employer plans are pension agreements between labor unions and a group of companies, usually in the same industry. The agency said the deficit in its multi-employer insurance program jumped to $42.4 billion from $8.3 billion in 2013.
By contrast, the deficit in the single-employer program shrank to $19.3 billion from $27.4 billion as the economy strengthened, the PBGC said.
The agency didn't name the multi-employer plans that it expects to run out of money within the next 10 years or how many are involved. It said they represent a minority of the total 1,400 or so multi-employer pension plans covering about 10 million workers.
But it said that without changes, its multi-employer insurance program will be insolvent within 10 to 15 years.
The Obama administration has proposed raising the insurance premiums, which are set by Congress, and tailoring them to the size of companies and their level of financial risk.
The agency has now run deficits for 12 straight years. The gap grew wider in recent years because the weak economy triggered more corporate bankruptcies and failed pension plans.
If the trend continues, the agency could struggle to pay benefits without an infusion of taxpayer funds.
Nonetheless, it said Monday that it "still has very substantial assets, and the day when we run out of money is years away."
The PBGC was created in 1974 as a government insurance program for traditional employer-paid pension plans. If an employer can no longer support its pension plan, the agency takes over the assets and liabilities, and pays promised benefits to retirees up to certain limits.
The agency backs defined-benefit plans, which are most prevalent in industries such as auto manufacturing, steel and airlines.
The number of companies offering traditional pension plans has shrunk dramatically in recent decades. U.S. employees increasingly have turned to defined-contribution plans such as 401(k)s to fund their retirement.
The PBGC has been in the red for 33 of its 40 years of operation. It did have surpluses in some years in the late 1990s and early 2000s, when fewer companies failed.
President Barack Obama hasn't yet named a director of the agency to replace Joshua Gotbaum, who left this summer.