PBGC Annual Report 2023

2023 Annual

Report

Protecting America’s Pensions

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

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A MESSAGE FROM OUR CHAIR

The Biden-Harris Administration continues to protect and strengthen the

retirement security of America’s workers, retirees, and their families. The

Pension Benefit Guaranty Corporation (PBGC) plays an important role in

these efforts by working with employers and unions to preserve their pension

plans and by providing a safety net for people whose pensions have failed.

Today, nearly 920,000 participants receive benefit payments of over $6

billion per year from the PBGC and more than 31 million of America’s

workers, retirees, and beneficiaries are in plans insured by the PBGC.

On behalf of the PBGC Board of Directors, I am pleased to present the

PBGC’s FY 2023 Annual Report, which provides important information

about the operations and finances of the PBGC Single-Employer and

Multiemployer Insurance Programs. The report highlights many of PBGC’s

accomplishments over this past fiscal year to preserve plans and protect pensions, including achieving its 31

consecutive unmodified audit opinion on its financial statements.

The PBGC Single-Employer Program’s financial status showed improvement and has been in a positive net

financial position, which is projected to grow over the next 10 years. The PBGC Multiemployer Program

improved during FY 2023 to a positive net position and is likely to remain solvent for more than 40 years,

primarily due to the enactment of the American Rescue Plan of 2021 and PBGC’s implementation of the

Special Financial Assistance (SFA) Program. The SFA Program provides funding to severely underfunded

multiemployer pension plans and will ensure that millions of America’s workers, retirees, and their families

receive the pension benefits they earned and can retire with dignity. As of the end of FY 2023, PBGC had

received 135 SFA applications requesting a total of $71.0 billion in SFA and had approved 100 applications

for $53.5 billion in SFA.

In FY 2023, PBGC continued its commitment to maintaining a diverse and inclusive workplace,

strengthening employee performance, and increasing leadership engagement. PBGC’s 2022 scores for

employee engagement; global satisfaction; and diversity, equity, inclusion, and accessibility ranked it as a Top

Agency among small agencies. Overall, PBGC ranked number two in the small agency category for Best

Places to Work in the Federal Government for 2022.

Retirement security plays a key role in providing opportunities for workers to reach their long-term financial

goals. My fellow Board members, Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo,

and I are proud of the work PBGC has accomplished to provide a more secure future for America’s workers

and retirees. We are confident that PBGC will continue to work toward financially sound insurance programs

to ensure America’s workers and retirees have the secure, dignified retirement they deserve.

Julie A. Su

Acting Secretary of Labor

Chair of the Board

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A MESSAGE FROM THE DIRECTOR

For nearly five decades, the Pension Benefit Guaranty Corporation

(PBGC), has steadfastly upheld its mission: safeguarding the retirement

security of over 31 million of America’s workers, retirees, and their families.

At PBGC, our enduring commitment to our mission drives our dedicated

team of talented professionals to meet the highest standards of customer

service, ensuring the stability of those who rely on private sector defined

benefit plans.

PBGC once again achieved the distinction of being ranked among one of

the best places to work in the federal government, securing the second-

place position among small federal agencies. In addition, PBGC ranked

number one in the following eight categories: Effective Leadership; Effective

Leadership: Empowerment; Teamwork; Innovation; Work-Life Balance; Diversity, Equity, Inclusion, and Accessibility

(DEIA); DEIA: Inclusion; Recognition; and Performance: Transparency. This accolade echoes the collective spirit of

teamwork, the depth of talent, and an unwavering pursuit of excellence.

For the third consecutive year, both PBGC’s Multiemployer and Single-Employer Insurance Programs ended

the fiscal year with positive net positions. The Multiemployer Program had a net positive position of $1.5

billion at the end of FY 2023, compared with $1.1 billion at the end of FY 2022. PBGC’s Single-Employer

Program remains financially healthy with a positive net position of $44.6 billion at the end of FY 2023,

compared with $36.6 billion at the end of FY 2022.

Due to the improved financial position of both insurance programs in recent years, the Government

Accountability Office (GAO) removed both of our insurance programs from its High-Risk List in its April

2023 High-Risk Series Report.

In adherence to the provisions of the American Rescue Plan Act of 2021, PBGC made substantial strides in

the Special Financial Assistance (SFA) Program. The SFA Program is pivotal in ensuring that millions of

America’s workers, retirees, and their families receive the pension benefits rightfully earned through years of

dedicated service. In FY 2023, PBGC approved over $45.9 billion in special financial assistance to 35 severely

underfunded multiemployer pension plans that cover nearly 615,000 participants. Our unwavering dedication

extends into the future, ensuring the realization of the SFA Program’s objectives in the months and years

ahead.

Simultaneously, PBGC has fortified its IT infrastructure, streamlined agency operations, and improved the

overall customer experience. Our proactive approach to strengthening cybersecurity is evident in high-level

FISMA ratings. Notably, for the third consecutive year, PBGC obtained an overall Office of the Inspector

General FISMA rating of “effective,” underscoring our enduring commitment to digital security.

The FY 2023 Annual Report is the 31st consecutive year the agency has received an unmodified audit opinion

on its financial statements and the eighth consecutive year of an unmodified audit opinion on internal control

over financial reporting. Additionally, as required by OMB Circular A-136, I am pleased to confirm with

reasonable assurance the completeness and reliability of the data presented in the FY 2023 Annual

Management Report and the FY 2023 Annual Performance Report, included in this Annual Report.

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PBGC’s achievements in FY 2023 demonstrate our steadfast adherence to regulatory compliance, customer

service, and technological advancement. We remain unwavering in our commitment to securing the

retirement security of millions of America’s workers, retirees, and their families.

Gordon Hartogensis

Director

November 15, 2023

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FISCAL YEAR (FY) 2023 ANNUAL REPORT

A MESSAGE FROM OUR CHAIR ............................................................................................................... i

A MESSAGE FROM THE DIRECTOR ...................................................................................................... iii

ANNUAL PERFORMANCE REPORT....................................................................................................... 1

OPERATIONS IN BRIEF ............................................................................................................ 2

STRATEGIC GOALS AND RESULTS ..................................................................................... 3

GOAL No. 1: Preserve Plans and Protect Pensions of Workers and Retirees ......... 3

GOAL No. 2: Pay Pension Benefits on Time and Accurately ..................................... 6

GOAL No. 3: Maintain High Standards of Stewardship and Accountability ............ 7

INDEPENDENT EVALUATION OF PBGC PROGRAMS ............................................................... 18

FINANCES ....................................................................................................................................................... 21

FISCAL YEAR 2023 FINANCIAL STATEMENT HIGHLIGHTS ................................. 23

MANAGEMENT’S DISCUSSION AND ANALYSIS ......................................................... 31

FINANCIAL STATEMENTS AND NOTES ......................................................................... 62

PAYMENT INTEGRITY INFORMATION ACT REPORTING .................................. 121

FISCAL YEAR 2023 ACTUARIAL VALUATION ............................................................. 124

INDEPENDENT AUDIT AND MANAGEMENT’S RESPONSE ................................................. 129

LETTER OF THE INSPECTOR GENERAL ..................................................................... 131

REPORT OF INDEPENDENT AUDITORS...................................................................... 133

MANAGEMENT’S RESPONSE TO REPORT OF INDEPENDENT AUDITORS . 142

ORGANIZATION ....................................................................................................................................... 143

This annual report is prepared to meet applicable legal requirements and is in accordance with and pursuant to the provisions of: the

Government Corporation Control Act, 31 U.S.C. Section 9106; Circular No. A-11, Revised, “Preparation, Submission and Execution

of the Budget,” Office of Management and Budget, August 11, 2023; and Circular No. A-136 Revised, Financial Reporting

Requirements (i.e., Government Corporations are only required to adhere to Section I.5 and Section V, and PBGC voluntary complies

with Section II.2.4) Office of Management and Budget, May 19, 2023. Section 4008 of the Employee Retirement Income Security Act

of 1974 (ERISA), 29 U.S.C. Section 1308, also requires an actuarial report evaluating expected operations and claims that will be

issued as soon as practicable.

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ANNUAL PERFORMANCE REPORT

The Pension Benefit Guaranty Corporation (PBGC or the Corporation) protects the retirement security of

over 31 million of America’s workers, retirees, and beneficiaries in both single-employer and multiemployer

private-sector pension plans. The benefits of these participants are valued at more than $3 trillion. The

Corporation’s two insurance programs are legally separate and operationally and financially independent.

The Single-Employer Program is financed by insurance premiums paid by companies that sponsor defined

benefit pension plans, investment income from plan assets trusteed by PBGC and recoveries from companies

formerly responsible for the plans. The Multiemployer Program is financed by premiums paid by insured

plans and investment income. Congress sets PBGC premium rates.

In addition, the American Rescue Plan (ARP) Act of 2021 (Public Law 117-2) — a historic law passed by

Congress and signed by President Biden on March 11, 2021 — established the Special Financial Assistance

(SFA) Program for financially troubled multiemployer pension plans. The law addresses the solvency of the

Multiemployer Program, which was projected to become insolvent in 2026. The SFA Program provides

funding assistance to severely underfunded multiemployer defined benefit pension plans and will enable

millions of America’s workers, retirees, and their families to receive the pension benefits they earned through

many years of hard work. The SFA program is funded entirely by an appropriation from the General Fund of

the U.S. Department of the Treasury (Treasury).

Upon approval of an SFA application, PBGC will make a payment to an eligible multiemployer defined

benefit pension plan in the amount that is projected to enable the plan to pay all benefits through the last day

of the plan year ending in 2051. The SFA Program also assist such plans by providing funds to reinstate

previously suspended benefits, including back payments to retirees, and repaying financial assistance that was

received from PBGC’s Multiemployer Program.

The Corporation achieves its mission through three strategic goals:

1. Preserve plans and protect the pensions of covered workers and retirees.

2. Pay pension benefits on time and accurately.

3. Maintain high standards of stewardship and accountability.

PENSION BENEFIT GUARANTY CORPORATION

2 FY 2023 | ANNUAL REPORT

OPERATIONS IN BRIEF

Since enactment of the Employee Retirement Income Security Act of 1974 (ERISA), PBGC has strengthened

retirement security by preserving plans and protecting pensions for participants and their families. In FY

2023, the Corporation made benefit payments of over $6.0 billion to 917,185 participants in single-employer

plans and provided over $175.8 million in traditional financial assistance to multiemployer plans covering

122,082 participants, as highlighted in Table 1: FY 2023 Operations in Brief.

TABLE 1: FY 2023 OPERATIONS IN BRIEF

2023

Target

2023

Actual

2022

Actual

GOAL 1: Preserve Plans and Protect Pensions

Single-Employer Plan Participants Protected – Employers

Emerging from Bankruptcy During the Year

32,038 999

Single-Employer Plan Standard Termination Audits:

Additional Payments

$2.3M to 1,306

participants

$1.03M paid to 663

participants

Single-Employer Benefit Payments for Terminated Plans

 Participants Receiving Benefits

920,000 960,000

 Benefits Paid

Over $6.0B Over $7.0B

 Participants Expected to Receive Future Benefits

473,000 496,000

Multiemployer Plan Traditional Financial Assistance $176M to 100 plans $226M

to 115 plans

Multiemployer Plan SFA Payments $45.6B $7.6B

Multiemployer Participants in Insolvent Plans

 Participants Receiving Benefits

80,421 93,525

 Participants Expected to Receive Future Benefits

41,661 46,480

GOAL 2: Pay Timely and Accurate Benefits

Estimated Benefits Within 10% of Final Calculation 95% 96% 97%

Average Time to Provide Benefit Determinations (Years) 4.5 4.4 4.1

Improper Payment Rates Within OMB Threshold

<1.5% Yes Yes

Applications Processed in 45 Days or Less 87% 98% 85%

GOAL 3: Maintain High Standards of Stewardship and Accountability

Retiree Satisfaction – ACSI Score

90 87 86

Participant Caller Satisfaction – ACSI Score 83 81 76

Premium Filer Satisfaction – ACSI Score 74 77 77

Single-Employer – Financial Net Position $44.6B $36.6B

Multiemployer – Financial Net Position $1.5B $1.1B

Unmodified Financial Statement Audit Opinion Yes Yes Yes

Some numbers in this report have been rounded.

The $226 million in 2022 includes a $9 million payment on a facilitated merger under the Multiemployer Pension Reform Act of

2014 (MPRA).

The Office of Management and Budget (OMB) threshold for significant improper payment reporting is as follows: amounts that

exceed (1) both 1.5% and $10 million in improper payments, or (2) $100 million in improper payments.

The American Customer Satisfaction Index (ACSI) uses a 0-100 scale; 80 or above is considered excellent.

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STRATEGIC GOALS AND RESULTS

PBGC’s FY 2023 Annual Performance Report highlights the Corporation’s achievements, accomplishments,

and performance results through the lens of its strategic goals. The Corporation’s priorities are to preserve

plans and protect pensions of workers and retirees, to pay timely and accurate benefits, and to maintain high

standards of stewardship and accountability.

GOAL NO. 1: PRESERVE PLANS AND PROTECT PENSIONS OF WORKERS AND

RETIREES

PBGC engages in activities to preserve plans and protect participants by administering two separate insurance

programs. The Multiemployer Program protects about 11.0 million workers and retirees in about 1,360

pension plans. The Single-Employer Program protects about 20.6 million workers and retirees in about

23,500 pension plans.

MULTIEMPLOYER PROGRAM

The Multiemployer Program covers defined benefit pension plans that are maintained through one or more

collective bargaining agreements between employers and one or more employee organizations or unions. The

participating employers are usually in the same or related industries, such as transportation, construction,

mining, or hospitality. PBGC provides financial assistance to insolvent plans to allow them to pay guaranteed

benefits and reasonable administrative expenses. PBGC refers to this financial assistance under the

Multiemployer Program as “traditional financial assistance.”

In FY 2023, PBGC provided $175.8 million in traditional financial assistance to 100 multiemployer plans

covering 80,421 participants (including beneficiaries) receiving guaranteed benefits. An additional 41,661

participants in the insolvent plans are eligible to receive benefits once they retire. Due to SFA payments made

under ARP in FY 2023, the number of participants relying on traditional financial assistance under section

4261 of ERISA has decreased by 7,483 for participants receiving guaranteed benefits and by 5,383

participants eligible to receive benefits once they retire. These participants are included in the FY 2023 counts

but will no longer be receiving traditional financial assistance in future years.

The Corporation initiated audits of seven insolvent multiemployer plans covering nearly 10,826 participants.

The objectives of the audits are to ensure timely and accurate benefit payments to all participants, compliance

with laws and regulations, and effective and efficient management of the remaining assets in terminated or

insolvent plans.

PBGC regularly provides informal consultations to plan sponsors and practitioners on partition and merger

applications, alternative withdrawal liability requests, plan insolvency, SFA applications, and ERISA Title IV

compliance issues to assist plans in making their formal requests to PBGC more efficient and effective.

Special Financial Assistance Program

ARP, enacted on March 11, 2021, added section 4262 of ERISA, which created the SFA Program for certain

financially troubled multiemployer plans. The amount of SFA to which an eligible plan may be entitled is the

amount required to pay all benefits due through 2051. The SFA payments are derived from appropriated

funds and financed by the general revenues of the Treasury.

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On July 8, 2022, PBGC published a final rule implementing changes to the SFA Program, which include

changes to permissible investments of SFA funds and the SFA calculation method. The rule also requires

plans to submit with their SFA applications documentation of a death audit to identify deceased participants.

The audit must be completed no earlier than one year before the plan’s SFA measurement date. It must

identify the service provider conducting the audit and include a copy of the results of the audit provided to

the plan administrator by the service provider. In the July 8, 2022, SFA final rule, PBGC requested comments

on the condition requiring a phased recognition of SFA assets for purposes of calculating withdrawal liability.

PBGC received seven comments, six of which discussed the withdrawal liability condition. PBGC published a

final rule in the Federal Register, effective on January 26, 2023, amending the SFA regulation to add an

exception process for the withdrawal liability conditions under narrow circumstances.

In FY 2023, PBGC updated the SFA application instructions and provided other guidance. On March 8,

2023, PBGC issued guidance on the application process for non-priority group plans. On July 19, 2023,

PBGC issued two sets of questions and answers. The first set clarifies and provides examples of permissible

investments of SFA funds, and the second set clarifies the calculation methodology under the withdrawal

liability phase-in condition for plans that paid make-up payments of previously suspended benefits. On July

27, 2023, PBGC released updates to several documents in the SFA information collection. These updates

include changes to the application instructions requiring the submission of census data to enable PBGC to

perform an independent death audit to identify deceased pension plan participants and the submission of an

assumptions’ summary. In addition, PBGC has provided a process for plans to request expedited processing

of revised applications and a process for plans to submit revised lock-in applications in limited circumstances.

As of September 30, 2023, PBGC had received 135 SFA applications requesting a total of $71.0 billion in

SFA and had approved 100 applications for $53.5 billion in SFA. Twenty-five applications, requesting a total

of $8.5 billion, were under PBGC review as of September 30, 2023, and another 10 applications had been

withdrawn but not yet resubmitted as of September 30, 2023. During FY 2023, PBGC paid $45.6 billion in

SFA, of which $1.4 billion was paid pursuant to applications approved under the interim final rule (i.e.,

applications received prior to August 8, 2022), and $44.2 billion was paid under the final rule (including $1.8

billion in supplemented SFA for plans that initially applied under the interim final rule).

Special Financial Assistance Program Litigation

In FY 2023, the Board of Trustees of the Bakery Drivers Local 550 and Industry Pension Fund sued PBGC,

challenging PBGC’s determination that the plan was not eligible for SFA. The plan terminated by mass

withdrawal in 2016. PBGC denied the application based on its conclusion that a plan terminated by mass

withdrawal cannot be restored and is therefore not eligible for SFA. After September 30, 2023, on October

26, the New York Federal District Court ruled in favor of PBGC in this lawsuit. The matter is ongoing.

Multiemployer Plan Withdrawal Liability, Plan Mergers and Transfers

PBGC approval is required for a multiemployer plan to adopt an alternative method for allocating unfunded

vested benefits in determining withdrawal liability. PBGC began FY 2023 with two pending requests for

approval of alternative rules. At the end of the fourth quarter, two requests were pending and two were

approved.

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A multiemployer plan may adopt alternative terms and conditions for satisfaction of withdrawal liability if

those terms and conditions are consistent with ERISA and PBGC regulations. Plans sometimes request

PBGC’s determination that proposed alternative terms are consistent with ERISA and PBGC regulations.

PBGC began FY 2023 with one pending request, which remains under review. Special withdrawal liability

conditions apply to multiemployer plans that receive SFA.

Under a statutory exception, an employer that withdraws from a construction or entertainment industry plan

is generally not subject to withdrawal liability. PBGC may, by regulation, authorize plans in other industries to

adopt a similar rule if PBGC determines it is appropriate to do so and doing so would not pose a significant

risk to PBGC. The Corporation began FY 2023 with one pending request. No requests were received during

FY 2023. As of the end of the fourth quarter, one request is pending.

A multiemployer plan merging with or transferring assets and liabilities to another multiemployer plan must

provide PBGC with notice (in accordance with applicable statutory and regulatory provisions). The plan

trustees may request a compliance determination from PBGC, which, if granted, provides a safe harbor from

certain prohibited transaction provisions of Title I. In FY 2023, PBGC received 15 notices of merger, 14 of

which were accompanied by a request for a compliance determination. By the end of the fourth quarter,

seven compliance determinations were issued, three were withdrawn, and seven remain under review. The

Corporation began FY 2023 with two pending transfer compliance determination requests. Both were

withdrawn in the first quarter. PBGC did not receive any notices of transfer during FY 2023. Special

conditions apply to transfers or mergers involving multiemployer plans that receive SFA.

SINGLE-EMPLOYER PROGRAM

The Single-Employer Program covers defined benefit pension plans that generally are sponsored by a single

employer. When an underfunded single-employer plan terminates, PBGC steps in to pay participants’ benefits

up to legal limits. This typically happens when the employer sponsoring an underfunded plan liquidates in

bankruptcy, ceases operation, or can no longer afford to keep the plan going. PBGC takes over the plan’s

assets, administration, and pays benefits up to the legal limits.

As part of its risk mitigation activities, PBGC monitors and identifies transactions and events that may pose

risks to participants and beneficiaries. The Corporation works collaboratively with employers to better

safeguard pension benefits.

Standard Terminations

A standard termination is a termination of a single-employer pension plan that has enough money to pay all

benefits owed to participants and beneficiaries. If a plan has enough money to pay all benefits owed to

participants and beneficiaries, the plan sponsor can choose to terminate a plan by filing a standard

termination. In a standard termination, PBGC does not become responsible for benefit payments.

In FY 2023, 1,868 plans, covering approximately 315,540 participants, filed standard terminations with

PBGC. The number of filings in FY 2023 is 12 percent more than the average number of terminations filed

in the five years prior to that.

Approximately 1,510 plans with an aggregate of more than 226,700 participants completed standard

terminations in FY 2023 by paying full plan benefits to participants and beneficiaries in the form of annuities

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or lump sums. Some of the larger standard terminations were J.C. Penney Corporation, Inc. Pension Plan,

Electrolux Home Products, Inc. Pension Plan, Louisiana-Pacific Corporation Retirement Account Plan, and

Western Union Pension Plan.

PBGC completed 232 standard termination audits in FY 2023 to verify plan administrators’ calculation of

benefits upon plan termination. These audits discovered errors that have since been corrected by the plan

administrators, resulting in more than $2.3 million in additional benefits distributed to 1,306 participants and

beneficiaries in these plans.

