Pension Benefit Guaranty Corporation: Financial Condition Improving, but
Long-Term Risks Remain (Letter Report, 10/16/98, GAO/HEHS-99-5).

Pursuant to a congressional request, GAO reviewed the long-term
financial viability of the pension insurance programs, focusing on: (1)
the financial condition of the insurance programs and trends in the
plans they insure; (2) the impact the Retirement Protection Act of 1994
has had on the financial condition of the Pension Benefit Guaranty
Corporation (PBGC) and insured plans; (3) risks to PBGC's solvency; (4)
PBGC's efforts to forecast its future financial condition; and (5)
PBGC's efforts to improve administration of the programs.

GAO noted that: (1) PBGC's financial condition has improved
significantly over the past few years; (2) the agency has had a surplus
for the past two fiscal years, after having a deficit for over 20 years;
(3) the single-employer program improved from a deficit of $2.9 billion
in 1993 to a surplus of nearly $3.5 billion in 1997; (4) the
multiemployer program has maintained a surplus since the early 1980s;
(5) like that of PBGC, the financial condition of most insured,
underfunded plans has also improved, but underfunding among some large
plans continues to pose a risk to the agency; (6) the improved financial
condition of both PBGC and the plans it insures has resulted from better
funding of underfunded plans and economic improvements; (7) over the
past decade, the number of insured single-employer plans has fallen by
more than one-half, to about 43,000, because of the termination of many
small plans; (8) the number of participants, about 33 million, has
increased slightly because of an increase in the number of large plans;
(9) the number of multiemployer plans and participants has remained
relatively stable since the early 1980s; (10) the declining number of
active workers participating in multiemployer plans could increase the
level of unfunded liabilities and place increased financial burdens on
the multiemployer program; (11) PBGC experienced an increase in premium
revenue immediately following passage of the legislation that
contributed to its improved financial condition; (12) despite
improvements in PBGC's financial condition, risks to the agency's
long-term financial viability remain; (13) factors beyond PBGC's control
could increase plan underfunding and PBGC's liabilities by reducing the
future returns on assets; (14) PBGC is developing a new single-employer
program forecasting model designed to estimate the probability of
bankruptcies and terminations of underfunded plans under various
economic conditions; (15) in addition, PBGC has already improved its
methodology for forecasting the financial status of the multiemployer
program; (16) PBGC has also improved its techniques for estimating its
liability for plans that are likely to require future financial
assistance and is now more closely monitoring the companies with
underfunded plans that represent its biggest risks; and (17) while PBGC
has made progress, it is important that it continue its efforts to
reduce the time it takes to assume control of terminated plans, improve
the timeliness of final determinations of participants' benefits, and
monitor the performance of contractors that assist PBGC in administering
the insurance programs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-99-5
     TITLE:  Pension Benefit Guaranty Corporation: Financial Condition 
             Improving, but Long-Term Risks Remain
      DATE:  10/16/98
   SUBJECT:  Internal controls
             Funds management
             Financial analysis
             Pension plan cost control
             Retirement pensions
             Financial management systems
             Risk management
             Insurance companies
IDENTIFIER:  PBGC Pension Plan Insurance Program
             PBGC Single Employer Pension Insurance Program
             PBGC Multiemployer Pension Plan Insurance Program
             

Pension Benefit Guaranty Corporation: Financial Condition Improving, but
Long-Term Risks Remain (Letter Report, 10/16/98, GAO/HEHS-99-5).

Pursuant to a congressional request, GAO reviewed the long-term
financial viability of the pension insurance programs, focusing on: (1)
the financial condition of the insurance programs and trends in the
plans they insure; (2) the impact the Retirement Protection Act of 1994
has had on the financial condition of the Pension Benefit Guaranty
Corporation (PBGC) and insured plans; (3) risks to PBGC's solvency; (4)
PBGC's efforts to forecast its future financial condition; and (5)
PBGC's efforts to improve administration of the programs.

GAO noted that: (1) PBGC's financial condition has improved
significantly over the past few years; (2) the agency has had a surplus
for the past two fiscal years, after having a deficit for over 20 years;
(3) the single-employer program improved from a deficit of $2.9 billion
in 1993 to a surplus of nearly $3.5 billion in 1997; (4) the
multiemployer program has maintained a surplus since the early 1980s;
(5) like that of PBGC, the financial condition of most insured,
underfunded plans has also improved, but underfunding among some large
plans continues to pose a risk to the agency; (6) the improved financial
condition of both PBGC and the plans it insures has resulted from better
funding of underfunded plans and economic improvements; (7) over the
past decade, the number of insured single-employer plans has fallen by
more than one-half, to about 43,000, because of the termination of many
small plans; (8) the number of participants, about 33 million, has
increased slightly because of an increase in the number of large plans;
(9) the number of multiemployer plans and participants has remained
relatively stable since the early 1980s; (10) the declining number of
active workers participating in multiemployer plans could increase the
level of unfunded liabilities and place increased financial burdens on
the multiemployer program; (11) PBGC experienced an increase in premium
revenue immediately following passage of the legislation that
contributed to its improved financial condition; (12) despite
improvements in PBGC's financial condition, risks to the agency's
long-term financial viability remain; (13) factors beyond PBGC's control
could increase plan underfunding and PBGC's liabilities by reducing the
future returns on assets; (14) PBGC is developing a new single-employer
program forecasting model designed to estimate the probability of
bankruptcies and terminations of underfunded plans under various
economic conditions; (15) in addition, PBGC has already improved its
methodology for forecasting the financial status of the multiemployer
program; (16) PBGC has also improved its techniques for estimating its
liability for plans that are likely to require future financial
assistance and is now more closely monitoring the companies with
underfunded plans that represent its biggest risks; and (17) while PBGC
has made progress, it is important that it continue its efforts to
reduce the time it takes to assume control of terminated plans, improve
the timeliness of final determinations of participants' benefits, and
monitor the performance of contractors that assist PBGC in administering
the insurance programs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-99-5
     TITLE:  Pension Benefit Guaranty Corporation: Financial Condition 
             Improving, but Long-Term Risks Remain
      DATE:  10/16/98
   SUBJECT:  Internal controls
             Funds management
             Financial analysis
             Pension plan cost control
             Retirement pensions
             Financial management systems
             Risk management
             Insurance companies
IDENTIFIER:  PBGC Pension Plan Insurance Program
             PBGC Single Employer Pension Insurance Program
             PBGC Multiemployer Pension Plan Insurance Program