The Pension Benefit Guaranty Corp. (PBGC) on Friday reported a surplus in its single-employer program for the first time in nearly two decades in fiscal 2018 on the back of higher interest rates, the Wall Street Journal reported. The PBGC's single-employer program had assets of $109.9 billion and liabilities of $107.5 billion as of Sept. 30, resulting in a net surplus of $2.4 billion. The program insures 23,400 plans that cover 26.2 million people. This is the first surplus since 2001 and came as a result of stronger U.S. economic growth, lower than expected claims and higher interest rates, said PBGC Director Thomas Reeder. “Every year since then we’ve been in deficit because of failures of large plans and changes in the market,” he said. That risk remains on the horizon, as there are a number of non-investment-grade companies that sponsor underfunded defined-benefit plans, Reeder said. One such company, Sears Holdings Corp., filed for bankruptcy protection last month. Sears has two pension plans that held a combined $2.5 billion in assets and had a funding shortfall of $1.5 billion at the end of 2017. The company hasn’t terminated its plans and retains responsibility for paying the roughly 90,000 workers and retirees covered by the plans.