Plans Saved

When plan sponsors enter bankruptcy proceedings, PBGC encourages continuation of pension plans.

Although bankruptcy forces tough choices, it does not mean that pensions must terminate for companies to

succeed. In FY 2023, these plans were among those that continued after the bankruptcies of their sponsors or

controlled group members, protecting the benefits of participants and beneficiaries:

• Scouts BSA.

• Revlon, Inc.

• Avaya Holdings Corporation.

• Talen Energy Corporation.

Mediation Program

PBGC’s Mediation Program offers mediation to facilitate resolution of fiduciary breach

cases, negotiations

with ongoing plan sponsors as part of its Early Warning and Risk Mitigation Program, and with former plan

sponsors to help resolve their pension liabilities after termination of underfunded pension plans.

PBGC’s practice is to resolve early warning issues, termination liability claims, and fiduciary breach cases on a

consensual basis without the need for litigation. This gives plan administrators, plan sponsors, and fiduciaries

of terminated plans the opportunity to resolve these cases with a neutral, professional, and independent

mediator in a timely and cost-effective manner. PBGC had no mediations in FY 2023.

GOAL NO. 2: PAY PENSION BENEFITS ON TIME AND ACCURATELY

Nearly 1.4 million current and future retirees in trusteed single-employer pension plans rely on PBGC for

their pension benefits. PBGC’s benefits administration and plan processing teams are committed to paying

benefits accurately and on time.

Benefits Administration

The PBGC assumes the role of trustee for single-employer pension plans when plan sponsors lack the

resources to pay benefits according to their plan’s provisions. In FY 2023, PBGC trusteed 26 single-employer

plans, which provide pension entitlements to approximately 4,500 current and future retirees. Upon

As the statutory trustee of a terminated single-employer pension plan, PBGC has authority under Title IV to collect amounts due the plan and to bring suits on

behalf of the plan. Pursuant to this authority, PBGC pursues recovery actions against former fiduciaries to recover amounts lost by the plan as result of a breach

of fiduciary duties..Before filing an action in court, PBGC offers mediation to the former fiduciaries in an effort to reach a settlement.

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trusteeship, PBGC’s foremost responsibility is to ensure uninterrupted benefit payment to existing retirees. In

FY 2023, PBGC successfully maintained uninterrupted benefit payment to nearly 2,100 retirees.

Over the course of FY 2023, PBGC disbursed more than $6.0 billion in benefits to nearly 920,000 retirees in

single-employer pension plans. Additionally, over 28,000 new retirees applied for benefits during the fiscal

year. The PBGC achieved an impressive 98 percent rate for processing all applications within 45 days,

surpassing its target rate of 87 percent.

After PBGC becomes trustee of a terminated pension plan, it begins a multifaceted, multi-year endeavor that

involves the valuation of plan assets, comprehensive analysis of plan and participant data, and calculation of

benefits payable by the PBGC. At the end of the process, participants are notified of their benefit

determination. Prior to the completion of this process and as eligible participants request to commence their

benefits, PBGC pays estimated benefit amounts. In FY 2023, over 96 percent of benefit determinations

issued were within 10 percent of the estimated benefit amount.

PBGC has concentrated its efforts on the thorough review of payable benefit amounts associated with the

oldest plans in its portfolio, an endeavor that has achieved significant success. Notably, PBGC has shortened

the average age of benefit determinations issued from 5.9 years in FY 2021 to 4.4 years in FY 2023,

outperforming its target of 4.5 years.

Reviews and Appeals

When participants and beneficiaries in trusteed single-employer plans do not agree with PBGC’s

determination of their benefit, they have the right to bring their concerns to PBGC’s Appeals Board.

Employers and plan sponsors may also appeal certain PBGC determinations. The Appeals Board

independently reviews each appeal and provides a detailed written explanation for each decision. In FY 2023,

the Corporation started with 47 open appeals, accepted 147 new appeals, and closed 72 appeals, with 122 still

open at the end of the year. More information about PBGC’s Appeals Board is available at PBGC.gov.

GOAL NO. 3: MAINTAIN HIGH STANDARDS OF STEWARDSHIP AND

ACCOUNTABILITY

Accountability: Measuring and Monitoring Performance

PBGC continuously monitors how well it performs and serves customers using a wide range of performance

measures. Among them are how quickly and seamlessly the Corporation pays retirees, accurately calculates

benefits, and invests assets. PBGC conducts surveys to help improve the coordination and cooperation

essential to meeting customer service goals.

Each quarter, PBGC leadership participates in data-driven discussions covering the Corporation’s progress in

operations, stewardship and accountability, customer satisfaction, and building and maintaining a model

workplace. The strategic use of performance data better informs planning and execution of operations, as

well as corporate and program area decision-making.

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PB G C ’ S OWN FINAN C ES MUST BE SOU N D

PBGC’s operations are financed by insurance premiums set by Congress and paid by sponsors of PBGC-

insured defined benefit pension plans and by investment income. In addition, the Single-Employer Program

is funded by assets from pension plans trusteed by PBGC and recoveries from the companies formerly

responsible for the plans. The Corporation pays benefits based on federal law and the provisions of the plans

it trustees. In 2021, ARP added section 4262 of ERISA, which created the SFA Program, covering both

administrative and operating expenses, for certain financially troubled multiemployer defined benefit pension

plans. This Special Financial Assistance will enable eligible multiemployer plans to pay retirement benefits

without reduction for many years into the future. The SFA payments are derived from appropriated funds

and financed by general revenues of the Treasury.

Financial Position

The financial status of the Single-Employer Program showed improvement and achieved a positive net

position of $44.6 billion at the end of FY 2023. The Single-Employer Program’s financial status has evolved

to a positive net financial position which is projected to grow over the next 10 years.

The net financial position of the Multiemployer Program improved during FY 2023 to a positive net position

of $1.5 billion. Estimates from PBGC’s FY 2022 Projections Report show that the Multiemployer Program is

likely to remain solvent for more than 40 years, primarily due to the enactment of ARP and PBGC’s

implementation of the final rule for SFA. The SFA Program is expected to protect the benefits of millions of

participants in financially troubled plans and to reduce the demand on PBGC to provide traditional financial

assistance to insolvent plans.

Financial Soundness and Financial Integrity

The Corporation protects the pensions of over 31 million participants whose plan benefits are valued at more

than $3 trillion. PBGC’s two insurance programs, one for single-employer plans and one for multiemployer

plans, are designed to protect a guaranteed amount of participants’ pension benefits when plans fail. The

programs differ significantly in the extent to which plan benefits are funded as well as in the structure and

level of PBGC’s premium rates and guarantees. In addition to collecting premiums, PBGC exercises care in

the management of approximately $135 billion in total assets. In FY 2023, PBGC attained its 31

consecutive

unmodified audit opinion on its financial statements.

Collecting Premiums

Premium rates are set by statute. The Bipartisan Budget Act of 2013, the Multiemployer Pension Reform Act

of 2014 (MPRA), the Bipartisan Budget Act of 2015, and the SECURE 2.0 Act of 2022 specify premium

rates or premium increases for certain years. In FY 2023, combined premium cash receipts collected totaled

$4.942 billion. Single-Employer Program premium cash receipts collected were $4.595 billion. Separately,

Multiemployer Program premium cash receipts in FY 2023 were $347 million.

In FY 2023, PBGC continued to enhance the new version of My Plan Administration Account (My PAA),

PBGC’s online premium filing website, by prioritizing practitioner-based feedback with multiple system

updates throughout the fiscal year. Specifically, this included: adding and increasing capability for an

authorized plan filing coordinator to establish a filing team member’s access and user role permissions to

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multiple plans in a single request; revamping the upload process to streamline the submission process if

filings are error free; customizing the plan list view to allow users to view, search, and find information from

each plan’s most recent filing; creating a customizable routing feature that allows filing team members to send

or receive a filing notification email indicating the action required to complete the filing submission; and

adding the My PAA payment ID to the Filing Details webpage.

Investing Prudently

PBGC investment assets are administered by investment management firms subject to PBGC’s investment

policies and oversight procedures. Procedures for internal controls, due diligence, and risk management are

subject to periodic review. Regular and detailed communication with management firms enables the

Corporation to stay informed on matters affecting its investment program. For more information, refer to

Section VIII Investment Activities.

OUTREACH AND CUSTOMER SERVICE

Central to PBGC’s mission are its valued customers. In its unwavering commitment to offering the highest

level of service, PBGC relies on surveys to actively engage customers, identify opportunities for

enhancement, implement procedural refinements, and continually assess satisfaction levels. Survey scoring

methodology aligns with the criteria of the American Customer Satisfaction Index (ACSI). In FY 2023,

PBGC took proactive measures based on customer feedback to enhance the quality of services rendered.

Retirees and Participants

PBGC’s satisfaction score among retirees

remains consistently high. Satisfaction surveys

indicate that retirees receiving monthly

payments from PBGC rated their satisfaction at

87 out of 100.

Pension plan participants who engaged with

PBGC by phone and participated in a survey

provided an overall satisfaction rating of 81 out

of 100. This marks a notable improvement over

the FY 2022 score of 76. In FY 2023, the

increased staffing level of PBGC’s Customer

Contact Center (CCC) reduced wait times and helped to significantly improve the satisfaction score in

comparison to FY 2022.

In FY 2021, PBGC increased the security of its online portal, My Pension Benefit Access (MyPBA), by

instituting a multi-factor authentication sign-on solution sponsored by Login.gov. MyPBA achieved a

satisfaction score of 54 out of 100 in FY 2023. The improvement of this score over the FY 2022 score of 45

was achieved through the implementation of user-friendly navigation and additional support for users facing

challenges in establishing a Login.gov account. PBGC continues to provide constructive feedback to

customers.

100

2017 2018 2019 2020 2021 2022 2023

American Customer Satisfaction Index

Retiree and Participant Caller Satisfaction

PBGC Participant Callers PBGC Retirees

Federal Government Aggregate

80 = Threshold of Excellence

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Premium Filers

Pension plan sponsors and their practitioners who

file premiums with PBGC gave a FY 2023 annual

premium filer satisfaction score of 77 out of 100

(same as last year), exceeding the target of 74. This

score compared very well to similar functions, such

as Internal Revenue Service small-business and self-

employed tax filers (65) and large-business and

international tax filers (62). Filers gave excellent

scores to PBGC’s personal service, written

communication, and filing process.

My Plan Administration Account (My PAA) is an online application for pension plan practitioners to file

premium information and payments with PBGC. The FY 2023 satisfaction score was 69 out of 100 (down

three from last year). This score is below the target of 78. Based on My PAA online survey responses, the

lower score is due primarily to practitioners continued challenges with the updated My PAA system, especially

for infrequent users who use the system once a year.

In FY 2023, PBGC continued to implement new system enhancements to My PAA for the practitioner

community. The Corporation made these enhancements to improve the user experience and better align My

PAA with information technology industry standards and security upgrades.

ENGAGING WITH CUSTOMERS AND STAKEHOLDERS

PBGC regularly communicates with customers about ongoing activities and news updates. The Corporation

uses several communication tools, including PBGC.gov and email notifications to reach its various audiences.

As part of the Corporation’s ongoing SFA Program efforts, PBGC continuously published new and updated

SFA content on PBGC.gov. In FY 2023, there were nearly 55,000 visits to the Corporation’s SFA page.

PBGC also published more than 60 SFA-related news releases regarding program activities and plan

application approvals. Additionally, the Corporation hosted a webinar on the SFA application filing process

for non-priority groups.

PBGC also responded to numerous inquiries from members of Congress — many writing on behalf of their

constituents — and various stakeholders.

SUSTAINING THE PROGRAMS

PBGC serves as a source of information about pension and retirement policy. The Corporation implements

strategies to strengthen its programs’ financial health and continues to successfully manage risks by actively

monitoring and reporting on its insurance programs and other relevant information.

Research and Analysis Activities

The Corporation regularly produces analyses and reports on its programs and policy alternatives to its Board

of Directors, policymakers, and external stakeholders, including the public. The Pension Insurance Data

77 77 77

60 60

100

2017 2018 2019 2020 2021 2022 2023

American Customer Satisfaction Index

Premium Filer Satisfaction

PBGC Premium Filers IRS Small Bus. & Self-Emp. Filers

IRS Large Bus. & Int'l Filers

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Table — a collection of data on PBGC and its insurance programs — is published annually. The Data Table

includes multiyear data and statistics about the broader private defined benefit pension system.

PBGC’s Projections Report is an annual actuarial evaluation of its future operations and financial status. The

report provides 10-year projections of the financial status of both insurance programs under a range of future

financial scenarios.

Improvements to the Pension Insurance Modeling System and Related Reports

PBGC’s primary forecasting model is the Pension Insurance Modeling System (PIMS). The model is

periodically evaluated through a congressionally mandated peer review by outside experts, required under the

Moving Ahead for Progress in the 21st Century Act (MAP-21). In FY 2023, PBGC initiated a comprehensive

Model Risk Management and governance review of its PIMS forecasting models in an effort to assess and

support its model-related goals of conceptual soundness, operational validity, efficacy in functionality and

performance, transparency and sufficiency in documentation, and effectiveness in model governance.

The peer reviews provide recommendations to improve the data assumptions and modeling methodology

used to produce the PIMS projections. PBGC uses these reviews to improve PIMS. The Corporation also

uses PIMS to generate results reported in its annual Projections Report and the budget process, to illustrate

the effects of proposed changes to pension law, and to provide other technical assistance to policymakers.

PBGC has undertaken a multiyear effort to improve the speed and performance of PIMS.

Enterprise Risk Management

During FY 2023, the Corporation continued to maintain its risk management framework and conducted its

annual agency-wide risk assessment, in accordance with Office of Management and Budget (OMB) Circular

A-123. As a part of the effort, PBGC assessed entity-specific known and anticipated risks, uncertainties,

future events/conditions, and trends that could significantly affect the agency’s future financial or operating

performance and developed mitigating strategies to address the challenges. This process was in-line with the

requirements of OMB Circular A-136.

One of the Corporation’s recently identified top entity-wide risks related to the rapid pace and magnitude of

change across the government and at PBGC, was precipitated by the relocation of PBGC’s headquarters.

Additional top risks were associated with the SFA Program, recruiting and retaining staff, technology

modernization, and continuing trends away from defined benefit plans. Program offices throughout PBGC

worked to review, mitigate, and continuously monitor these risks.

The results of the annual risk assessment found that the Multiemployer Program insolvency and operational

planning uncertainty risk were reduced. Additionally, the Government Accountability Office (GAO) removed

the high-risk designation for PBGC’s insurance programs.

Regulatory and other Guidance Activities

In FY 2023, PBGC issued regulations and other guidance under the SFA Program. PBGC published a final

rule, effective on January 26, 2023, that amended the SFA regulation to provide an exception process for the

withdrawal liability conditions imposed on plans that receive SFA. PBGC also released on July 19, 2023,

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questions and answers that provide guidance on the investment of SFA funds and calculation methodology

under the withdrawal liability phase-in condition, and on July 27, 2023, updated the SFA instructions.

PBGC continued to develop other rulemakings and guidance to protect plan participants and minimize

burdens on pension plans and plan sponsors.

PBGC published a proposed rule on October 14, 2022, that would prescribe actuarial assumptions under

section 4213(a)(2) of ERISA that may be used by a multiemployer plan actuary in determining a participating

employer’s withdrawal liability. The comment period closed on December 13, 2022, and PBGC plans to

publish a final rule that responds to public comments received on the proposed rule.

PBGC published a final rule on July 11, 2023, to increase transparency of PBGC benefits administration for

terminated single-employer pension plans that PBGC trustees. The final rule, which became effective on

August 10, 2023, makes clarifications and codifies policies involving benefit payments and valuation of plan

assets.

On August 7, 2023, PBGC issued Technical Update 23-1, a one-time waiver of the 4010-filing requirement

(annual financial and actuarial information reporting requirements under section 4010 of ERISA and 29 CFR

part 4010 of PBGC’s regulations). The waiver of the reporting requirement for filers meeting specified criteria

recognizes the atypical market conditions of late 2022 and early 2023 and the way those conditions impacted

plan assets and liabilities for purposes of determining whether a 4010 filing is required. This is a one-time

waiver of the reporting requirement for filers meeting specified criteria.

Lastly, PBGC published a proposed rule on August 18, 2023, which would amend its regulation on Allocation

of Assets in Single-Employer Plans to update the interest, mortality, and expense assumptions used to

determine the present value of benefits for a single-employer pension plan ending in a distress or involuntary

termination. The assumptions are also used for certain multiemployer withdrawal liability calculations and for

other purposes. The rulemaking included a 60-day public comment period that closed on October 17, 2023.

STRENGTHENING A DIVERSE WORKFORCE AND LEADERSHIP

PBGC continues to be committed to maintaining a diverse and inclusive workplace that ensures alignment

with strategic goals and outcomes. In FY 2023, the Corporation continued to focus on strengthening

employee performance, increasing leadership engagement, expanding health and wellness programs, and

continuing efforts to recruit and retain disabled veterans.

Federal Employee Viewpoint Survey

The 2022 FEVS was administered May 30, 2022, through July 15, 2022. The agency’s response rate was 70

percent, up from 66 percent of employees who completed the survey in 2021. The results not only show how

PBGC employees rate employee engagement; global satisfaction; and diversity, equity, inclusion, and

accessibility (DEIA); but that PBGC ranked number one in each index for small agencies and government

wide. PBGC’s employee engagement index score, which measures areas including employee development,

was 86 percent. The score for this index increased from previous years. The agency’s global satisfaction index

score, which measures employee satisfaction with jobs, pay, organization, and if they would recommend

PBGC as a good place to work, was 83 percent, which also increased from the previous year. The agency’s

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DEIA index score was 86 percent. As a result of the high index scores, PBGC ranked as Top Agency among

small agencies in these categories.

As a result of the FEVS scores, PBGC ranked number two in the small agency category for Best Places to

Work in the Federal Government for 2022.

Additionally, PBGC had three business units that ranked in the top 10 subcomponent category out of 432

agency subcomponents:

• The Office of Negotiations & Restructuring ranked number 1.

• The Office of Benefits Administration ranked number 7.

• The Office of Information Technology ranked number 8.

Recruitment and Outreach

As a result of ARP, PBGC continues to expeditiously hire highly skilled employees. The Corporation

successfully filled almost 90 percent of the positions. These new positions support the maintenance of the

SFA Program, ensuring that retirees in multiemployer plans that receive SFA continue to receive their full

plan benefit payments.

PBGC’s recruitment efforts include participating in the Office of Personnel Management’s (OPM) efforts to

improve the Pathways Internship Program. As a result, PBGC has enhanced the experience for interns that

will promote growth within the Corporation, leading to an increased number of interns filling permanent

federal positions. Additionally, the Corporation’s Disabled Veterans Affirmative Action Program (DVAAP)

participated in the virtual U.S. Department of Veterans Affairs Job Fair.

PBGC has a robust Workplace Flexibilities Program. In 2023, the Corporation continued increasing its focus

on employee services and benefits, and expanding wellness activities to include stress, mental health,

childcare, and caregiver tools.

Diversity, Equity, Inclusion, and Accessibility

In FY 2023, the Corporation submitted updates to OMB, OPM, and the Domestic Policy Council (DPC) for

the Action Plan for Advancing Racial Equity and Support for Underserved Communities.

The Corporation continued publishing bi-monthly editions of the “Diversity, Equity, Inclusion and

Accessibility (DEIA) Digest” to managers and supervisors, with articles highlighting best practices,

knowledge of what other agencies are doing, and videos to reinforce DEIA principles and upcoming cultural

events.

PBGC delivered 13 DEIA awareness and cultural events.

PBGC conducted a series of listening sessions with the DEIA Council members to gather ideas and

information for FY 2024 agency-wide DEIA activities and initiatives. The DEIA Council along with

leadership explored ways of “Viewing Diversity Through Various Lenses” to educate and connect the

workforce with DEIA. This included two days of enriching videos, facilitating discussions, and engaging

dialogues.

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PBGC offered 33 DEIA trainings.

To attract a diverse applicant pool, PBGC conducted outreach with organizations serving underrepresented

populations, such as Historically Black Colleges and Universities and professional associations. To recruit a

workforce representing the Nation’s diversity, PBGC continues to attend minority serving events, internship

career fairs, and Veterans career fairs to market federal employment opportunities.

Performance Management

PBGC is a performance-based organization. The Corporation’s Performance Management Program is

focused on more than just the end of year appraisal. PBGC prides itself on translating goals into results, and

creating an environment that sustains a healthy and effective results-oriented culture. It all starts with a solid

performance plan which is the foundation of a rigorous performance management program. In FY 2023,

PBGC reviewed 100 percent of its departments performance plans and provided feedback to managers on

plans needing improvements. Additionally, training modules were developed for both employees and

managers on performance management to aid in ensuring the employees were educated and well informed on

performance matters.

Management and Leadership Development

The Corporation continued its commitment to training and developing its workforce to ensure employees

were prepared for the rapid changes in technology and policy. In FY 2023, PBGC’s Management &

Leadership (M&L) Development Program designed and offered four major learning events that focused on

preparing PBGC leadership for leading hybrid teams, addressing the challenges posed by the future of work,

and building trust and promoting collaboration in a remote work environment. The Leadership/Executive

Coaching Program continues to be popular and highly successful.

Equal Employment Opportunity

The Office of Equal Employment Opportunity (OEEO) is responsible for providing leadership in the

development, implementation, and evaluation of the Equal Employment Opportunity (EEO) programs and

services within PBGC. The office provides technical guidance, advice, and equal opportunity support services

to PBGC employees and job applicants, regarding the federal government's equal opportunity program.

OEEO continues to build a Model EEO Program.

The Corporation met its annual requirements to conduct barrier analysis in an effort to identify and mitigate

barriers to equal employment opportunity and to develop programs that support equal employment

opportunity.

The Affirmative Employment Program (AEP) sponsored by the OEEO continued to promote equal

employment opportunity by identifying discriminatory employment policies, practices, and procedures that

impede equal employment opportunity for all workforce demographics.

The AEP Team presented numerous PBGC-wide events and activities that support equal employment

opportunity, including the innovative YOUniversity, a Bias Awareness Program administered by OEEO.

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SA F EGUARDING CU ST O M ER S’ INTERESTS

Participant and Plan Sponsor Advocate

The PBGC Participant and Plan Sponsor Advocate (the Advocate), selected by PBGC’s Board of Directors

(the Board) and responsible to the Board and Congress, acts as a liaison among PBGC, sponsors of insured

defined benefit plans, and participants in PBGC-trusteed plans. The duties of the Office of the Advocate

include advocating for the full attainment of the rights of participants in trusteed plans, as well as assisting

participants and plan sponsors in resolving disputes with the Corporation. The Advocate also identifies areas

where participants and plan sponsors have problems dealing with PBGC and may propose changes in

PBGC’s administrative practices and recommend legislative changes to mitigate problems.

The Advocate submitted the statutorily required annual report to PBGC’s congressional committees of

jurisdiction, the Board, and PBGC’s Director on December 31, 2022. The report noted that PBGC had made

many changes and improvements over the years in response to the Advocate’s recommendations and

observations, yet certain systemic issues persist, presenting themselves in different forms through various

participant and plan sponsor assistance requests. Additionally, the report noted that the Corporation needs to

understand internal inefficiencies and how interdepartmental coordination can be maximized. The report also

noted that understanding this will enhance the Corporation’s ability to review PBGC’s critical processes and

procedures to ensure that participant and plan sponsor cases are resolved in a timely and transparent manner,

particularly when a matter involves multiple departments within the Agency. The report also indicated that

PBGC has done good work in implementing its SFA Program.

Strengthening E-Government and Information Technology

PBGC’s Office of Information Technology (OIT) published the FY 2022-2026 PBGC IT Strategic Plan.

Driven by evidence and data, the plan aligns with PBGC’s strategic vision and goals, and reflects IT support

for PBGC’s business units short and long-term plans. As described in the plan, OIT focusses on strategic

thinking, collaborative business partnerships, and innovative IT solutions that support the PBGC’s mission.

Partnering with the Workplace Solutions Department (WSD), OIT played a pivotal role supporting the

PBGC’s Return to Office initiative at the new Portals II headquarters in FY 2023. From entering the building,

to workspace arrival, to circulating and navigating around the building, OIT and WSD organized the

headquarters environment to welcome returning workforce and to mitigate and manage risks. For example,

OIT and WSD released episodes of the Portals II headquarters animated mini-series that provided employees

and contractors with workplace protocols to include workspace direction, navigating Portals II security, and

geographically familiarizing PBGC workforce with the new internal and external environment.

Further demonstrating partnerships and adaptation to flexible work strategies, OIT and the Office of

Management and Administration collaboratively developed a customized Reservation Onsite Workspace

system for PBGC workspace reservation management. The solution supports the Corporation’s telework

strategy through enabling as-needed workspace reservations.

Ensuring all pertinent IT systems were functioning properly, OIT adapted the IT infrastructure to facilitate

the transition to Portals II headquarters, to include relocating technology and infrastructure and modernizing

the IT in workspaces, conference rooms, and common areas.

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OIT bolstered its modernization efforts by successfully completing Phase 3 of the Benefit Calculation and

Valuation (BCV) project. Modernizing BCV improved participants customer service, enhanced application

security, and optimized PBGC internal operation efficiencies. Additionally, significant progress was made

with IT Modernizations such as Case/Legal Management System, BCV Phase 4 which included online benefit

estimates capability for select participants, and replacing U.S. Environmental Protection Agency’s

FOIAOnline system with a new solution which are scheduled to go live by year end. Continued progress is

being made with the Transformational Pension Insurance Modeling System and Acquisition Management

System modernizations. Detailed modernization data are available at IT Modernization Projects on

PBGC.gov.

PBGC’s Chief Data Officer (CDO) and the Data Governance Board (DGB) continued to implement the

Foundations for Evidence Based Policymaking Act. To improve the Corporation’s ability to leverage data as a

strategic asset and account for data assets across the Corporation, the CDO and DGB developed

a comprehensive data inventory (CDI). The CDI supports the Corporation’s data maturation efforts through

unifying agency data and enabling opportunities for traditional and emerging analytical methods.

OIT completed all quarterly and annual OMB FY 2023 Annual Federal Information Security Modernization

Act (FISMA) Reports. Notably, for the third consecutive year, PBGC obtained an overall Office of Inspector

General (OIG) FISMA rating of “Effective/Managed-Risk” for its information security program.

Ensuring Ethical Practices

In FY 2023, PBGC continued to ensure that all employees received initial ethics training within 90 days of

their date of hire and that separating employees had the opportunity to meet with an ethics counselor to

discuss the rules on post-employment activities. All public financial-disclosure filers and other designated

employees received annual ethics training during the fiscal year. PBGC’s ethics team continued its “Ethics in

Brief” email notices to all PBGC employees on ethics issues arising out of holiday activities and provided

informational guidance regarding the Hatch Act.

Protecting Privacy Interests

PBGC’s Privacy Program implements the requirements that all federal agencies must meet under the Privacy

Act, which governs the collection, maintenance, use, and dissemination of information about individuals that

is maintained in systems of records by federal agencies. PBGC’s Privacy Program protects the personally

identifiable information (PII) it maintains on participants, beneficiaries, employees, and contractors by

educating its workforce on the applicable laws and regulations, implementing various controls, and limiting

the amount of PII collected and maintained.

As the primary means of achieving this goal in FY 2023, the Privacy Office continued embedding privacy

experts within various integrated project teams related to ongoing and new technology modernizations, data

migrations, and commercial software/technology procurements. The Privacy Office has partnered with the

OIT in assessing emerging technologies such as generative artificial intelligence products for use at PBGC.

The Privacy Office also established a new Privacy Common Control baseline that is aligned with the recent

update to the NIST 800-53 Rev 5, “Assessing Security and Privacy Controls for Information Systems and

Organizations.” Additionally, the Privacy Office continued its partnership with PBGC’s Enterprise

Cybersecurity Department which strengthens the relationship between security and privacy by ensuring the

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right controls are working and effective. Going forward, the Privacy Office will prioritize privacy-related

performance measures and technology-enabled strategies and develop more specific metrics and performance

measures.

Strengthening Transparency & Disclosure

PBGC continued its commitment to transparency and accountability by ensuring agency-wide compliance

with the Freedom of Information Act (FOIA). In FY 2023, PBGC received 2,682 and processed more than

2,643 requests while maintaining a median processing time of 17 working days, three days under the statutory

time-limit. The Disclosure Division continued a 10-year history of ending the fiscal year with zero backlogged

requests or appeals; less than 0.01 percent of requests were appealed and no initial disclosure determinations

were completely overturned. The division conducted 45 virtual training sessions to promote efficiency and

accuracy, and co-created corporate-wide outreach and awareness, achieving cultural compliance with FOIA.

The Disclosure Division was recognized by the Department of Justice, which awarded the Disclosure

Division the 2023 Exceptional Service Award in appreciation of exemplary performance by a team of agency

professionals in helping to carry out the agency’s administration of FOIA, while receiving a score of 100

percent from DOJ for compliance.

The Disclosure Division continued to focus on citizen-centered service by maximizing the use of technology

and human capital management to maintain agency transparency. The Disclosure Division continued to

support the SFA Program’s transparency efforts by conducting commercial, financial, and PII reviews of 103

SFA applications prior to publishing the applications to PBGC.gov.

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INDEPENDENT EVALUATION OF PBGC PROGRAMS

PBGC programs are regularly subject to independent evaluations that help the Corporation remain true to its

mission and accountable for services provided to the public. To maintain high standards of stewardship and

accountability, PBGC continues to strengthen controls over operations and compliance with laws and

regulations.

Office of Inspector General

PBGC places a strong emphasis on diligently addressing the OIG’s audit recommendations. To facilitate

timely completion and closure of such recommendations, regular status reports are issued to executive

management to assist in monitoring corrective actions. Once work on recommendations is completed, the

Corporation provides evidence documenting the corrective actions taken for the OIG review.

PBGC is committed to addressing the OIG recommendations in a timely manner. During FY 2023, PBGC

closed 34 audit recommendations. Also, during FY 2023, PBGC received 33 new audit recommendations,

resulting in 34 open at the end of FY 2023.

PBGC’s OIG oversaw the annual financial statement audit completed by independent public accounting firm,

Ernst & Young LLP. In addition, during FY 2023, the OIG performed other audits and evaluations,

including the following:

• Audit of the Pension Benefit Guaranty Corporation’s Fiscal Year 2022 and 2021 Financial

Statements (AUD-2023-02), issued November 15, 2022. In this report, the OIG stated this is the 30th

consecutive unmodified financial statement audit opinion.

• Evaluation of Hotline Compliances Regarding a PBGC Contract (EVAL-2023-04), issued

November 22, 2022. The OIG received two hotline complaints that alleged fraud regarding a PBGC

Contract. The OIG determined the fraud allegations in the complaints were unsubstantiated. However,

the OIG found two concerns related to PBGC’s oversight of the labor-hour contacts that warrant

management action. Specifically, a contracting officer’s representative (COR) approved invoices without

verifying supporting documentation. As a result of the lack of adequate COR oversight, the labor hours

charged to the two task orders and paid by PBGC may not be accurate. The OIG made two

recommendations to the Corporation. Corrective actions to address one of the recommendations has

been completed and submitted to the OIG for review and the corrective actions are ongoing for the

remaining recommendation.

• PBGC Should Exclude Deceased Terminated Vested Participants from SFA Calculations

(EVAL-2023-05), issued March 22, 2023. PBGC continues to strengthen its internal controls, policies,

and procedures, to maintain high standards of stewardship, accountability, and integrity within its

programs. Furthermore, PBGC has revised its guidance and application instructions to strengthen the

Special Financial Assistance (SFA) Program. The OIG made six recommendations to the Corporation,

three of which are closed. Corrective actions for two of the recommendations have been submitted to the

OIG for review and corrective actions are ongoing for the remaining recommendation.

• PBGC Should Improve Its Special Financial Assistance Review Procedures (EVAL-2023-08),

issued February 24, 2023. Since the OIG’s review, PBGC completed its risk assessment of the SFA

Program and refined its SFA application review procedures. The OIG made eight recommendations to

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the Corporation, four of which are closed. Corrective actions for the four remaining recommendations

have been submitted to the OIG for review.

• Evaluation of PBGC’s Fiscal Year 2022 Compliance with the Payment Integrity Information Act

of 2019 (EVAL-2023-09), issued May 18, 2023. As required by the Payment Integrity Information Act

of 2019 (PIIA), the OIG reviewed PBGC’s compliance with improper payment reporting requirements.

For FY 2022, the OIG determined that PBGC complied with the applicable PIIA requirements outlined

in M-21-19, Transmittal of Appendix C to OMB Circular A-123, Requirements for Payment Integrity

Improvement, dated March 5, 2021. However, PBGC did not include a hyperlink to

PaymentAccuracy.gov in the Annual Financial Report for access to the accompanying materials. The

OIG made one recommendation and corrective actions are ongoing.

• Audit of PBGC’s Review of Initial Special Financial Assistance Applications (AUD-2023-11),

issued June 30, 2023. OIG assessed whether PBGC adequately reviewed applications for SFA prior to

approving them. For the three applications reviewed, OIG found that PBGC had many procedures in

place to review SFA applications, including eligibility checks, completeness checks, actuarial and business

assumption reviews, actuarial calculation reviews, legal reviews of plan amendments, and reviews by

upper management. Upon examining application files in PBGC’s TeamConnect system, OIG verified all

three plans in its sample submitted documentation required by PBGC. OIG also verified PBGC

performed its eligibility checks, completeness checks, and legal reviews of plan amendments, and

documented these steps in the concurrence packages. Finally, OIG confirmed that each of the three

plans was eligible for SFA. However, OIG found the following areas for PBGC to improve in its review

of SFA applications. First, PBGC should better document its analysis of potential application issues and

management concurrence regarding the resolution of those issues to better ensure management

oversight. Second, to improve PBGC’s ability to detect discrepancies in plan calculations for suspended

benefits and a plan’s reported Contribution Base Unit (CBU) history, the Corporation should develop

and implement additional controls to assess plan calculations for previously suspended benefits and a

plan’s reported CBU history. The OIG made three recommendations and corrective actions are ongoing.

For more information about the OIG’s work in promoting accountability in PBGC operations, visit

oig.pbgc.gov.

Government Accountability Office (GAO)

In its April 2023 High-Risk Series Report, GAO removed the insurance programs from the High-Risk List.

In that Report, GAO noted that while currently financially healthy, the Single-Employer Program will

continue to face potentially substantial financial risks and that PBGC’s experience shows that the financial

position of the program can change quickly and precipitously. Similarly, GAO noted that although SFA

significantly extended the life of the Multiemployer Program, the Multiemployer Program still faces

fundamental financial risks, such as inadequate plan funding, premiums that do not fully cover the cost of

insurance, and uncertainty regarding future investment returns. GAO stated that it will continue to monitor

the insurance programs’ finances and other issues. PBGC also monitors progress in addressing GAO

recommendations. As of September 30, 2023, PBGC had no open GAO recommendations. For more

information about GAO’s work on pensions and retirement security issues, visit GAO.gov.

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P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 2 3 | A N N U A L R E P O R T

FI NANC ES

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

FISCAL YEAR 2023 FINANCIAL STATEMENT HIGHLIGHTS

The Pension Benefit Guaranty Corporation (PBGC or the Corporation or the agency) is a federal corporation

established under the Employee Retirement Income Security Act (ERISA) of 1974, as amended. It guarantees

payment of basic pension benefits earned by over 31 million of America’s workers and retirees participating

in more than 24,500 private-sector defined benefit pension plans. In accordance with the American Rescue

Plan (ARP) Act of 2021, the Corporation received appropriations from the U.S. Treasury General Fund to

help severely underfunded multiemployer plans that meet ARP’s eligibility criteria. This new funding assisted

in remedying the Multiemployer Program’s deficit in FY 2021 by reducing the future amount needed for

traditional financial assistance. The Multiemployer Program’s deficit would have remained significant through

FY 2023 if not for the favorable impact of the ARP which resulted in the program achieving a surplus in each

fiscal year since enactment. PBGC receives no funds from general tax revenues for its Single-Employer

Program or the traditional multiemployer financial assistance program. Operations are financed by insurance

premiums set by statute and paid by sponsors of defined benefit plans, investment income, assets from

pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.

FINANCIAL POSITION

PBGC’s Memorandum Total

Financial Position

PBGC includes Memorandum Totals for its two independent insurance programs solely for an entity-wide

informational view of its financial statements. Most importantly, under Section 4005(g) of ERISA, the Single-

Employer and Multiemployer Programs are separate by law; and, therefore, PBGC is required to report the

financial results of operations separately.

PBGC’s Memorandum Total cumulative results of operations increased by $8,439 million, resulting in the

Corporation’s Memorandum Total cumulative results of operations of $46,068 million as of September 30,

2023, from a balance of $37,629 million as of September 30, 2022. The increase in the Memorandum Total

cumulative results of operations is due to $45,925 million in contributed transfer appropriation income,

$5,994 million in premium and other income, $4,798 million in investment gains, $3,008 million in credits due

to change in interest factors, $128 million in actuarial credits, and $10 million in multiemployer credits from

insolvent and probable plans, offset by $45,907 million in special financial assistance expense, $3,996 million

in charges due to expected interest, $949 million in losses from completed and probable terminations, $461

million in administrative, administrative SFA, and other expenses, and $111 million in investment expenses.

Memorandum Total actuarial charges totaled $860 million. PBGC uses a curve of interest factors to

determine the actuarial present value of estimated future benefit payments (see Note 6). The curve of spot

rates for September 30, 2023, starts with an interest factor of 6.30% in year 1 and changes as the future

period for discounting gets longer until year 30 when the factor becomes 5.55% and is assumed to remain

level thereafter. This increase in interest factors since FY 2022 resulted in $3,046 million in credits that

consists of $2,942 million in credits for terminated single-employer plans, $66 million in credits for insolvent

multiemployer plans, and $38 million in credits for probable multiemployer plans.

Multiemployer Financial Position

• The ARP established a new multiemployer Special Financial Assistance (SFA) Program, resulting in a

new source of financing outside of PBGC’s revolving fund. PBGC receives appropriated SFA funds to

disburse to multiemployer plans that meet certain criteria. Unlike traditional financial assistance wherein

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PBGC provides assistance to multiemployer plans in the form of a loan, the new special financial

assistance is provided via a transfer of funds with no obligation of repayment. At the end of each fiscal

year, any unused appropriated SFA funds must be returned to the U.S. Treasury General Fund.

• The Multiemployer Program’s cumulative results of operations improved by $398 million, resulting in a

positive cumulative results of operations of $1,453 million as of September 30, 2023. The Multiemployer

Program’s FY 2023 net income of $398 million is due to $45,925 million in contributed transfer

appropriation income, $381 million in net premium and other income, $66 million in credits due to

change in interest factors (which resulted from increases in market interest rates), $37 million in credits

from actuarial adjustments, and a $10 million credit from insolvent and probable plans-financial

assistance. These favorable factors for the Multiemployer Program were offset by $45,907 million in

special financial assistance expense, $87 million in charges due to expected interest, $18 million in

administrative SFA expenses, $7 million in administrative expenses, and $2 million in fixed investment

losses. The Multiemployer Program would still be in a deficit position had it not been for the ARP

enacted in FY 2021.

• Credits from insolvent and probable plans-financial assistance for the Multiemployer Program was $10

million as of September 30, 2023. The drivers of these credits are:

o $38 million credit due to change in interest factors which resulted from increases in market

interest rates; and

o $38 million credit due to the reclassification of one multiemployer probable plan to reasonably

possible; and

o $24 million credit from expected benefit payments; and

o $22 million credit from change due to actual investment rates of return; and

o $20 million credit due to change in mortality table; offset by

o $72 million increase in the multiemployer small plan bulk reserve; and

o $24 million in charges from expected interest on benefit liability; and

o $19 million charges from effects of experience including premium indexing; and

o $16 million charge from the addition for one new multiemployer probable plan; and

o $1 million net charges from other recurring actuarial adjustments.

• In FY 2023, one multiemployer plan was reclassified from the probable category to reasonably possible.

One new probable plan with net claims of $16 million was added to the multiemployer inventory and one

other plan that was added, and then subsequently deleted due to SFA eligibility.

Multiemployer Probable Insolvent Activity

• The $250 million decrease in probable insolvent plan liability from $839 million at September 30, 2022, to

$589 million at September 30, 2023, was primarily due to four plans with net claims of $252 million that

were transferred from the probable insolvent category to plans receiving financial assistance, $38 million

credit due to the reclassification of one multiemployer probable plan to reasonably possible, $38 million

credit due to the change in interest factors (which resulted from increases in market interest rates), $21

million credit from actual investment rates of return on probable plan assets, and $5 million credit from

13 deleted plans, offset by $72 million increase in the small plan bulk reserve, $24 million in charges from

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F Y 2 0 23 | A N N U A L R E P O R T

expected interest on benefit liability, and $15 million from the addition of one new probable insolvent

plan.

Multiemployer Insolvent Activity

• The $71 million increase in insolvent plan liability (i.e., plans currently receiving financial assistance) from

$1,551 million at September 30, 2022, to $1,622 million at September 30, 2023, was primarily due to four

plans with net claims of $252 million that were transferred from the probable insolvent category to plans

receiving financial assistance and $87 million in charges from expected interest on benefit liability, offset

by $176 million credit from financial assistance provided, $66 million credit due to the change in interest

factors (which resulted from increases in market interest rates), and $15 million credit due to change in

the mortality table. PBGC paid $176 million in traditional financial assistance in FY 2023.

Single-Employer Financial Position

• The Single-Employer Program’s FY 2023 cumulative results of operations improved by $8,041 million,

resulting in a positive cumulative results of operations of $44,615 million as of September 30, 2023. The

Single-Employer Program’s FY 2023 net income of $8,041 million is due to $5,613 million in net

premium and other income, $4,800 million in investment gains, $2,942 million in credits due to change in

interest factors (which resulted from increases in market interest rates), and $91 million in credits from

actuarial adjustments. These favorable factors for the Single-Employer Program were offset by $3,909

million in charges due to expected interest related to PBGC’s liabilities of $78,332 million as of

September 30, 2022, $949 million in losses from completed and probable terminations (primarily due to

the removal of J.C. Penney’s pension plan from the single-employer terminated plan inventory, as the

company completed a standard termination), $436 million in administrative and other expenses, and $111

million in investment expenses.

INVESTMENTS

Single-Employer Investment Activity

• Global Public Equity – Global equity markets, as represented by the MSCI All Capitalization World

IMI (Net), returned 20.16% for FY 2023. The broad U.S. equity market, as represented by the Russell

3000 Index, returned 20.46% over the same period. Within U.S. equities, growth outperformed value and

large capitalization outperformed small capitalization. Non-U.S. developed equities, as represented by the

MSCI EAFE IMI Index (Net), returned 24.51% for FY 2023. Within non-U.S. Developed equities, value

outperformed growth. Emerging markets, as represented by the MSCI Emerging Markets Standard Index

(Net), returned 11.70% during the same period.

For FY 2023, global equity market returns generated a gain of $2,648 million from equity investments

compared to a loss of $3,655 million for FY 2022 (19.51 percent return for Total Global Public Equity in

FY 2023 versus -21.11 percent in FY 2022).

• Global Bonds – The broad U.S. investment-grade fixed income markets, as represented by the

Bloomberg U.S. Aggregate Bond Index, returned 0.64%. Intermediate U.S. Treasuries were positive for

FY 2023, while long duration U.S. Treasuries were negative as yields at the long end of the curve of

interest rates increased significantly. Corporate bond returns were positive and outperformed government

bonds as spreads narrowed during FY 2023.

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For FY 2023, global fixed income generated a gain of $2,168 million from fixed income investments

compared to a loss of $19,305 million for FY 2022. This reflects higher fixed income returns (1.45

percent return for Total Global Bonds in FY 2023 versus -16.62 percent in FY 2022).

• Real Estate Investment Trusts (REITS) – REITs, as represented by the Dow Jones U.S. Select Real

Estate Securities Index, returned 2.68% for FY 2023, lagging behind U.S. equities significantly as rising

yields have put pressure on real estate.

For FY 2023, REITS generated a loss of $21 million from real estate investments compared to a loss of

$229 million for FY 2022 (1.66 percent return for US REITs in FY 2023 versus -17.08 percent in FY

2022).

• Combined Single-Employer Investment Return – FY 2023 investment returns contributed to a total

PBGC combined investment gain of $4,800 million. PBGC’s Total Fund Composite (excluding transition

accounts) earned 3.89 percent in FY 2023, exceeding the Total Fund Benchmark return of 3.81 percent.

Multiemployer Investment Activity

• U.S. Treasury Bonds – Broad U.S. Treasury bonds, as represented by the Bloomberg U.S. Treasury

Index, returned -0.81% for FY 2023. Long Treasuries underperformed intermediate during FY 2023.

For FY 2023, multiemployer fixed income generated a loss of $2 million from fixed income investments

compared to a loss of $248 million for FY 2022. This reflects higher fixed income returns (-0.75 percent

return for multiemployer revolving fund in FY 2023 versus -9.20 percent in FY 2022).

OPERATIONS

• PBGC’s combined (i.e., the Memorandum Total which is comprised of both the Single-Employer and

Multiemployer Program activity) single-employer benefit payments and multiemployer financial assistance

paid were $51,813 million in FY 2023 and $14,794 million in FY 2022. The significant increase was

primarily due to $45,577 million in special financial assistance paid to 64 approved plans in FY 2023.

There were $7,526 million in special financial assistance payments to 29 approved plans in FY 2022.

PBGC assumed responsibility for the benefit payments of an additional 4,510 workers and retirees in the

26 single-employer plans that were trusteed during FY 2023.

• FY 2023 combined (Memorandum Total) net premium income increased by $1,040 million to $5,965

million compared to FY 2022 net premium income of $4,925 million. The primary components of the

combined net premium income were variable rate premium (VRP) income of $3,728 million and flat rate

premium income of $2,254 million. Overall, this represented a 21 percent year-over-year increase in

combined premium income and is primarily due to a $966 million increase in the single-employer variable

rate premium income. This increase in variable rate premium income is primarily due to increased

premium rates for variable rate premiums and declining conditions of the plans’ underfunding (i.e., higher

Unfunded Vested Benefits) (see Note.11).

• During FY 2023, PBGC assumed financial responsibility for 21 underfunded single-employer plans that

were terminated. Some of these plans are pending the completion of a trusteeship agreement with PBGC

as of year-end. None of these 21 terminated plans were previously classified as a probable termination by

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PBGC. These 21 terminated plans had an average funded ratio of about 86 percent, and these

terminations resulted in an aggregate net loss to PBGC of $22 million (see Note 12).

• As of September 30, 2023, there were two new related single-employer plans (net claim of $174 million)

classified as a probable termination. Probable terminations represent PBGC’s best estimate of claims for

plans that are classified as likely to terminate in a future year.

• As of September 30, 2023, the present value of multiemployer nonrecoverable future financial assistance

of $2,211 million consists of 90 insolvent plans ($1,622 million), 32 terminated plans not yet insolvent but

probable ($386 million), and one ongoing plan that is projected to exhaust plan assets within 10 years and

classified as probable including a small plan bulk reserve ($203 million).

ESTIMATES OF REASONABLY POSSIBLE CONTINGENCIES

• At fiscal year-end, PBGC’s estimate of its single-employer reasonably possible exposure decreased to

$25,657 million in FY 2023, a $26,375 million decrease compared to $52,032 million in FY 2022. This

decrease is primarily due to the increase in the interest factors used for valuing liabilities as of the

measurement date (see Note 9 for discount factors utilized in calculating the reasonably possible

estimate).

• PBGC’s estimate of its multiemployer reasonably possible exposure decreased to $410 million in FY

2023, a $1,808 million decrease from the $2,218 million in FY 2022. The primary reason for the decrease

in exposure was a net decrease in the number of plans classified as reasonably possible to seven plans at

September 30, 2023, from 12 plans classified as reasonably possible at September 30, 2022. The plans

removed no longer meet the reasonably possible criteria as the plans experienced improved financial

conditions due to better than expected investment returns, higher discount rates in valuing liabilities, and

higher plan contributions. One of the plans was removed since it is eligible for SFA. Additionally, the

reasonably possible aggregate reserve for small plans decreased by $390 million due to improved financial

conditions of the plans, higher discount rates in valuing liabilities and a change in the small plan bulk

reserve estimation methodology. The number of small plans projected to become insolvent within 20

years decreased from 55 to 41.

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KEY SINGLE-EMPLOYER AND MULTIEMPLOYER RESULTS

(Dollars in millions)

FY 2023

FY 2022

Insurance Activity

SINGLE-EMPLOYER AND MULTIEMPLOYER

PROGRAMS MEMORANDUM TOTAL

Single-Employer Benefits Paid

6,061

7,042

Multiemployer Financial Assistance Paid – SFA

45,577

7,526

Multiemployer Financial Assistance Paid – Traditional

176

226

Retirees Receiving Benefits (at end of year)

997,609

1,056,626

Total Participants Receiving or Owed Benefits (at end of year)

1,486,000

1,552,000

New Underfunded Terminations

Terminated/Trusteed Plans (combined to date)

5,129

5,110

Plans That Have Received Financial Assistance – Traditional

Summary of Operations

SINGLE-EMPLOYER AND MULTIEMPLOYER

PROGRAMS MEMORANDUM TOTAL

Premium Income, Net

5,965

4,925

Losses (credits) From Completed and Probable Terminations

949

249

Losses (credits) From Financial Assistance – Traditional

(10)

(72)

Investment Income (Loss)

4,798

(23,280)

Actuarial Charges and Adjustments (Credits)

860

(25,329)

Financial Position

SINGLE-EMPLOYER AND MULTIEMPLOYER

PROGRAMS MEMORANDUM TOTAL

Total Assets

134,919

127,887

Total Liabilities

88,843

90,252

Net Income (Loss)

8,439

6,214

Cumulative Results of Operations

46,068

37,629

SINGLE-EMPLOYER PROGRAM

Total Assets

130,873

124,394

Total Liabilities

86,258

87,820

Net Income (Loss)

8,041

5,637

Cumulative Results of Operations

44,615

36,574

MULTIEMPLOYER PROGRAM

Total Assets

4,046

3,493

Total Liabilities

2,585

2,432

Net Income (Loss)

398

577

Cumulative Results of Operations

1,453

1,055

The Single-Employer Program and Multiemployer Program are separate by law.

The “Single-Employer and Multiemployer Programs Memorandum Total” data totals presented above are solely an entity-wide informational view of

PBGC’s two independent insurance programs.

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FINANCIAL SUMMARY – SINGLE-EMPLOYER PROGRAM

Fiscal Year Ended September 30,

(Dollars in millions)

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

Insurance Activity:

Benefits paid

6,061

7,042

6,440

6,125

6,020

5,792

5,699

5,659

5,570

5,522

Participants receiving monthly

benefits at end of year

917,185

963,097

967,506

984,474

887,138

861,371

839,772

838,493

825,666

812,608

Plans trusteed and pending

trusteeship by PBGC

5,119

5,100

5,068

5,031

4,965

4,919

4,845

4,769

4,706

4,640

Summary of Operations:

Premium income, net

5,597

4,586

4,511

5,663

6,352

5,518

6,739

6,379

4,138

3,812

Other income

184

Investment income (loss)

4,800

(23,032)

4,058

12,470

14,820

1,502

5,363

8,648

324

6,439

Actuarial charges and

adjustments (credits)

876

(24,916)

(8,460)

8,875

14,409

(6,468)

(950)

11,515

9,504

1,864

Losses (credits) from completed

and probable termination

and probable terminations

949

249

1,022

1,926

(322)

3,063

(417)

(780)

(115)

Administrative and investment

expenses

544

585

559

538

488

489

481

465

446

464

Other expenses

Net income (loss)

8,041

5,637

15,459

6,822

6,217

13,353

9,666

3,485

(4,727)

8,043

Summary of Financial

Position:

Cash and investments

117,454

114,223

138,854

134,244

118,119

101,310

96,830

89,596

80,090

81,215

Total assets

130,873

124,394

150,692

143,472

128,068

109,941

106,196

97,342

85,735

88,013

Present value of future benefits

73,929

78,332

108,929

120,430

113,100

101,866

111,280

113,704

106,926

102,774

Cumulative Results of

Operations

44,615

36,574

30,937

15,478

8,656

2,439

(10,914)

(20,580)

(24,065)

(19,338)

This measure may differ from yearly performance numbers reported in PBGC’s Annual Performance Report, which also include participants whose

benefit payments ended during the year (for example, due to death or a final lump-sum payout).

These cumulative measures may differ due to plans that terminated in a prior year may have been removed from inventory in a subsequent year.

Cash and investments

consists of Cash and cash equivalents, Total investments, and Receivables, net: Investment income.

As a general note, a dash “-” indicates no net activity to be reported.

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FINANCIAL SUMMARY – MULTIEMPLOYER PROGRAM

Fiscal Year Ended September 30,

(Dollars in millions)

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

Insurance Activity:

Financial assistance paid – SFA

45,577

7,526

Plans that have received – SFA

Financial assistance paid – traditional

176

226

230

173

160

153

141

113

103

Plans that have received FA – traditional

100

115

109

Summary of Operations:

Premium income, net

368

339

331

322

310

292

291

282

212

122

Contributed transfer appropriation

income

45,925

7,566

Other income

Investment income (loss)

(2)

(248)

(47)

180

442

(52)

(53)

143

Actuarial charges and adjustments

(credits)

(16)

(413)

(178)

180

340

(147)

(23)

167

135

Losses (credits) from insolvent and

probable plans - financial assistance

(10)

(72)

(63,736)

(1,137)

(11,662)

(10,830)

6,438

6,768

9,963

34,260

Special financial assistance expense

45,907

7,555

Administrative and investment expense

Administrative special financial

assistance expense

Net income (loss)

398

577

64,227

1,417

(11,290)

11,176

(6,219)

(6,549)

(9,850)

(34,176)

Summary of Financial Position:

Cash and investments

3,404

3,058

2,978

2,951

2,676

2,137

2,080

2,037

1,768

1,701

Restricted cash

369

Total assets

4,046

3,493

3,512

3,144

2,858

2,311

2,262

2,204

1,924

1,769

Present value of future benefits

Nonrecoverable future financial

assistance, present value

2,211

2,390

3,017

66,865

67,995

56,153

67,283

61,009

54,186

44,190

Cumulative Results of Operations

1,453

1,055

478

(63,749)

(65,166)

(53,876)

(65,052)

(58,833)

(52,284)

(42,434)

This amount consists of traditional financial assistance paid to 100 insolvent plans (see Note 7). In FY 2022, this amount consisted of $217 million in

traditional financial assistance paid to 115 insolvent plans and $9 million to PBGC’s first facilitated merger under MPRA.

100 plans received traditional financial assistance in FY 2023, 90 are expected to continue to receive traditional financial assistance. In FY 2022, 115

plans received traditional financial assistance, 86 plans were expected to continue to receive traditional financial assistance.

Cash and investments

consists of Cash and cash equivalents, Total investments, and Receivables, net: Investment income. As a general note, a dash

“-” indicates no net activity to be reported.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF

OPERATIONS AND FINANCIAL POSITION

I. INTRODUCTION

PBGC management believes its discussion and analysis of its financial statements and other statistical data

will help all interested parties and readers better understand PBGC’s financial condition and results of

operations. Readers should consider this material in conjunction with the Annual Performance Report

starting on page 1, the financial statements beginning on page 62, and the accompanying notes beginning on

page 66.

II. FINANCIAL AND PROGRAM RISKS

As of September 30, 2023, the Single-Employer and Multiemployer Programs reported cumulative results of

operations of $44,615 million and $1,453 million, respectively. The Single-Employer Program’s cumulative

results of operations improved by $8,041 million and the Multiemployer Program’s cumulative results of

operations improved by $398 million. The Corporation has $130,873 million in single-employer assets and

$4,046 million in multiemployer assets and will be able to meet its obligations for a number of years. PBGC’s

FY 2022 Projections Report shows that the Multiemployer Program is likely to remain solvent for more than

40 years and that the Single-Employer Program is projected to remain in a positive net financial position over

the next decade. Most importantly, under Section 4005(g) of ERISA, the Single-Employer and Multiemployer

Programs are separate by law and, therefore one program’s resources cannot be used to fund the activities of

the other. It is important to note that the Special Financial Assistance Program created by the ARP is

expected to enable PBGC to satisfy long-term multiemployer obligations by providing SFA to currently

insolvent and probable plans. For more information, please refer to Section V. Overall Capital and Liquidity

and Section VI. Single-Employer and Multiemployer Exposure.

In FY 2023, significant factors beyond PBGC’s control, including the performance of financial markets,

changes in interest rates, and the solvency of insured pension plans, continued to influence PBGC’s

underwriting income and investment gains or losses.

PBGC’s operating results can change markedly from year to year depending on the severity of losses from

plan terminations, investment performance, changes in the interest factors used to discount future benefit

payments, general economic conditions, changes in law, and other factors. PBGC’s operating results may vary

more than those of most private insurers, in part because PBGC must insure against catastrophic risk without

all the tools private insurers use to address risk. Most private insurers can diversify or reinsure their

catastrophic risks or apply traditional insurance underwriting methods to mitigate these risks. Unlike private

insurers, the Corporation cannot decline insurance coverage or provide a lower level of coverage, regardless

of the potential risk posed by an insured plan. Private insurers can also adjust premiums in response to risk,

while PBGC cannot. PBGC’s premiums are set by statute.

Claims against PBGC’s insurance programs can vary greatly from year to year. The termination or insolvency

of a single large pension plan may result in a larger claim against the Corporation than the termination or

insolvency of many smaller plans. Thus, future claims will continue to depend largely on the failures of large

plans. Additionally, PBGC’s risks are concentrated in certain industries. Finally, PBGC’s financial condition is

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sensitive to market risk. Interest rates and equity returns affect not only PBGC’s own assets and liabilities but

also those of PBGC-insured plans (see Note 9).

III. LEGISLATIVE AND REGULATORY DEVELOPMENTS

LEGISLATIVE DEVELOPMENTS

SECURE 2.0 Act of 2022

The SECURE 2.0 Act of 2022, enacted on December 29, 2022, as Division T of the Consolidated

Appropriations Act, 2023 (P.L. 117-328)

, contains various provisions relating to retirement plans, including

several provisions relating to PBGC’s insurance programs. The PBGC-related provisions are summarized

below:

• Variable-rate premium:

The variable-rate premium (VRP) rate ceases to be indexed. The VRP rate of

$52 per $1,000 of unfunded vested benefits, in effect for plan years beginning in 2023, is made

permanent.

• Age pension payments are required to begin:

The required beginning age for pension payments,

including payments from plans trusteed by PBGC, is delayed for individuals who attain age 72 after

December 31, 2022. The new required beginning age depends on date of birth.

• Mandatory cash out limit:

The maximum benefit value that ongoing plans may require participants to

receive as a lump sum rather than as an annuity is increased from $5,000 to $7,000 for distributions made

after December 31, 2023. Although PBGC does not make mandatory cash outs to participants in PBGC-

trusteed plans, it does offer participants the option of a lump sum if the value of their benefit as of the

date of plan termination is not more than the mandatory cash out limit applicable to ongoing plans.

Therefore, for plans that terminate after December 31, 2023, PBGC’s threshold for lump sum eligibility

will be $7,000 instead of $5,000.

• Funding mortality table:

A cap is established on mortality improvement rates impacting the mortality

used to value benefit obligations for single-employer defined benefit pension plans for purposes of

ERISA minimum funding requirements and to determine plan liabilities for PBGC single-employer

variable-rate premiums. The cap applies for plan valuation dates in 2024 or later.

• Reporting and disclosure report:

The Department of Labor, Department of the Treasury, and PBGC

are required to submit a joint report to Congress with recommendations to standardize, consolidate,

simplify, and improve requirements to report information to the agencies and disclose information to

participants. The report is due three years after the date of enactment.

Division T (SECURE 2.0 Act of 2022) of the Consolidated Appropriations Act, 2023 (P.L. 117-328)

Sec. 349 of Division T of P.L. 117-328

Sec. 107 of Division T of P.L. 117-328

Sec. 304 of Division T of P.L. 117-328

Sec. 335 of Division T of P.L. 117-328

Sec. 319 of Division T of P.L. 117-328

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• Retirement savings lost and found:

A national retirement plan database to help former employees and

beneficiaries locate their retirement benefits is to be established within the Department of Labor. The

Department may call upon other agencies, including PBGC, to provide needed information.

REGULATORY AND RELATED ACTIVITIES

In FY 2023, PBGC issued regulations and other guidance under the SFA Program. PBGC published a final

rule, effective on January 26, 2023, that amended the SFA regulation to provide for an exception process for

the withdrawal liability conditions imposed on plans that receive SFA. PBGC also released on July 19, 2023,

questions and answers that provided guidance on the investment of SFA funds and calculation methodology

under the withdrawal liability phase-in condition, and on July 27, 2023, updated the SFA instructions.

PBGC continued to develop other rulemakings and guidance to protect plan participants and minimize

burdens on pension plans and plan sponsors.

PBGC published a final rule in the Federal Register on July 11, 2023, to increase transparency of PBGC

benefits administration for terminated single-employer pension plans that PBGC trustees. The final rule,

which became effective on August 10, 2023, made clarifications and codified policies involving benefit

payments and valuation of plan assets.

PBGC published a proposed rule on October 14, 2022, that would prescribe actuarial assumptions under

section 4213(a)(2) of ERISA which may be used by a multiemployer plan actuary in determining an

employer’s withdrawal liability. The comment period closed on December 13, 2022, and PBGC plans to

publish a final rule that responds to public comments received on the proposed rule.

PBGC published a proposed rule on August 18, 2023, which would amend its regulation on Allocation of

Assets in Single-Employer Plans to update the interest, mortality, and expense assumptions used to determine

the present value of benefits for a single-employer pension plan ending in a distress or involuntary

termination. The assumptions are also used for certain multiemployer withdrawal liability calculations and for

other purposes. The rulemaking included a 60-day public comment period that closed on October 17, 2023.

On August 7, 2023, PBGC issued Technical Update 23-1, a one-time waiver of the 4010 filing requirement

(annual financial and actuarial information reporting requirements under section 4010 of ERISA and 29 CFR

part 4010 of PBGC’s regulations). The waiver recognizes the atypical market conditions of late 2022 and early

2023 and the way those conditions impact assets and liabilities for purposes of determining whether a 4010

filing is required. This is a one-time waiver of the reporting requirement for filers meeting specified criteria.

IV. DISCUSSION OF INSURANCE PROGRAMS

PBGC operates two separate insurance programs for defined benefit plans. PBGC’s Single-Employer

Program guarantees basic pension benefits when underfunded plans terminate and when a plan sponsor

demonstrates it can no longer afford its plan or goes out of business. By contrast, in the Multiemployer

Program, the insured event is plan insolvency, whether or not the plan is terminated. PBGC’s Multiemployer

Sec. 303 of Division T of P.L. 117-328

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Program provides traditional financial assistance to insolvent covered plans to pay benefits at the level

guaranteed by law.

The American Rescue Plan (ARP) Act of 2021 established a new multiemployer Special Financial Assistance

Program (SFA), resulting in a new source of financing outside of PBGC’s revolving fund. PBGC receives

appropriated SFA funds to disburse to multiemployer plans that meet certain criteria. Unlike traditional

financial assistance wherein PBGC provides assistance to multiemployer plans in the form of a loan, the new

special financial assistance provides assistance to eligible plans approved for SFA via a transfer of funds with

no obligation of repayment. At the end of each fiscal year, any unused appropriated SFA funds must be

returned to the U.S. Treasury General Fund.

By law, the two programs are funded and administered separately, and their financial conditions, results of

operations, and cash flows are reported separately. The accompanying financial statements for both

programs, which appear on pages 62-65, have been prepared in accordance with accounting principles

generally accepted in the United States of America (U.S. GAAP) as published by the Financial Accounting

Standards Board (FASB). Please refer to Note 2: “Significant Accounting Policies” for further detail,

including a description of PBGC’s valuation method used in determining benefit liabilities.

While the classification of contingent liabilities described in this report generally reflects information available

as of September 30, 2023, given the uncertainty associated with the impact of the pandemic and the economic

recovery, it is not possible at this time to reasonably estimate all the potential effects of the COVID-19

pandemic on the Single-Employer and Multiemployer Insurance Programs.

IV.A. SINGLE-EMPLOYER PROGRAM RESULTS OF ACTIVITIES AND TRENDS

The Single-Employer Program covers about 20.6 million people (excluding those plans that PBGC has

trusteed), down from the 22.3 million people PBGC covered in FY 2022. The number of covered ongoing

plans at the end of FY 2023 was about 23,500.

Plans that terminate in a standard termination must have sufficient funding to cover all accrued benefits owed

to participants and beneficiaries. In these cases, PBGC ensures that all standard termination applications

comply with statutory and regulatory requirements. PBGC audits a sample of plans that have filed for a

standard termination to determine if earned benefits have been distributed to participants.

In contrast, when a covered underfunded plan terminates, PBGC becomes the trustee. PBGC applies legal

limits to payouts and pays the benefits. To determine the amount to pay each participant, PBGC takes into

account (a) the benefit that the participant had accrued in the terminated plan, (b) the availability of assets

from the terminated plan to cover benefits, (c) how much PBGC recovers from employers for plan

underfunding, and (d) the limits on guaranteed benefits provided under ERISA. The benefit guarantee limits

are indexed (i.e., they increase in proportion to increases in the Old-Law Social Security wage base) and vary

based on the participant’s age and elected form of payment. Because of indexing, the benefit guarantee limits

for plans that will fall in calendar year 2024 will be 5.30 percent higher than the limits that applied for 2023 as

shown below for sample ages:

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MAXIMUM GUARANTEED ANNUAL BENEFIT PAYABLE AS A SINGLE LIFE ANNUITY

Age

Plans Terminating

in 2024

Plans Terminating

in 2023

$141,590

$134,460

$85,295

$81,000

$55,442

$52,650

$38,383

$36,450

The benefit guarantee limit is a cap on what PBGC guarantees, not on what PBGC pays. In some cases, such

as when PBGC recovers sufficient plan assets to pay more than just the maximum guaranteed benefit, PBGC

pays benefits above the benefit guarantee limit.

The applicable maximum guarantee is determined by the year the retiree’s plan terminated (if the plan

terminated during the plan sponsor’s bankruptcy, the year the sponsor entered bankruptcy) and the

participant’s age at the later of the date the sponsor entered bankruptcy or the date the participant begins

collecting benefits.

SINGLE-EMPLOYER OVERALL FINANCIAL RESULTS

Net income for the Single-Employer Program was $8,041 million in FY 2023. The drivers of this income

included net premium income and other income of $5,613 million, investment income of $4,800 million,

credits of $2,942 million due to an increase in interest factors (which has the effect of decreasing benefit

liabilities and actuarial charges), and $91 million in credits from actuarial adjustments. This was offset by

actuarial charges due to expected interest on accrued liabilities of $3,909 million, losses from completed and

probable terminations of $949 million, administrative and other expenses of $436 million, and investment

expenses of $111 million.

PBGC’s FY 2023 Single-Employer Program realized net income of $8,041 million compared to FY 2022 net

income of $5,637 million. This favorable $2,404 million year-over-year change was attributable to:

(1) An increase in investment income of $27,832 million (a gain of $4,800 million in FY 2023 compared

to a loss of $23,032 million in FY 2022),

(2) an increase in net premium and other income of $1,006 million,

(3) a decrease in administrative, investment, and other expenses of $58 million,

(4) a decrease in actuarial credits due to change in interest factors of $21,119 million,

(5) an increase in actuarial charges due to expected interest of $3,427 million,

(6) a decrease in actuarial adjustment credits of $1,246 million, and

(7) an increase in losses from completed and probable terminations of $700 million (see “Single-

Employer Underwriting Activity” below).

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Actuarial charges and adjustments arise from changes in mortality and retirement assumptions, changes in

interest factors, and expected interest. Expected interest refers to the interest that PBGC expects to accrue

during the current fiscal year based on PBGC’s liability and interest factors at the end of the prior year, with

adjustments made for new plans and benefit payments made during the year.

SINGLE-EMPLOYER UNDERWRITING ACTIVITY

PBGC’s Single-Employer Program realized a net underwriting gain of $4,319 million in FY 2023, $893

million less than the FY 2022 gain of $5,212 million. This $893 million decrease from the previous year was

due to a $1,246 million decrease in actuarial adjustment credits and a $700 million increase in losses from

completed and probable terminations, offset by a $1,006 million increase in single-employer net premium and

other income and a $47 million decrease in administrative and other expenses.

Premium and other income from underwriting activity increased by $1,006 million from $4,607 million in FY

2022 to $5,613 million in FY 2023. This increase is largely due to a $966 million increase in variable rate

premium income from plan sponsors from $2,762 million in FY 2022 to $3,728 million in FY 2023. Other

income, consisting of interest on recoveries from plan sponsors, decreased from $21 million in FY 2022 to

$16 million in FY 2023. The decrease in FY 2023 was primarily due to a decrease of interest income from

sponsors’ employer liability settlements. The 35 percent increase in variable rate premium income was

primarily due to the increase in the VRP rates and increases in unfunded vested benefits (UVB). The UVBs

increased due to unfavorable asset returns in 2022. The asset declines were partially offset by decreases in

liabilities resulting from higher discount rates being used to determine those liabilities. Annual variable rate

premium (VRP) income increased from $48 per $1,000 of underfunding (capped at $598 per participant) to

$52 per $1,000 of underfunding (capped at $652 per participant) for plan years beginning in 2023. The VRP

rate is permanent (i.e., ceases to be indexed).

Flat rate premium income for the Single-Employer Program increased $62 million from $1,821 million in FY

2022 to $1,883 million in FY 2023. Factors contributing to this increase include increases in the per

participant flat rate premium for plan years beginning in 2022 and 2023, offset by a decrease in the participant

count in FY 2023.

A plan’s present value of vested benefits for VRP purposes is generally determined using three “segment”

rates. The first of these applies to benefits expected to be paid within five years of the valuation date, the

second applies to the following 15 years, and the third applies to benefits expected to be paid thereafter.

The U.S. Department of Treasury (U.S. Treasury) determines each segment rate monthly using the portion of

a corporate bond yield curve that is based on corporate bonds maturing during that segment rate period. The

corporate bond yield curve is also prescribed every month by the U.S. Treasury. It reflects the yields for the

previous month on investment-grade corporate bonds with varying maturities that are in the top three quality

levels. PBGC’s premium regulation provides a few alternatives with respect to which month’s rates are used

and whether the segment rates are averaged over 24 months.

The Corporation’s “Losses (credits) from completed and probable plan terminations” increased from a loss

of $249 million in FY 2022 to a loss of $949 million in FY 2023. The current $949 million loss is due to $862

million in charges from revaluations and deletions of plans that had terminated in a prior year (primarily due

to the removal of J.C. Penney’s pension plan from the single-employer terminated plan inventory, as the

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company completed a standard termination), $65 million in losses from changes to single-employer probable

claims, and by $22 million in charges related to new plan terminations (see “Losses (credits) from Completed

and Probable Terminations – Single-Employer Program” table in Note 12).

The net claim for single-employer probable terminations as of September 30, 2023, was $286 million, while

the net claim as of September 30, 2022, was $221 million. This $65 million increase is due to the addition of

two new related single-employer probable plans with a net claim of $174 million, offset by a decrease in the

reserve for small unidentified probables of $106 million and the deletion of one probable plan in FY 2023

with a net claim of $3 million (see Note 6).

Single-employer administrative expenses decreased by $30 million from $463 million in FY 2022 to $433

million in FY 2023.

In summary, the following key metrics describe the components of PBGC’s single-employer present value of

future benefits liability:

• $73,610 million – trusteed plans (5,119 plans),

• $16 million – plans pending termination and trusteeship (17 plans). For more information on this topic

please see “Protecting Pension in Standard Terminations" in VI. Single-Employer and Multiemployer

Program Exposure,

• $286 million – claims for probable terminations and reserve for small single-employer unidentified plans

(there was one specifically identified single-employer probable plan at September 30, 2023), and

• $22 million – claims for 21 terminated underfunded single-employer plans.

SINGLE-EMPLOYER FINANCIAL ACTIVITY

Single-employer financial activity reflected a gain of $3,722 million in FY 2023, a $3,297 million increase from

the FY 2022 gain of $425 million. This is due to 1) $4,800 million in investment gains (compared with

$23,032 million loss in FY 2022), and 2) $111 million in investment expenses (compared with $122 million in

FY 2022), offset by 3) $967 million in net actuarial charges (compared with a net actuarial credit of $23,579

million in FY 2022). PBGC marks its assets to market, which is consistent with the FASB Accounting

Standards Codification Section 820, Fair Value Measurements and Disclosures (see Note 5).

Actuarial charges under financial activity represent the effects of changes in interest factors and the expected

interest accrued on the present value of future benefits. The change in interest factors generally reflects the

difference between the liability for future benefits of terminated plans at year-end when valued using updated

interest factors compared to the liability when valued using the prior year’s interest factors. An actuarial credit

of $2,942 million due to the change in interest factors occurred in FY 2023 due to an increase in the interest

factors from FY 2022.

Expected interest refers to the interest that PBGC expects to accrue during the fiscal year on PBGC’s liability

at the end of the prior year based on the interest factor in effect at the beginning of the year. The interest

factor in effect at the beginning of FY 2023 (5.12%) increased compared to the factor at the beginning of FY

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2022 (0.44%). The Single-Employer Program’s expected interest charges increased in FY 2023 (from $482

million in FY 2022 to $3,909 million in FY 2023).

PBGC’s single-employer Total Present Value of Future Benefits (PVFB) decreased from $78,332 million at

September 30, 2022 to $73,929 million at September 30, 2023.

Components of PBGC’s single-employer PVFB of $73,929 million are as follows:

• Trusteed plans – $73,610 million,

• Plans pending termination and trusteeship – $16 million,

• Settlements and judgements – $17 million, and

• Claims for probable terminations – $286 million.

PBGC discounts its liabilities for future benefits with interest factors

that, together with the mortality table

used by PBGC, approximate the price in the private-sector annuity market at which a plan sponsor or PBGC

could settle its obligations. PBGC uses a curve of interest factors to determine the actuarial present value of

estimated future benefit payments (see Note 6). The curve of spot rates for September 30, 2023, starts with

an interest factor of 6.30% in year 1 and changes as the future period for discounting gets longer until year 30

when the factor becomes 5.55% and is assumed to remain level thereafter. The curve of spot rates for

September 30, 2022, started with an interest factor of 5.12% in year 1 and changed as the future period for

discounting got longer until year 30 when the factor became 4.76% and was assumed to remain level

thereafter.

To determine future mortality rates, PBGC used the results of a 2023 Mortality Study. The Study

recommended the use of Pri-2012 Total Dataset Separate Annuitant and Non-Annuitant Mortality tables for

Healthy Males and Females with age band adjustments. The resulting tables are projected generationally using

an adjusted Scale MP-2021 for the FY 2023 valuations. The impact on PVFB from this mortality assumption

change is included in the actuarial adjustments (credits) amount reported in the Underwriting section of the

Statements of Operations.

IV.B. MULTIEMPLOYER PROGRAM RESULTS OF ACTIVITIES AND TRENDS

On March 11, 2021, the American Rescue Plan (ARP) Act of 2021 was enacted into law. ARP established the

Special Financial Assistance (SFA) Program for financially distressed multiemployer plans that meet specific

criteria. The SFA Program is administered by PBGC and is funded by general U.S. Treasury monies, not by

PBGC’s multiemployer insurance fund.

The amount of SFA funding to which an eligible plan is entitled is the amount the plan requires to pay all

benefits and expenses, net of plan resources (including plan assets, projected future contributions, and

withdrawal liability collections), through the plan year ending in 2051. The SFA payment also includes

reinstatement of benefits previously suspended due to implementation of benefit suspensions under the

PBGC surveys life insurance industry annuity prices through the American Council of Life Insurers (ACLI) to obtain input needed to determine

interest spread factors and then derives a 30-year curve of interest factors that together with PBGC’s mortality assumption best matches the private

sector annuity prices from the ACLI surveys. PBGC’s process derives the curve of interest factors that differs least over the range of annuity prices in

the ACLI surveys (see Note 6).

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Multiemployer Pension Reform Act of 2014 (MPRA) or benefits reduced to PBGC guaranteed benefit levels

due to insolvency.

PBGC must process all SFA applications within 120 days of receipt. Upon PBGC’s approval of the plan’s

application, PBGC will pay the SFA funds to the plan with no requirement for repayment. To accurately

reflect the impact of SFA eligibility on PBGC’s accrued and contingent liability, multiemployer plans expected

to be eligible and eventually approved for SFA are not considered high risk and will be classified as remote.

For an insolvent, but not yet terminated, plan that has an obligation to repay traditional financial assistance

under Section 4261 of ERISA, PBGC will issue two disbursements. The first disbursement will be a transfer

to the plan to cover future benefit payments requested in the plan’s SFA application. The second

disbursement reimburses PBGC for the loan amount of traditional financial assistance (includes premium

waivers and interest) previously provided.

ARP specifies that multiemployer plans must satisfy one or more criteria to be eligible for SFA. The criteria

are as follows:

1. The plan is in critical and declining status in any plan year beginning in 2020 through 2022.

2. The plan has an approved suspension of benefits under MPRA as of March 11, 2021.

3. In any plan year beginning in 2020 through 2022, the plan meets the following criteria (the

requirements do not have to be met for the same plan year):

a. The plan is in critical status,

b. The plan has a modified funding percentage of less than 40 percent, and

c. The plan has a ratio of active to inactive participants which is less than 2 to 3.

4. The plan became insolvent after December 16, 2014, and has remained insolvent and not terminated

as of March 11, 2021.

PBGC’s determination on a plan’s eligibility for SFA is not made until after a plan has submitted an

application and PBGC has completed its review. For purposes of determining financial statement

classification only, PBGC considers a plan that is reported to be in critical and declining status for any plan

year after 2018 to be eligible for SFA under criteria (1) above. Plans that are eligible under criteria (2) are

listed on the Treasury Department’s website. PBGC considers any plan that meets the criteria in (3) based on

information reported on its Form 5500 filing for any plan year after 2018 to be eligible for SFA for

classification purposes. The information PBGC maintains on insolvent plans receiving traditional financial

assistance under Section 4261 of ERISA is sufficient to determine eligibility under criterion (4).

PBGC has a high expectation that every SFA eligible plan for which PBGC has accrued liability or classified

as a reasonably possible loss will apply for this assistance. Based upon the prior year filings for ongoing

probables, as well as more currently available information, it is anticipated that those applications for SFA will

be approved and funded.

SFA eligible plans are no longer considered to be in the high-risk category as defined by either (1) projected

insolvency over the next 20 years, (2) currently classified as critical and declining status, or (3) meeting the

projected insolvency thresholds as defined in the PBGC’s procedures. Therefore, the end result is that these

SFA eligible plans are classified as remote and not presented within PBGC’s financial statements.

The Multiemployer Program covers about 11.0 million participants in about 1,360 insured plans. Generally, a

multiemployer plan is a pension plan sponsored by two or more unrelated employers under collective

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bargaining agreements with one or more unions. Multiemployer plans cover most unionized workers in

trucking, retail food, construction, mining, garment, and other industries. Workers accrue pension credits in

the plan even when they change employment from one contributing employer to another. For a participant

with 30 years of service, the maximum annual benefit guarantee is $12,870, which is much lower than for the

participants under the Single-Employer Program (where premium rates are higher).

Multiemployer plans are typically governed by a board of trustees appointed in equal numbers by labor and

management. Under ERISA, the trustees have a fiduciary duty to act solely in the interest of participants and

beneficiaries. Multiemployer plans are subject to ERISA’s minimum funding requirements with assets held in

a trust fund managed by the board to pay benefits and plan expenses. Excess assets do not revert to

contributing employers. Although bargaining parties negotiate over plan contributions, they usually delegate

the establishment of benefit levels and plan design to the trustees.

Most collective bargaining agreements that cover multiemployer plans provide for contributions based on

time worked in a covered job. Most plans base contributions on “number of hours worked.” In some plans,

benefits depend on the level of contributions that employers make to the plan for the participants’ work.

Employers in multiemployer plans generally remain in the plan unless they go out of business, bargain out of

the plan, or move their business out of the plan coverage area. If an employer withdraws from the plan, it

may be assessed withdrawal liability. Withdrawal liability is generally based on the plan’s unfunded vested

benefits and the employer’s share of total contributions made to the plan. The amount of withdrawal liability

is based on the employer’s share of the unfunded vested benefits in that plan but is capped based generally on

an employer’s contribution history over the prior ten years and payable annually for no more than twenty

years. In some instances, the employer may be assessed partial withdrawal liability.

Since the 1980’s, PBGC does not trustee multiemployer plans. In the Multiemployer Program, the event

triggering PBGC’s guarantee is plan insolvency (the inability to pay guaranteed benefits when due), whether

or not the plan has terminated. PBGC provides insolvent multiemployer plans with traditional financial

assistance, in the statutorily required form of loans (generally unsecured), sufficient to pay PBGC guaranteed

benefits and reasonable administrative expenses. These loans generally continue until the plan no longer

needs assistance or has paid all promised benefits at the guaranteed level. These loans are generally not repaid

(except for plans receiving SFA), and for that reason they are fully reserved.

Benefits under the Multiemployer Program are calculated based on (a) the benefit a participant would have

received under the insolvent plan, subject to (b) the legal multiemployer guarantee under ERISA. The

guaranteed amount depends on the participant’s years of service and the level of the benefit accruals. Monthly

benefit accrual rates per year of service up to $11 are fully guaranteed; the portion of monthly benefit accrual

rates between $11 and $44 is 75 percent guaranteed; monthly benefit accrual rates in excess of $44 are not

guaranteed. For example, for a participant with 20 years of service, PBGC’s guarantee would cover 100

percent of annual amounts up to $2,640 and partially cover amounts in excess of that not to exceed a total of

$8,580 per year. Similarly, for a participant with 30 years of service, PBGC’s guarantee would cover 100

percent of annual amounts up to $3,960 and partially cover amounts in excess of that not to exceed a total of

$12,870 per year. Additionally, for a participant with 40 years of service, PBGC’s guarantee would cover 100

percent of annual amounts up to $5,280 and partially cover amounts in excess of that not to exceed a total of

$17,160 per year. This multiemployer benefit guarantee limit has been in place since 2001.

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As shown in the Statements of Financial Position on page 63, the liability for financial assistance that PBGC

provides to the multiemployer plans fall into two categories under the classification “Present value of

nonrecoverable future financial assistance.” The first category listed is for “Insolvent plans” (whether

terminated or not) that have exhausted plan assets and are currently receiving financial assistance. The second

category is for “Probable insolvent plans” representing plans that have terminated but not yet become

insolvent (for the current year), as well as ongoing plans that are expected to exhaust plan assets and require

financial assistance within the next 10 years.

During FY 2023, PBGC’s obligations for future traditional financial assistance to multiemployer plans

decreased from $2,390 million at September 30, 2022, to $2,211 million at September 30, 2023, a decrease of

$179 million or 7.5 percent. The largest component of the current $2,211 million liability is the $1,622 million

liability for insolvent plans, of which $955 million is attributable to 10 large plans.

MULTIEMPLOYER OVERALL FINANCIAL RESULTS

The Multiemployer Program reported net income of $398 million in FY 2023 compared with a net income of

$577 million in FY 2022. This resulted in cumulative result of operations of $1,453 million in FY 2023

compared with a cumulative result of operations of $1,055 million in FY 2022.

The improvement in cumulative result of operations is attributable to the following key drivers impacting

Multiemployer Program liabilities:

(1) A favorable credit due to actual/expected assistance resulted in a $177 million reduction in program

liabilities.

(2) A favorable change in the pension liability valuation interest factors, which generated a $104 million

decrease in Multiemployer Program liabilities ($66 million to multiemployer insolvent plans and $38

million related to multiemployer probable plans).

(3) A reclassification of one multiemployer probable plan to reasonably possible, which resulted in a $38

million decrease in program liabilities.

(4) A favorable decrease due to actual investment rates of return on probable plan assets (rather than the

assumed rate) of $21 million.

(5) A favorable decrease due to a change in mortality table resulting in a $20 million decrease in program

liabilities.

(6) A favorable decrease due to data changes resulting in a $14 million decrease in program liabilities.

(7) An unfavorable increase due to expected interest on benefit liabilities that resulted in a $111 million

increase in program liabilities.

(8) An increase to the small bulk reserve of $72 million.

(9) Addition of one new probable insolvent plan that resulted in a $16 million increase in program

liabilities.

(10) A favorable decrease due to $4 million in net credits from other recurring actuarial adjustments.

PBGC uses a curve of interest factors to determine the actuarial present value of estimated financial

assistance. For September 30, 2023, the curve of spot rates starts with an interest factor of 6.30% in year 1

and changes as the future period for discounting gets longer until year 30 when the factor becomes 5.55%

and is assumed to remain level thereafter. For September 30, 2022, the curve of spot rates started with an

interest factor of 5.12% in year 1 and changed as the future period for discounting got longer until year 30

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when the factor became 4.76% and was assumed to remain level thereafter. (See Note 6 for the table of

interest factors used.)

During FY 2023, PBGC paid $45,753 million in financial assistance consisting of $45,577 million in special

financial assistance (for 64 approved plans) created by the ARP and $176 million in traditional financial

assistance to 100 insolvent plans. As of September 30, 2023, there were 90 insolvent plans expected to

continue receiving traditional financial assistance covering about 80,421 participants in pay status with an

additional 41,661 participants entitled to benefits once they retire. Comparatively, in FY 2022, PBGC paid

$7,752 million in financial assistance consisting of $7,526 million in special financial assistance (for 29

approved plans) created by the ARP, $217 million in traditional financial assistance to 115 insolvent plans,

and a final annual payment of $9 million (for a total of $27 million) in traditional financial assistance as part of

PBGC’s first facilitated merger of two multiemployer plans under Multiemployer Pension Reform Act of

2014 (MPRA). At FY 2022 year end, there were 86 insolvent plans expected to continue receiving traditional

financial assistance covering about 93,525 participants in pay status with an additional 46,480 participants

entitled to benefits once they retire.

MULTIEMPLOYER UNDERWRITING ACTIVITY

As shown on the Statements of Operations on page 64, underwriting activity reflected a net gain of $421

million in FY 2023. This was attributed to $45,925 million in contributed transfer appropriation income, $381

million in net premium and other income (other income is primarily due to the reversal of the allowance of

interest on notes receivable from insolvent multiemployer plans expected to be eligible to receive special

financial assistance), $37 million in credits due to actuarial adjustments, and $10 million credit from insolvent

and probable plans-financial assistance, offset by $45,907 million in special financial assistance expense, $18

million in administrative SFA expense, and $7 million in administrative expense.

Net premium income increased by $29 million from $339 million in FY 2022 to $368 million in FY 2023, due

primarily to increases in the multiemployer per participant flat rate premium and a slight increase in the

participant count. The multiemployer flat rate premium for plan years beginning in 2023 increased to $35 per

participant from the 2022 rate of $32 per participant.

MULTIEMPLOYER FINANCIAL ACTIVITY

As shown on the Statements of Operations on page 64, financial activity reflected a loss of $23 million for FY

2023. This was attributed to a charge of $87 million due to expected interest and a $2 million loss from fixed

income investments, offset by a credit of $66 million due to change in interest factors for plans known to be

insolvent and plans about to begin receiving traditional financial assistance. As required by law,

Multiemployer Program investments consist solely of U.S. Treasury securities.

Multiemployer Program investments originate primarily from the cash receipts for premiums due from

insured plans. PBGC is required to invest these premiums in obligations issued or guaranteed by the U. S.

government.

Expected interest refers to the interest that PBGC expects to accrue during the fiscal year on PBGC’s liability

for plans known to be insolvent at the end of the prior year based on the interest factor in effect at the

beginning of the year. The interest factor in effect at the beginning of FY 2023 (5.12%) increased compared

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to the factor at the beginning of FY 2022 (0.44%). The multiemployer expected interest charges increased

from $10 million in FY 2022 to $87 million in FY 2023.

IV.C. MISSING PARTICIPANTS P ROGRAM

The Missing Participants Program (MP Program) is governed by Section 4050 of ERISA. Under the MP

Program, the benefits of missing participants can be transferred to PBGC or PBGC can be informed about

other arrangements for distributing the missing participants’ benefits. Through PBGC’s search efforts, the

MP Program helps participants find and receive the benefits being held for them. The expanded MP

Program, which began in FY 2018, is designed to cover defined benefit single-employer plans that terminated

under a standard termination or sufficient distress termination, as well as the terminations of defined

contribution plans and small professional service pension plans, and terminated multiemployer plans that

closed-out. Prior to FY 2018, the MP Program covered only insured single-employer defined benefit plans

terminating in a standard termination. Plans in the MP Program are categorized as follows:

• Original (legacy) PBGC Insured Defined Benefit Single-Employer Plans (terminating in a standard or

sufficient distress termination on or before 12/31/2017)

• PBGC Insured Defined Benefit Single-Employer Plans (terminating in a standard or sufficient distress

termination on or after 01/01/2018)

• Defined Contribution Plans – noncovered by PBGC (terminating on or after 01/01/2018)

• Small Professional Services Plans – Defined Benefit noncovered by PBGC (terminating on or after

01/01/2018)

• PBGC Insured Multiemployer Plans (terminated pans that completed close-out on or after 01/01/2018)

A standard termination occurs when a sponsor of a PBGC-insured single-employer defined benefit plan

settles its obligations by purchasing annuities for and/or paying lump sums to all participants.

The September 30, 2023, total combined PVFB for the MP Program was $364 million for the participants

whose benefits were transferred to PBGC, compared to $295 million at September 30, 2022, and is reported

under “Present value of future benefits – Trusteed plans” on PBGC’s balance sheet. This liability includes

interest accrued from the date of transfer at the federal mid-term rate. The unlocatable participants’ benefit

funds ($481 million in FY 2023 compared to $370 million in FY 2022) are transferred to PBGC by plan

sponsors and subsequently earns interest on cash received.

V. OVERALL CAPITAL AND LIQUIDITY

PBGC’s obligations include monthly payments to participants and beneficiaries in terminated defined benefit

plans, financial assistance to multiemployer plans, investment management fees, and administrative operating

expenses. The financial resources available to pay these obligations are underwriting income received from

insured plan sponsors (largely premiums), the income earned on PBGC’s investments, and the assets taken

over from failed single-employer plans.

The Corporation has sufficient liquidity to meet its obligations for a number of years. PBGC’s FY 2022

Projections Report showed that PBGC’s Multiemployer Program is likely to remain solvent for more than 40

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years, similar to the projection in last year’s FY 2021 Projections Report. However, both reports show a high

degree of uncertainty, with the most pessimistic downside scenarios continuing to show a risk of insolvency

in the mid-2030s. The primary driver of the improvement in the projected solvency of the Multiemployer

Program is the significant increase in expected future plan asset returns due to the sharp rise in interest rates

during the 2022 calendar year. The rise in interest rates, in conjunction with poor equity returns, contributed

to large plan asset losses during 2022. Plans ineligible for SFA were significantly impacted by these losses, but

most plans that receive SFA recover these losses as part of the SFA calculation. On a going forward basis, the

higher interest rates are expected to generate higher yields and equity returns that would bolster future asset

performance for all plans. For SFA plans, these higher returns exceed the level of the interest rate increase

used in the development of the SFA amount, which improves plan solvency outcomes. Overall, the updated

model projects an improvement in plan solvency outcomes that in turn extends PBGC’s solvency.

FY 2023 Memorandum Total premium cash receipts totaled $4,942 million, an increase of $177 million from

$4,765 million in FY 2022. The FY 2023 increase of $177 million primarily reflects peak filing and the

payment of premiums in October 2022 for plan year 2022 premium filings which were higher than peak filing

and the payment of premiums in October 2021 for plan year 2021 premium filings. Net cash flow provided

by investment activities is $3,216 million in FY 2023 compared to $704 million net cash used in FY 2022. In

FY 2023, PBGC’s cash receipts of $8,395 million from operating activities of the Single-Employer Program

were sufficient to cover its operating cash obligations of $7,004 million. This resulted in net cash provided by

operating activities of $1,391 million (as compared to net cash provided by operating activities of $170 million

in FY 2022). When the single-employer cash provided through investing activities of $2,963 million is added

to cash provided from operating activities, the Single-Employer Program in the aggregate experienced a net

cash increase of $4,354 million. In FY 2022, the Single-Employer Program experienced a net cash decrease of

$528 million.

PBGC’s best estimate of FY 2024 premium receipts ranges between $6,150 million and $6,450 million. No

reasonable estimates can be made for FY 2024 terminations, the effects of changes in interest rates, or

investment income.

In the Multiemployer Program, cash receipts of $551 million from operating activities were sufficient to cover

its operating cash obligations of $183 million, resulting in net cash provided by operations of $368 million.

When this net cash provided is added to net cash provided through investing activities of $253 million, the

Multiemployer Program in the aggregate experienced an overall net cash increase of $621 million. In FY 2022,

the Multiemployer Program experienced a net cash increase of $329 million.

During FY 2023, PBGC recovered $76 million through agreements with sponsors of terminated single-

employer plans for unpaid contributions and unfunded benefits. A portion of those recovered funds are paid

out as additional benefits to plan participants with nonguaranteed benefits according to statutory priorities.

In FY 2023, PBGC’s combined (Memorandum Total) net increase in cash and cash equivalents amounted to

$4,975 million, arising from an increase of $4,354 million for the Single-Employer Program and an increase of

$621 million for the Multiemployer Program.

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VI. SINGLE-EMPLOYER AND MULTIEMPLOYER PROGRAM EXPOSURE

PBGC estimates its single-employer loss exposure to reasonably possible terminations (e.g., underfunded

plans sponsored by companies with credit ratings below investment grade) as $25,657 million at September

30, 2023, and $52,032 million at September 30, 2022. PBGC’s exposure to loss may be less than these

amounts because of the statutory guarantee limits on insured pension plans, but PBGC is unable to estimate

prospectively the extent and effect of the guarantee limitations. These estimates are determined using a

measurement date as of December 31 of the previous year (see Note 9). For FY 2023, this exposure was

concentrated in the following sectors: manufacturing, transportation/communications/utilities, and services.

PBGC estimates that, as of September 30, 2023, it is reasonably possible that multiemployer plans may

require future traditional financial assistance of $410 million, compared to $2,218 million at September 30,

2022. Additionally, the reasonably possible aggregate reserve for small plans decreased due to a decrease in

the number of small plans projected to become insolvent within 20 years primarily due to an increase in plan

assets. The change in the small plan bulk reserve estimation methodology also contributed to the decrease in

the reasonably possible reserve.

The significant volatility in plan underfunding and sponsor credit quality over time makes long-term estimates

of PBGC’s expected claims uncertain. This volatility, along with the concentration of claims in a relatively

small number of terminated plans, has characterized PBGC’s experience to date and will likely continue.

Factors such as economic conditions affecting interest rates, financial markets, and the rate of business

failures will also influence PBGC’s claims going forward.

PBGC’s sources of information on plan underfunding are the most recent Section 4010 and PBGC premium

filings, Form 5500, and other submissions to the Corporation. PBGC publishes Table S-49, “Various

Measures of Underfunding in PBGC-Insured Plans,” in its Pension Insurance Data Book. In that table the

limitations of the estimates are appropriately described.

Protecting Pensions in Standard Terminations

A company can end a fully funded plan in a standard termination by paying all the benefits it owes. In FY

2023, 1,868 plans covering approximately 315,540 participants filed standard terminations. The number of

filings in FY 2023 is 12 percent more than the average number of terminations filed in the five years prior to

that. Additionally, the number of participants in these plans is significantly more (38 percent). Nine large

plans filed a standard termination.

Some of the larger standard terminations completed in FY 2023 were J.C. Penney Corporation, Inc. Pension

Plan, Electrolux Home Products, Inc. Pension Plan, Louisiana-Pacific Corporation Retirement Account Plan,

and Western Union Pension Plan.

As in previous years, more than 90 percent of the plans that filed standard terminations were small plans with

300 or fewer participants.

When plan sponsors file standard terminations, PBGC conducts audits on a sample of plans to verify that the

plan sponsors have properly calculated and paid participants’ benefits. In FY 2023, PBGC conducted 232

such plan audits and, as a result, 1,306 people in these plans received more than $2.3 million in additional

benefits.

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VII. SUMMARY OF OMB CIRCULAR A-136 DISCLOSURE OF MAJOR YEAR OVER

YEAR CHANGES

Pursuant to OMB Circular A-136, Section II.2.4, MD&A Analysis of Financial Statements and Stewardship

Information Section, the MD&A should summarize the entity’s financial results, position, and condition and

explain major changes (i.e., changes typically in excess of 10 percent). For significant entities (which are

defined in Treasury Financial Manual (TFM) Vol. 1, Part 2, Section 4703) major changes are generally

changes in excess of 10 percent and $1 billion.

PBGC is a significant entity and discloses the following major year over year changes to financial statement

balances (i.e., FY 2023 financial results compared to FY 2022) below consistent with the OMB Circular.

1. Cash and cash equivalents increased by $4,975 million from $8,678 million at September 30, 2022, to

$13,653 million at September 30, 2023, a 57% increase. This increase is primarily due to the increase

in net cash provided by investing activities. Net cash provided by investing activities is $3,216 million

in FY 2023 (proceeds from the sale of investments of $144,104 million, less payments for the

purchase of investments of $140,888 million). The increase in cash and cash equivalents was also due

to decreased benefit payments of $564 million in FY 2023, increased cash from interest and

dividends of $406 million, and increased premium receipts of $177 million compared to FY 2022.

2. Securities lending cash collateral increased $2,172 million from $4,581 million at September 30, 2022,

to $6,753 million at September 30, 2023, a 47% increase. These amounts are recorded as assets and

are offset with a corresponding liability. The $2,172 million increase in securities lending cash

collateral was attributable to an increase in value of securities on loan in the custodian agent lending

program. Securities on loan increased in value due to a higher level of demand for U.S. Government

Securities from borrowers.

3. Premium receivables increased by $1,034 million from $3,356 million at September 30, 2022, to

$4,390 million at September 30, 2023, a 31% increase. This increase primarily reflects increased

premium rates for both flat and variable rate premiums derived from actual 2023 plan filings for

calendar year plans received October 2023 and declining conditions of single-employer plans’

underfunding (i.e., higher Unfunded Vested Benefits). At September 30, 2023, the premiums for

these plans were not yet due and recognized as estimated premiums receivable.

4. Payable upon return of securities loaned increased $2,172 million from $4,581 million at September

30, 2022, to $6,753 million at September 30, 2023, a 47% increase. These amounts are recorded as

liabilities and are offset with a corresponding asset. The $2,172 million increase in payable upon

securities loaned was attributable to an increase in value of lendable securities in the custodian agent

lending program. Securities on loan increased in value due to a higher level of demand for U.S.

Government Securities from borrowers.

5. Premium income increased by $1,040 million from $4,925 million as of September 30, 2022, to

$5,965 million as of September 30, 2023, a 21% increase. This increase primarily reflects increased

premium rates for both flat and variable rate premiums and declining conditions of the single-

employer plans’ underfunding (i.e., higher Unfunded Vested Benefits).

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6. Contributed transfer appropriation income increased by $38,359 million from $7,566 million as of

September 30, 2022, to $45,925 million as of September 30, 2023, a 507% increase. Contributed

transfer appropriation income is recognized from the SFA appropriations when SFA applications are

approved by PBGC as well as when SFA administrative expenses are incurred. In FY 2023, the

$45,925 million of contributed transfer appropriation income was primarily due to $45,907 million

for 66 multiemployer plans that were approved to receive special financial assistance and $18 million

in administrative SFA expense, compared to $7,555 million for 30 multiemployer plans that were

approved to receive special financial assistance and $11 million in administrative SFA expense in FY

2022.

7. Actuarial adjustments credits decreased $1,224 million from $1,352 million as of September 30, 2022,

to $128 million as of September 30, 2023, a 91% decrease. This is due to a $3,080 million decrease in

credits from changes in other assumptions and a $35 million decrease in credits due to expense

payments, offset by a $905 million increase in credits from effects of experience, $834 million

increase in credits from the change in valuation method (seriatim/non seriatim), and a $152 million

decrease in charges from changes in mortality assumptions.

8. Special financial assistance expense increased by $38,352 million from $7,555 million as of September

30, 2022, to $45,907 million as of September 30, 2023, a 508% increase. Special financial assistance

expense represents the total amount of SFA approved by PBGC during the year. In FY 2023, the

$45,907 million of special financial assistance expense was primarily due to $45,577 million paid to 64

multiemployer plans that were approved to receive special financial assistance, compared to $7,526

million paid to 29 multiemployer plans that were approved to receive special financial assistance in

FY 2022.

9. Investment income – Fixed income increased by $21,719 million from a loss of $19,553 million as of

September 30, 2022 to a gain of $2,166 million as of September 30, 2023, an 111% increase. This

increase is attributable to the change in market interest rates during FY 2023 compared to the change

in FY 2022, which contributed to the Total Global Bonds return of 1.45% in FY 2023, compared to

FY 2022 which had a return of -16.62%.

10. Investment income – Equity increased by $6,303 million from a loss of $3,655 million as of

September 30, 2022, to $2,648 million as of September 30, 2023, a 172% increase. This increase is

due primarily to the stronger investment performance of equity securities in FY 2023, relative to FY

2022. Total Global Public Equity returned 19.51% in FY 2023, compared to FY 2022 which had a

return of

-21.11%.

11. Due to expected interest charges increased by $3,504 million from $492 million as of September 30,

2022, to $3,996 million as of September 30, 2023, a 712% increase. Expected interest refers to the

interest that we expect to accrue during the current fiscal year based on PBGC’s liability and interest

factors at the end of the prior year with adjustments made for new plans and benefit payments made

during the year. PBGC’s FY 2023 expected interest rate of 5.12% at the beginning of the fiscal year

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applied to the prior year single employer trusteed liability of $78,422 million and the multiemployer

nonrecoverable future financial assistance insolvent liability of $1,551 million.

12. Due to change in interest factor credits decreased by $21,461 million from $24,469 million as of

September 30, 2022, to $3,008 million as of September 30, 2023, an 88% decrease. The change in

interest factors generally reflects the difference between the liability for future benefits of terminated

plans at year-end when valued using updated interest factors compared to the liability when valued

using the prior year’s interest factors. Increasing interest factors result in a lower present value of

pension liabilities and thus credits to this expense. The $21,461 million decrease is due to the

significantly smaller change in interest factors that occurred in FY 2023 compared to the change in

interest factors that occurred in FY 2022.

VIII. INVESTMENT ACTIVITIES

PBGC uses institutional investment management firms to invest its assets, subject to PBGC’s oversight and

consistent with the Investment Policy Statement (IPS) approved by the PBGC Board of Directors. The

Board approved an IPS in August 2023. Objectives listed in the IPS include utilizing Liability Driven

Investment (LDI) strategies to minimize the Single-Employer Program funded status volatility and the risk of

future deficits. The PBGC’s LDI strategy worked as intended in FY 2023 with assets and liabilities moving in

the same direction which protected PBGC’s surplus from declines and lowered surplus volatility. PBGC does

not determine the specific investments to be made, but instead relies on PBGC’s investment managers’

discretion in executing investments appropriate for their contractually assigned investment mandates. PBGC

does ensure that each investment manager adheres to PBGC’s prescribed investment guidelines associated

with each investment mandate and measures each investment manager’s performance in comparison with

agreed-upon investment benchmarks.

PBGC’s investment assets consist of premium revenues, which are accounted for in the revolving fund, and

assets from trusteed plans and their sponsors, which are accounted for in the trust fund. By law, PBGC is

required to invest certain revolving funds (i.e., Funds 1 and 2) in obligations issued or guaranteed by

the United States government. Portions of the other revolving fund (i.e., Fund 7) can be invested in other

debt obligations, but under PBGC’s current investment policy these revolving funds are invested solely in

Treasury securities (PBGC has never established funds 3, 4, 5 or 6, which ERISA authorized for special

discretionary purposes).

Total revolving fund investments, including cash and investment income, on September 30, 2023, were

$52,758 million ($2,551 million for Fund 1, $3,404 million for Fund 2, and $46,803 million for Fund 7). Trust

fund investments totaled $68,100 million as of September 30, 2023. At the end of FY 2023, PBGC's total

investments consisting of cash and cash equivalents, investments, and investment income receivable as shown

on the Statements of Financial Position were $120,858 million.

The investment policy objectives are to (1) satisfy existing liabilities and future claims when due, (2) maximize

funded status within a prudent risk framework that is informed by PBGC’s fixed obligations and asset

composition of potential trusteed plans, and (3) utilize LDI strategies to minimize funded status volatility and

the risk of future deficits.

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PBGC’s investment program had assets under performance management of $117,031 million as of September

30, 2023. Of the $3,827 million difference between the September 30, 2023, investment assets reported on

the Statements of Financial Position and the assets within PBGC’s investment performance portfolio, $2,845

million represents net unsettled purchases, $481 million in undisbursed funds from the Missing Participants

Program, $411 million from newly trusteed assets that have not yet been commingled, $79 million from

custodial bank holding accounts, $46 million from other non-commingled assets, and $15 million from

private market timing differences, offset by $50 million from net derivative contracts receivable.

Asset allocation percentages refer to the investments within PBGC’s investment program that are subject to

the Corporation’s investment policy, as described below. Cash and fixed income securities totaled about 87

percent of total assets under performance management invested at the end of FY 2023 and FY 2022. Equity

securities (i.e., public equities) represented about 13 percent of total assets under performance management

invested at the end of FY 2023, compared with about 12 percent at the end of FY 2022. The Total Fund

Composite return (excluding private market assets and transition accounts) for FY 2023 was 3.89 percent

compared with -16.68 percent in FY 2022. A small percentage of PBGC’s investments are in the process of

moving out of one of the manager portfolios (which was less than 0.01% for both FY 2023 and FY 2022)

either for liquidation or for transfer to another manager. The return of the Total Fund Composite including

these transition accounts was 3.91 percent in FY 2023, compared to -16.69 percent in FY 2022.

Due to the cyclical nature of capital markets, PBGC also reports five-year returns for its investment program.

For the five-year period ending September 30, 2023, PBGC’s annualized return on total invested funds

excluding private market assets and transition accounts was 2.36 percent compared with a total fund

benchmark return of 2.07 percent — a benchmark based on the relative weights of the underlying managed

accounts. Including the transition accounts, the five-year annualized return was 2.32 percent. Separately, the

annualized ERISA/Pension Protection Act of 2006 (PPA) hypothetical portfolio benchmark return for the

five-year period ending September 30, 2023, was 6.97 percent. (See section VIII Investment Activities - The

Pension Protection Act of 2006 Reporting Requirement.)

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The table below summarizes the performance of PBGC’s investment program.

INVESTMENT PERFORMANCE

(Annual Rates of Return)

Three and Five

September 30,

Years Ended

2023

2022

September 30, 2023

3 yrs

5 yrs

Single-Employer Investment Performance

Total Fund Composite

3.89%

(16.68%)

(3.91%)

2.36%

Total Fund Benchmark

3.81

(16.89)

(4.06)

2.07

ERISA/PPA Portfolio Benchmark

16.16

(14.85)

4.99

6.97

Total Global Public Equity

19.51

(21.11)

7.09

6.22

Total Global Public Equity Benchmark

18.71

(21.01)

6.65

5.46

Total Global Bonds (excluding SAMPP)

1.45

(16.62)

(6.73)

1.65

Total Global Bonds Benchmark

1.30

(16.89)

(6.87)

1.41

Smaller Asset Managers Pilot Program

1.01

(14.66)

(4.66)

0.56

Trust Funds

7.08

(17.19)

(1.18)

3.33

Revolving Funds

(0.37)

(15.95)

(7.81)

1.17

Indices Applicable to Single-Employer Investments

Russell 3000 Index

20.46

(17.63)

9.38

9.14

Dow Jones U.S. Select Real Estate Securities Index

2.68

(17.21)

6.12

1.56

MSCI ACWI ex-U.S. IMI Index (Net)

20.19

(25.72)

3.77

2.57

MSCI World IMI Index (Net)

21.05

(20.32)

7.87

6.74

Bloomberg U.S. Treasury Index

(0.81)

(12.94)

(5.83)

(0.07)

Bloomberg U.S. Aggregate Bond Benchmark

0.64

(14.60)

(5.21)

0.10

Multiemployer Investment Performance

Multiemployer Revolving Fund

(0.75)

(9.20)

(3.97)

N/A

Index Applicable to Multiemployer Investments

Multiemployer Revolving Fund Benchmark

(1.78)

(11.26)

(5.04)

N/A

Note - Composites and indices above exclude Transition Accounts and Private Market Assets.

The Total Fund Benchmark is a dynamic weighted benchmark based upon the weights of the Total Global Bonds Benchmark, Total Global Public Equity

Benchmark, Total Smaller Asset Managers Pilot Program Benchmark, and Total Money Market Securities Benchmark. This benchmark is utilized to

compare against the Total Fund Composite returns shown above.

The ERISA/PPA Portfolio Benchmark is based upon a hypothetical portfolio with a 60 percent allocation to the Standard & Poor’s 500 equity index and a

40 percent allocation to the Bloomberg U.S. Aggregate Bond index. See section VIII Investment Activities (The Pension Protection Act of 2006 Reporting

Requirement).

The Total Global Public Equity Benchmark is a dynamic weighted benchmark based upon the weights of the U.S. Public Equity Benchmark, the Total

International Public Equity Benchmark and the MSCI World IMI Benchmark.

The Total Global Bonds Benchmark is a dynamic weighted benchmark based upon the weights of PBGC’s fixed income managers and the returns of their

respective benchmarks (excludes Smaller Asset Managers Pilot Program).

The performance inception date for the Smaller Asset Managers Pilot Program is August 2016. This program is currently benchmarked against the

Bloomberg U.S. Aggregate Bond index, shown within the Indices section.

As of October 2019, Total Revolving Fund reflects the Single-Employer Plan's Revolving Fund investment returns and assets. Periods which include dates

prior to October 2019 reflect the Single-Employer Plan's and Multiemployer Plan's combined investment returns and assets.

The performance inception date for the Multiemployer Revolving Fund is October 2019. As such, the five-year performance is not yet available. From

10/1/19 through 9/30/2022, this fund was benchmarked against the Bloomberg U.S. Aggregate Treasury 3-7 Years. From 10/1/22 through current, it is

benchmarked against a custom blended benchmark consisting of 70% Bloomberg U.S. Treasury Intermediate and 30 % Bloomberg U.S. Treasury Long.

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FIXED INCOME

As described below, PBGC fixed income investment managers use a number of different benchmarks. Where

applicable, the relative percentage that each index or benchmark represents for its respective asset class is

provided. The percentage invested under each benchmark(s), in aggregate, for each asset class relative to the

overall PBGC investment program as of September 30, 2023, is also parenthetically provided in the text

below.

The Total Global Bonds Benchmark is a dynamic weighted benchmark based on the weights of the

underlying fixed income managers and the returns of their respective benchmarks. As of September 30, 2023,

the weighted benchmark encompasses the Completion Treasuries Benchmark (53.7 percent), the Credit

Completion Benchmark (6.3 percent), the Total Long Duration Bonds Benchmark (19.7 percent), the

Bloomberg Aggregate Bond index (17.8 percent), and the Total Emerging Market Bonds Benchmark (2.5

percent). The overall Total Global Bonds composite equals 77.4 percent of the total PBGC portfolio.

Completion Treasuries: This category includes investments in U.S. Treasury securities managed by outside

professional asset managers and it applies to 41.6 percent of PBGC’s investment program assets as of

September 30, 2023. The assets of this category are split among the Revolving Fund (90.5 percent) and Trust

Fund (9.5 percent). The objective of this category – in conjunction with the assets of Credit Completion,

Long Duration, Core, Smaller Asset Manager Pilot Program, and Money Market Securities – is to hedge a

portion of the single-employer liabilities. While PBGC can redeem composite assets upon request, those

composite assets that are part of the Revolving Fund can only be redeemed to meet pension benefit

obligations and administrative expenses.

Credit Completion: This category includes investments in United States Dollar (USD) denominated fixed-

income securities managed by an outside professional asset manager and it applies to 4.9 percent of PBGC’s

investment program assets as of September 30, 2023. The Credit Completion Benchmark is a custom blend of

multiple Bloomberg indices, whose underlying components include credit, corporate, and U.S. Treasury

securities. The credit and corporate components include publicly issued U.S. corporate and foreign

debentures and secured notes that meet specified maturity (intermediate and long duration), liquidity, and

quality (investment grade) requirements. PBGC is able to redeem composite assets upon request.

Long Duration: This category includes investments mainly in USD-denominated fixed income securities

managed by outside professional asset managers and applies to 15.3 percent of PBGC’s investment program

assets as of September 30, 2023. The Total Long Duration Bonds Benchmark is a dynamic weighted

benchmark based on the weights of the underlying Trust Fund long-duration fixed income managers and the

returns of their respective benchmarks. As of September 30, 2023, the Total Long Duration Bonds

Benchmark encompasses the Bloomberg Long U.S. Government/Credit index (24.2 percent), the Bloomberg

Long U.S. Corporate index (1.3 percent), and Custom Benchmarks (74.5 percent). The Bloomberg Long U.S.

Government/Credit index includes both government and credit securities. The government component

includes public obligations of the U.S. Treasury that have remaining maturities of more than one year and

publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt

guaranteed by the U.S. Government. The credit component of the index includes publicly issued U.S.

corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality

(investment grade) requirements. The Bloomberg Long U.S. Corporate index includes investment grade,

fixed-rate, taxable, U.S. dollar-denominated U.S. corporate bonds that have a maturity of greater than or

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equal to 10 years. The custom benchmarks include similar securities and are weighted combinations of sub-

sector benchmarks. PBGC is able to redeem composite assets upon request.

Core: This category includes investments primarily in USD-denominated fixed income securities managed by

outside professional asset managers. It applies to 13.8 percent of PBGC’s investment program assets as of

September 30, 2023. The Core Fixed Income Benchmark is the Bloomberg Aggregate Bond index. The

Bloomberg Aggregate Bond index includes securities that are registered with the Securities and Exchange

Commission (SEC) and are taxable and dollar-denominated. The index covers the U.S. investment grade

fixed rate bond market, with index components for government and corporate securities, mortgage pass-

through securities, asset-backed securities, and foreign securities. PBGC is able to redeem composite assets

upon request.

Emerging Market Bonds: This category includes fixed income securities denominated in either U.S. dollars

or foreign currencies and managed by outside professional asset managers. It makes up 1.9 percent of

PBGC’s investment program assets as of September 30, 2023. The Total Emerging Market Bonds

Benchmark is a dynamic weighted benchmark based on the weights of all emerging market bond managers

and the returns of their respective benchmarks. As of September 30, 2023, the weighted benchmark

encompasses the JP Morgan EMBIG Diversified index (25.0 percent), JP Morgan GBI EM Global

Diversified (26.9 percent) and Custom Benchmarks (48.1 percent). The custom benchmarks are weighted

combinations of the JP Morgan EMBIG Diversified and the JP Morgan GBI EM Global Diversified indices.

The JP Morgan EMBIG Diversified index includes USD-denominated debt instruments issued by Emerging

Market countries. The index also includes USD-denominated Brady bonds, Eurobonds, and traded loans

issued by sovereign and quasi-sovereign entities. The JP Morgan GBI EM Global Diversified index includes

local currency or non-U.S. dollar-denominated debt instruments issued by Emerging Market countries. PBGC

is able to redeem composite assets upon request.

MONEY MARKET SECURITIES

This category includes investments in money market instruments managed by an outside professional asset

manager who invests in a diversified portfolio of short-term obligations and deposits, including, but not

limited to, Treasury and agency obligations, certificates of deposits, commercial paper, and repurchase

agreements (Trust Fund Cash). In addition, the category includes overnight investments in Treasury securities

held at Treasury (Revolving Fund Cash). The Total Money Market Securities Benchmark is a dynamic

weighted benchmark based on the weights of the Trust Fund Cash and the Revolving Fund Cash and the

returns of their respective benchmarks. As of September 30, 2023, the weighted benchmark encompasses the

3-month Treasury bill (23.0 percent) and the 4-week Treasury bill (77.0 percent). The cash composite

represents 8.3 percent of PBGC’s investment program as of September 30, 2023. PBGC is able to redeem

money market securities upon request.

GLOBAL PUBLIC EQUITY

This category includes investments in the U.S. Public Equity composite, the International Public Equity

composite, and the World Public Equity composite, and applies to 13.0 percent of PBGC’s investment

program assets as of September 30, 2023. The Total Global Public Equity Benchmark is a dynamic weighted

benchmark based upon the weights of the U.S. Public Equity composite, the International Public Equity

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composite and the World Public Equity composite, and the returns of their respective benchmarks. As of

September 30, 2023, the Total Global Public Equity Benchmark comprises the Total U.S. Public Equity

Benchmark (58.8 percent), the Total International Public Equity Benchmark (32.1 percent) and the Total

World Public Equity Benchmark (9.1 percent). PBGC is able to redeem composite assets upon request.

U.S. Public Equity: This category includes investments in U.S. publicly traded equity securities and U.S.

publicly traded real estate investment trusts (REITs) managed by outside professional asset managers. It

applies to 7.6 percent of PBGC’s investment program assets as of September 30, 2023. The Total U.S. Public

Equity Benchmark is a dynamic weighted benchmark based upon the weights of the U.S. Public Equity

managers and the returns of their respective benchmarks. As of September 30, 2023, the weighted benchmark

comprises the Russell 3000 index (82.9 percent), the Dow Jones U.S. Select Real Estate Securities index (4.4

percent), and the FTSE NAREIT EQ REITs index (12.7 percent). PBGC is able to redeem composite assets

upon request.

International Public Equity: This category includes investments in international publicly traded equity

securities managed by outside professional asset managers. It applies to 4.2 percent of PBGC’s investment

program assets as of September 30, 2023. The Total International Public Equity Benchmark is a dynamic

weighted benchmark based upon the weights of the International Public Equity managers and the returns of

their respective benchmarks. As of September 30, 2023, the weighted benchmark encompasses the MSCI

EAFE Standard index (46.0 percent), the MSCI EAFE Value index (12.1 percent), the MSCI EAFE Small

Cap index (4.5 percent), the MSCI Emerging Markets index (30.2 percent), and the MSCI Canada IMI index

(7.2 percent). The MSCI EAFE Standard index (Europe, Australasia and Far East) is designed to measure the

developed markets large and mid-capitalization equity performance, excluding the U.S. and Canada. The

MSCI EAFE Value index is designed to measure the performance of developed markets large and mid-

capitalization equities exhibiting value style characteristics, excluding the U.S. and Canada. The MSCI EAFE

Small Cap index is designed to measure the developed markets small capitalization equity performance,

excluding the U.S. and Canada. The MSCI Emerging Markets index is designed to measure equity market

performance of emerging markets. The MSCI Canada IMI index is designed to measure the large, mid, and

small capitalization equity market performance of Canada. PBGC is able to redeem composite assets upon

request.

World Public Equity: This category includes investments in world publicly traded equity securities managed

by outside professional asset managers. It applies to 1.2 percent of PBGC’s investment program assets as of

September 30, 2023. The Total World Public Equity Benchmark is the MSCI World Investable Market Index

(IMI) and thus as of September 30, 2023, this benchmark encompasses 100% of World Public Equity. The

MSCI World IMI index is designed to measure the large, mid, and small capitalization equity performance

across developed including the U.S. PBGC is able to redeem composite assets upon request.

SMALLER ASSET MANAGERS PILOT PROGRAM

PBGC implemented the Smaller Asset Managers Pilot Program (SAMPP), which created new opportunities

for smaller asset managers who wish to compete for the agency’s business. Investment management firms

selected to participate in the SAMPP were allocated assets to manage in FY 2016 and PBGC’s Board of

Directors approved making the SAMPP an ongoing program in FY 2022. Contracts associated with the

ongoing program, to be called PBGC Smaller Asset Managers Program (SAMP), are expected to be awarded

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in FY 2024. This category includes investments primarily in USD-denominated fixed income securities

managed by outside professional asset managers. It applies to 1.3 percent of PBGC’s investment program

assets as of September 30, 2023. The Smaller Asset Managers Pilot Program Benchmark is the Bloomberg

Aggregate Bond index. The Bloomberg Aggregate Bond index includes securities that are SEC-registered,

taxable, and dollar-denominated. The index covers the U.S. investment grade fixed rate bond market, with

index components for government and corporate securities, mortgage pass-through securities, asset-backed

securities, and foreign securities. PBGC is able to redeem composite assets upon request.

INHERITED PRIVATE MARKETS

This category includes private equity, private debt, and private real estate funds inherited from trusteed plans.

These private market investments invest mainly in buyouts, venture capital, distressed debt, and commercial

real estate. As a result of the most recently approved Investment Policy Statement, inherited private market

assets are not included in asset allocation targets, but shall be managed prudently for the benefit of

PBGC. These assets are not included in PBGC’s investment program assets as of September 30, 2023, but are

included in PBGC’s Statements of Financial Position. Private investments are difficult to benchmark due to

their illiquid nature. Typical benchmarks utilized for private equity include universe comparisons, where funds

that have the same original investment date are compared against the performance of a similar fund. For

direct private real estate investments, many institutions use the National Council of Real Estate Investment

Funds (NCREIF) index, which includes U.S. commercial real estate properties acquired in the private market

for investment purposes. For investments in private equity real estate, peer universe comparisons based on

similar funds with the same original investment date are often utilized. Private market investments typically

do not have redemption provisions; instead, the nature of the investments in this category is that distributions

are received through the liquidation of the underlying assets of the funds. It is estimated that the majority of

the underlying assets of the funds will be liquidated over the next five years. The fair values of the

investments in this category have been estimated using the net asset value of PBGC’s ownership interest in

partners’ capital.

THE PENSION PROTECTION ACT OF 2006 REPORTING REQUIREMENT

The Pension Protection Act of 2006 requires PBGC to estimate the effect of an asset allocation based on a

combination of two commonly used market benchmarks. The hypothetical portfolio presented below, with a

60 percent allocation to the Standard & Poor's 500 equity index and a 40 percent allocation to the Bloomberg

Aggregate Bond index, would have increased the assets of the Corporation by about $13.7 billion (16.17

percent return compared with PBGC’s Total Fund Composite return including transition accounts of 3.91

percent) for the one-year period ending September 30, 2023, and increased the assets of the Corporation by

about $31.5 billion (6.97 percent annualized return compared with PBGC’s Total Fund Composite annualized

return including transition accounts of 2.32 percent) over the five-year period ending September 30, 2023. Per

the IPS approved by PBGC’s Board of Directors, PBGC invests its portfolio with a Liability Driven

Investment strategy and, therefore, the comparison to a hypothetical pension plan with an allocation of 60

percent to equities and 40 percent to fixed income is not a representative comparison. For further analysis of

PBGC’s Investment Activities please refer to the MD&A of Results of Operations and Financial Position.

These results are summarized in the following table.

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INVESTMENT PORTFOLIO ANALYSIS

60/40 Hypothetical Portfolio Analysis Versus PBGC Fiscal Year Actual Return

(60/40 comprises S&P 500 Index/Bloomberg Aggregate Bond Index)

Fiscal Year

1-Year Period Ending

5-Year Period Ending

60/40

Incremental

$ Billions

60/40

% Return

PBGC

Actual

Return

60/40

Incremental

$ Billions

60/40

% Return

PBGC

Actual

Return

9/30/2022

$1.2

-14.85%

-16.69%

$25.8

5.81%

1.80%

9/30/2023

$13.7

16.17%

3.91%

$31.5

6.97%

2.32%

PBGC actual return is the PBGC’s Total Fund Composite return including transition accounts.

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ANALYSIS OF SYSTEMS, CONTROLS AND LEGAL COMPLIANCE

PBGC maintains an Internal Controls Program designed to support compliance with the requirements of the

Federal Managers’ Financial Integrity Act of 1982 (FMFIA), the Government Accountability Office (GAO)

Standards for Internal Control in the Federal Government (Green Book), the Office of Management and Budget

(OMB) Circular A-123, Management's Responsibility for Enterprise Risk Management and Internal Control, and its

appendices, as applicable, and other relevant laws and regulations. PBGC has continued implementing the

requirements specified in the GAO Green Book and OMB Circular A-123 and, as noted below, performs a

number of corporate-wide activities that serve to support the FMFIA Statement of Assurance. For FY 2023,

PBGC provided an unmodified FMFIA Statement of Assurance. Please refer to annual statement of

assurance, as described below.

INTERNAL CONTROL COMMITTEE

The PBGC Internal Control Committee (ICC) provides corporate oversight and accountability regarding

internal controls over PBGC’s operations, reporting, and compliance with laws and regulations consistent

with the GAO Green Book, OMB Circular A-123 and FMFIA requirements. Chaired by the agency’s Chief

Financial Officer, the ICC includes senior-level executives and management representatives from each

executive office within the agency and a representative from the OIG, who is a non-voting member. The ICC

oversees the process by which internal controls are documented, implemented, and assessed within the

agency; reviews and approves significant revisions to key business level and entity-wide controls; monitors the

status of internal control deficiencies and related corrective actions; and considers other matters, including

controls designed to prevent or detect fraud. The ICC also interacts with the agency’s Risk Management

Council (RMC) regarding its oversight of the risk assessment processes.

DOCUMENTATION AND EVALUATION OF INTERNAL CONTROLS

As part of the agency’s Internal Controls Program, key business level and entity-wide controls are evaluated,

on an annual basis, to assess the adequacy of the control design and the extent to which they are operating

effectively in accordance with GAO Green Book standards. The evaluation is performed using a risk-based

approach as required by OMB Circular A-123. Reports regarding results of the evaluation are provided to

stakeholders within the agency, and corrective actions are recommended and remediated by management, as

appropriate. The following provides additional information regarding management’s documentation and

evaluation of internal controls and areas of focus include:

Standards for Internal Control in the Federal Government (Green Book): These standards, published by the GAO,

provide criteria to be used by federal agencies for designing, implementing, and operating an effective internal

control system. In FY 2023, under ICC direction, agency management continued its comprehensive

evaluation of the PBGC’s internal control system with regard to the design, implementation, and operating

effectiveness of the five components and 17 principles of internal controls, as outlined in the Green Book.

As part of this evaluation, agency management performed its annual assessment of internal controls using the

Green Book, as required by OMB Circular A-123. Based on management’s evaluation and the results of the

annual assessment, it was determined that PBGC continues to have an effective internal controls system and

remains in compliance with the Green Book.

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Business Level Controls: Business level controls are controls that are built directly into operational processes to

support an organization in achieving its objectives and addressing related risks. The agency has developed,

implemented and maintained business level controls within its 12 major business processes cycles, which

include: Benefit Payments, Benefit Determinations, Budget and Finance, Financial Reporting, Human Resources and Payroll,

Investments, Losses from Completed and Probable Terminations, Multiemployer, Procurement Accounts Payable and Related

Expenses, Premiums, Single-Employer Contingent Liability, and Present Value of Future Benefits. The ICC has

designated certain business level controls as “key” with regard to the agency’s operations, reporting and

compliance requirements, and employees designated as “key control owners” and their supervisors provide

quarterly representations certifying the performance of those controls and to maintain evidence documenting

control execution. These controls are also documented in business cycle memoranda which are updated on an

annual basis by control owners and other stakeholders.

Entity-Wide Controls: Entity-wide controls are controls that have a pervasive effect on an entity’s internal

control system. These controls are overarching and support the overall effectiveness of PBGC’s internal

control environment. The ICC has designated certain entity-wide controls as key to meeting the agency’s

control objectives over operations, reporting and compliance with laws and regulations within the following

six categories: control environment, risk assessment, control activities, information and communication,

monitoring, and anti-fraud. Many of these controls also address the five components and 17 underlying

control principles of internal controls, as required by the GAO Green Book, and the related categories of

objectives.

Fraud Prevention: In FY 2023, PBGC continued efforts to fully implement GAO’s Framework for Managing Fraud

Risks in Federal Programs. This work is focused on identifying and responding to fraud risks and developing

control activities to prevent and detect fraud. The use of this framework is required by OMB Circular A-123

and the Payment Integrity Information Act of 2019. As part of the framework, potential fraud areas are

identified, and key controls are evaluated and implemented as proactive measures to prevent fraud.

Monitoring activities include supervisory approvals, management reports, and exception reporting. PBGC

management performs due diligence in areas of suspected or alleged fraud.

Further, as required by Executive Order 13587, PBGC maintains an insider threat detection and prevention

program to prevent, detect, deter, and remediate internal threats to the agency’s assets. As part of the

expansion of this program, an Insider Threat, Privacy and Security Reportal was developed which allows all

PBGC staff and contractors to report an insider threat, privacy, or security incident in an effective and

efficient manner. Additionally, the agency implemented technology to block the intentional or unintentional

release of Personally Identifiable Information (PII) and to detect and alert on anomalous user behavior on

PBGC’s network.

PBGC also instituted other controls relating to fraud prevention such as the maintenance of hotlines for

PBGC employees, contractors and the public to confidentially report suspected wrongdoing or allegations of

possible fraud, waste or abuse occurring in a PBGC program or operation. In addition, the agency regularly

issues communications to employees and contractors and provides training to promote fraud awareness.

Information Technology Controls: In order to protect the confidentiality, integrity, and availability of the PBGC

information systems and the information processed and stored by those systems, PBGC implements the

controls included in the National Institute of Standards and Technology’s (NIST) Special Publication No.

800-53, Security and Privacy Controls for Federal Information Systems and Organizations. These controls are

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documented as part of System Security Plans which are maintained within the Cyber Security Assessment and

Management (CSAM) tool managed by the Office of Information Technology’s (OIT) Enterprise

Cybersecurity Department.

Digital Accountability and Transparency Act (DATA Act): The DATA Act of 2014 was designed to increase the

standardization and transparency of federal spending. It requires the disclosure of direct federal agency

expenditures and linking federal contract, loan and grant spending information of federal agencies to enable

taxpayers and policymakers to track federal spending more effectively. The law required the establishment of

government-wide data standards established by the OMB and the Department of the Treasury to provide

consistent, reliable, researchable, and usable spending data on USASpending.gov. The agency continues to

maintain, perform and assess the design and operating effectiveness of key controls over data quality to

support the achievement of DATA Act reporting objectives. Further, as required by Appendix A to OMB

Circular A-123, Management of Reporting and Data Integrity Risk (Memorandum M-18-16), the agency developed

and maintained a Data Quality Plan that considers incremental risks and internal controls over the input and

validation of data submitted to USAspending.gov in accordance with OMB requirements. Consideration of

the plan was included in the agency’s annual assurance statement as described in the FMFIA process below.

ASSESSMENT OF PAYMENT INTEGRITY RISK

Based on the requirements of Appendix C to OMB Circular A-123, Requirements for Payment Integrity

Improvement, and related improper payment legislation, PBGC performed a risk assessment in FY 2023 over

the agency’s Multiemployer Special Financial Assistance and Payments to Federal Employees Payments programs. Please

refer to the Payment Integrity Information Act Reporting section of this annual report for additional information.

AUDIT COORDINATION AND FOLLOW-UP PROGRAM

In implementing OMB Circular A-50, Audit Follow-up, PBGC has established its Audit Coordination and

Follow-up Directive. It is PBGC’s policy to fully cooperate with audits of PBGC operations and ensure the

efficient tracking, resolution, and implementation of agreed-upon audit recommendations contained in audit

reports issued by the OIG and GAO. PBGC has dedicated staff to coordinate with OIG and GAO audit

representatives in providing access to records and information needed to complete audits and ensure that

management responses to draft reports are provided in a timely manner. To facilitate timely completion and

closure of audit recommendations, staff regularly monitors implementation efforts, including regular

distribution of audit follow-up status reports to executive management and formal submission of

documentation evidencing completion of required corrective actions. Status reports are used to document

planned corrective actions and estimated completion dates; they also indicate those recommendations for

which work has been completed and reported as such to the OIG and to GAO. In addition, PBGC prepares

a management report to the Semiannual Report to Congress (SARC) issued by the OIG, which addresses the

status of agreed-upon OIG recommendations and provides other information required under the Inspector

General Act of 1978, as amended.

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COMPLIANCE WITH LAWS, REGULATIONS, AND OTHER REQUIREMENTS

To foster an environment that promotes compliance with laws and regulations, PBGC maintains two legal

compendia: the Compendium of Laws lists statutes that may have a significant impact on PBGC’s financial

statements or PBGC operations, the Compendium of Executive Orders and OMB Requirements lists

Executive Branch requirements applicable to PBGC. These documents provide brief descriptions of each

applicable requirement and identify the PBGC department or other component with primary compliance

responsibility. PBGC updates and maintains these lists to help ensure compliance with applicable laws,

regulations, and other requirements. In addition, the ICC enhanced PBGC’s control environment by adding

and augmenting other specific controls to ensure compliance with laws, regulations, and other requirements.

ENTERPRISE RISK MANAGEMENT ACTIVITIES

As a part of PBGC’s Enterprise Risk Management (ERM) activities, the RMC conducted an agency-wide risk

assessment, which was used to prepare the FY 2023 Risk Profile. The RMC – chaired by the Risk

Management Officer – also met with risk owners to discuss mitigation strategies for PBGC’s top risks and

related measures to assess strategy effectiveness. Agency-wide communication regarding ERM, the automated

ERM-related dashboard and the recurring call for emerging risks continued to foster a risk management

aware culture. In addition, ERM principles remained integrated into key decision-making processes, such as

strategic planning, organizational performance, budgeting, and the development and implementation of

agency internal controls.

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT STATEMENT OF ASSURANCE (FMFIA)

ASSURANCE STATEMENT PROCESS

Pursuant to Office of Management and Budget (OMB) Circular A-123, government corporations are required

to provide a statement on control systems by the head of the management of the corporation consistent with

the requirements of the FMFIA. To assist in this effort, the agency’s department and office directors

performed assessments of risk and internal controls over the effectiveness and efficiency of their operations,

reliability of reporting and compliance with applicable laws and regulations. These assessments addressed

several different considerations affecting internal control objectives, such as: the development and

implementation of policies and procedures; extent of management oversight; results of internal and external

reviews (e.g., Office of Inspector General (OIG), Government Accountability Office (GAO), or other

reviews); the safeguarding of assets; implementation of data quality plan (DATA Act Reporting); processes

and controls over the special financial assistance program and other agency payment streams; government

charge card management and practices; and the evaluation of known internal control deficiencies and

applicable OMB requirements related to financial management systems. These directors also provided

assurance statements for their reporting area which assisted with the determination of the type of assurance

recommended to the Agency Director. In addition, the Internal Control Committee (ICC) assessed cross-

cutting internal control issues for consideration by members of PBGC’s executive management. Based on the

results of the completed assessments, review of the departmental assurance statements, and consideration of

other relevant factors, PBGC’s executive management recommended, and the Director approved, the FY

2023 FMFIA Statement of Assurance included below.

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FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT STATEMENT OF ASSURANCE

The PBGC’s management is responsible for managing risks and maintaining effective internal control to meet

the objectives of Sections 2 and 4 of the Federal Managers’ Financial Integrity Act. The PBGC conducted its

assessment of risk and internal control in accordance with OMB Circular No. A-123, Management’s

Responsibility for Enterprise Risk Management and Internal Control.

In our prior statement of assurance, we noted several actions taken by PBGC management to strengthen and

promote procurement integrity. On September 30, 2022, PBGC awarded a contract to support a new

acquisition management system that will strengthen the legal review process. The new system is expected to

be fully operational in fiscal year 2025.

The American Rescue Plan Act of 2021, enacted on March 11, 2021, allows certain financially troubled

multiemployer plans to apply for Special Financial Assistance (SFA). Upon approval of an application, the

PBGC will make a single, lump-sum payment to eligible multiemployer plans. PBGC has developed and

implemented internal controls to meet the specific requirements and mitigate risks with the SFA program.

Management will continue to review the related internal control processes and consider additional controls as

necessary. Additionally, PBGC is developing processes and procedures for auditing multiemployer plans that

have received SFA.

Based on the results of the assessment, the PBGC can provide reasonable assurance that internal control over

operations, reporting, and compliance were operating effectively as of September 30, 2023.

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MANAGEMENT REPRESENTATION

PBGC’s management is responsible for the accompanying Statements of Financial Position of the Single-

Employer and Multiemployer Funds as of September 30, 2023, and September 30, 2022, the related

Statements of Operations, and the Statements of Cash Flows for the years then ended, and the related note

disclosures to these statements. PBGC’s management is also responsible for establishing and maintaining

systems of internal accounting and administrative controls that provide reasonable assurance that the control

objectives (i.e., preparing reliable financial statements, safeguarding assets, and complying with laws and

regulations) are achieved.

PBGC management believes the financial statements of the Single-Employer and Multiemployer Program

Funds present fairly the financial position of PBGC as of September 30, 2023, and September 30, 2022, and

the results of its operations and cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States of America (U.S. GAAP) and actuarial standards applied on a

consistent basis. As noted in the FMFIA Statement of Assurance above, PBGC provides reasonable

assurance that its internal controls are effective.

Estimates of probable terminations, nonrecoverable future financial assistance, amounts due from employers,

and the present value of future benefits have a material effect on the financial results being reported.

Litigation has been disclosed and reported in accordance with U.S. GAAP.

As a result of the aforementioned, PBGC has based these statements, in part, upon informed judgments and

estimates for those transactions not yet complete or for which the ultimate effects cannot be precisely

measured, or for those that are subject to the effects of any pending litigation.

The Inspector General engaged Ernst & Young LLP to conduct the audit of the Corporation’s fiscal years

2023 and 2022 financial statements, and Ernst & Young LLP issued an unmodified opinion on those financial

statements.

Gordon Hartogensis

Director

Patricia Kelly

Chief Financial Officer

November 15, 2023

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(Dollars in Millions) 2023 2022 2023 2022 2023 2022

ASSETS

Cash and cash equivalents $12,424 $8,070 $1,229 $608 $13,653 $8,678

Restricted Cash - - 369 36 369 36

Total cash, cash equivalents, and restricted cash $12,424 $8,070 $1,598 $644 $14,022 $8,714

Securities lending collateral (Notes 3 and 5) 6,753 4,581 - - 6,753 4,581

Investments, at market (Notes 3 and 5):

Fixed maturity securities 88,880 90,969 2,161 2,439 91,041 93,408

Equity securities 13,374 12,509 - - 13,374 12,509

Private equity 195 242 - - 195 242

Real estate and real estate investment trusts 1,613 1,502 - - 1,613 1,502

Other 277 282 - - 277 282

Total investments 104,339 105,504 2,161 2,439 106,500 107,943

Receivables, net:

Sponsors of terminated plans 18 21 - - 18 21

Premiums (Note 11) 4,167 3,156 223 200 4,390 3,356

Sale of securities 1,523 1,707 - - 1,523 1,707

Derivative contracts (Note 4) 761 655 - - 761 655

Investment income 691 649 14 11 705 660

Other 16 8 49 198 65 206

Total receivables 7,176 6,196 286 409 7,462 6,605

Capitalized assets, net (Notes 10 and 16) 181 43 1 1 182 44

Total assets $130,873 $124,394 $4,046 $3,493 $134,919 $127,887

The accompanying notes are an integral part of these financial statements.

The Single-Employer Program and Multiemployer Program (which includes the SFA Program) are separate by law.

The "Memorandum Total" data columns presented above are solely an entity-wide informational view of the PBGC's two

independent insurance programs.

PENSION BENEFIT GUARANTY CORPORATION

STATEMENTS OF FINANCIAL POSITION

Single-Employer

Multiemployer

Memorandum

September 30,

Program

Total

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(Dollars in Millions) 2023 2022 2023 2022 2023 2022

LIABILITIES

Present value of future benefits, net (Note 6):

Trusteed plans $73,610 $78,422 - - $73,610 $78,422

Plans pending termination and trusteeship 16 (328) - - 16 (328)

Settlements and judgments 17 17 - - 17 17

Claims for probable terminations 286 221 - - 286 221

Total present value of future benefits, net 73,929 78,332 - - 73,929 78,332

Present value of nonrecoverable future

financial assistance (Note 7)

Insolvent plans - - 1,622 1,551 1,622 1,551

Probable insolvent plans - - 589 839 589 839

Total present value of nonrecoverable

future financial assistance - - 2,211 2,390 2,211 2,390

Special financial assistance - - 358 28 358 28

Payables, net:

Derivative contracts (Note 4) 711 641 - - 711 641

Due for purchases of securities 4,368 3,934 - - 4,368 3,934

Payable upon return of securities loaned 6,753 4,581 - - 6,753 4,581

Unearned premiums 264 254 9 8 273 262

Leases Payable 140 - - - 140 -

Accounts payable and accrued expenses (Note 8) 93 78 7 6 100 84

Total payables 12,329 9,488 16 14 12,345 9,502

Total liabilities 86,258 87,820 2,585 2,432 88,843 90,252

Contributed transfer appropriation - - 8 6 8 6

Cumulative results of operations 44,615 36,574 1,453 1,055 46,068 37,629

Net position 44,615 36,574 1,461 1,061 46,076 37,635

Total liabilities and net position $130,873 $124,394 $4,046 $3,493 $134,919 $127,887

The accompanying notes are an integral part of these financial statements.

The Single-Employer Program and Multiemployer Program (which includes the SFA Program) are separate by law.

"Contributed Transfer Appropriation" represents the total unused budget authority from General Fund appropriation(s) at fiscal year end,

which is returned to the U.S. Treasury if unused by fiscal year end.

The "Memorandum Total" data columns presented above are solely an entity-wide informational view of the PBGC's two

independent insurance programs.

September 30,

Program

Total

PENSION BENEFIT GUARANTY CORPORATION

STATEMENTS OF FINANCIAL POSITION

Single-Employer

Multiemployer

Memorandum

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(Dollars in Millions) 2023 2022 2023 2022 2023 2022

UNDERWRITING:

Income:

Premium, net (Note 11) $5,597 $4,586 $368 $339 $5,965 $4,925

Contributed transfer appropriation income - - 45,925 7,566 45,925 7,566

Other 16 21 13 10 29 31

Total 5,613 $4,607 46,306 $7,915 51,919 12,522

Expenses:

Administrative 433 463 7 9 440 472

Administrative special financial assistance - - 18 11 18 11

Other 3 20 - - 3 20

Total 436 483 25 20 461 503

Other underwriting activity:

Losses (credits) from completed and

probable terminations (Note 12) 949 249 - - 949 249

Losses (credits) from insolvent and probable

plans-financial assistance (Note 7) - - (10) (72) (10) (72)

Actuarial adjustments (credits) (Note 6) (91) (1,337) (37) (15) (128) (1,352)

Special Financial Assistance Expense - - 45,907 7,555 45,907 7,555

Total 858 (1,088) 45,860 7,468 46,718 6,380

Underwriting gain (loss) 4,319 5,212 421 427 4,740 5,639

FINANCIAL:

Investment income (loss) (Note 13):

Fixed 2,168 (19,305) (2) (248) 2,166 (19,553)

Equity 2,648 (3,655) - - 2,648 (3,655)

Private equity (11) 6 - - (11) 6

Real estate (21) (229) - - (21) (229)

Other 16 151 - - 16 151

Total 4,800 (23,032) (2) (248) 4,798 (23,280)

Expenses:

Investment 111 122 - - 111 122

Actuarial charges (Note 6):

Due to expected interest 3,909 482 87 10 3,996 492

Due to change in interest factors (2,942) (24,061) (66) (408) (3,008) (24,469)

Total 1,078 (23,457) 21 (398) 1,099 (23,855)

Financial gain (loss) 3,722 425 (23) 150 3,699 575

Net income (loss) 8,041 5,637 398 577 8,439 6,214

Cumulative results of operations, beginning of year

36,574 30,937 1,055 478 37,629 31,415

Cumulative results of operations, end of year $44,615 $36,574 $1,453 $1,055 $46,068 $37,629

The accompanying notes are an integral part of these financial statements.

The Single-Employer Program and Multiemployer Program are separate by law.

The "Memorandum Total" data columns presented above are solely an entity-wide informational view of the PBGC's two

independent insurance programs.

PENSION BENEFIT GUARANTY CORPORATION

STATEMENTS OF OPERATIONS

Single-Employer

Multiemployer

Memorandum

September 30,

Program

Total

For the Years Ended

PENSION BENEFIT GUARANTY CORPORATION

65 FY 2023 | ANNUAL REPORT

PENSION BENEFIT GUARANTY CORPORATION

STATEMENTS OF CASH FLOWS

Single-Employer

Program

Multiemployer

Program

Memorandum

Total

(Dollars in millions)

For the Years Ended

September 30,

For the Years Ended

September 30,

For the Years Ended

September 30,

202

OPERATING ACTIVITIES:

Premium receipts

$4,595

$4,434

$347

$331

$4,942

$4,765

Interest and dividends received

3,585

3,188

3,604

3,198

Plan Reimbursements from SFA

185

230

185

230

Cash received from plans upon trusteeship

Receipts from sponsors/non-sponsors

Receipts from the missing participant program

Other receipts

120

Benefit payments – trusteed plans

(6,320)

(6,884)

(6,320)

(6,884)

Traditional financial assistance payments

Settlements and judgments

(176)

(226)

(176)

(226)

Payments for administrative and other expenses

(516)

(576)

(7)

(9)

(523)

(585)

Accrued interest paid on securities purchased

(168)

(205)

(1)

(168)

(206)

Net cash provided (used) by operating activities (Note

15)

1,391

170

368 335

1,759

505

INVESTING ACTIVITIES:

Proceeds from sales of investments

143,640

147,157

464

306

144,104

147,463

Payments for purchases of investments

(140,677)

(147,855)

(211)

(312)

(140,888)

(148,167)

Net change in investment of securities lending

collateral

2,172

(1,564)

- -

2,172

(1,564)

Net change in securities lending payable

(2,172)

1,564

(2,172)

1,564

Net cash provided (used) by investing activities

2,963

(698)

253

(6)

3,216

(704)

Net increase (decrease) in cash and cash equivalents

4,354

(528)

621

329

4,975

(199)

Cash and cash equivalents, beginning of year

8,070

8,598

608

279

8,678

8,877

Cash and cash equivalents, end of year

$12,424

$8,070

$1,229

$608

$13,653

$8,678

SPECIAL FINANCIAL ASSISTANCE:

Appropriation warrant received for SFA

70,034

48,417

70,034

48,417

Return of unobligated appropriated funds

(24,107)

(40,848)

(24,107)

(40,848)

Total SFA administrative and payroll expense

payments

(16)

(10)

(16)

(10)

Special financial assistance payments

(45,577)

(7,526)

(45,577)

(7,526)

Net increase (decrease) in restricted cash

334

Special financial assistance restricted cash, beginning of

year

35 3

Special financial assistance restricted cash, end of year

369

Cash, cash equivalents, and restricted cash, end of year

$12,424

$8,070

$1,598

$644

$14,022

$8,714

The above cash flows are for trusteed plans and do not include non-trusteed plans.

The accompanying notes are an integral part of these financial statements.

The Single-Employer Program and Multiemployer Program (which includes the SFA Program) are separate by law.

The "Memorandum Total" data columns presented above are solely an entity-wide informational view of the PBGC's two

independent insurance programs.

Special Financial Assistance is provided under the American Rescue Plan Act of 2021, which provides for

appropriated funds to eligible SFA multiemployer plans that are transferred from the U.S. Treasury’s General Fund to PBGC.

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NOTES TO FINANCIAL STATEMENTS

September 30, 2023 and 2022

NOTE 1: ORGANIZATION AND PURPOSE

The Pension Benefit Guaranty Corporation (PBGC or the Corporation) is a federal corporation created by

Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) and is subject to the provisions

of the Government Corporation Control Act. Its activities are defined by ERISA, as that Act has been

amended over the years. The Corporation insures the pension benefits, within statutory limits, of participants

in covered single-employer and multiemployer defined benefit pension plans.

ERISA requires that PBGC programs be self-financing. ERISA provides that the U.S. Government is not

liable for any obligation or liability incurred by PBGC.

On March 11, 2021, the President signed into law the American Rescue Plan (ARP) Act of 2021. ARP

amended ERISA and added Section 4262, Special Financial Assistance (SFA) by the Corporation, which

provides funding from the U.S. Treasury’s General Fund for payments to eligible multiemployer plans

covering their full plan benefits through 2051 (see MD&A discussion on page 31). An ERISA eighth fund has

been established for SFA, which is the first time PBGC has an appropriated fund. PBGC received a new

appropriation to cover SFA administration costs, and going forward, PBGC will receive annual transfers from

the General Fund to cover both SFA payments to approved multiemployer plans and SFA administration

costs. This is mandatory funding with an indefinite appropriation for a period of availability of 10 years.

For financial statement purposes, PBGC divides its business activity into two broad areas — “Underwriting

Activity” and “Financial Activity” — covering both Single-Employer and Multiemployer Program segments.

PBGC’s underwriting activity provides financial guaranty insurance in return for insurance premiums

(whether actually paid or not). Actual and expected probable losses that result from the termination of

underfunded pension plans are included in this category, as are actuarial adjustments based on changes in

actuarial assumptions, such as mortality. PBGC’s financial activity consists of the performance of PBGC’s

assets and liabilities. PBGC’s assets consist of premiums collected from defined benefit plan sponsors, assets

from distress or PBGC-initiated terminated plans that PBGC has insured, and recoveries from the former

sponsors of those terminated plans. PBGC’s future benefit liabilities consist of those future benefits, under

statutory limits, that PBGC has assumed following distress or PBGC-initiated terminations (also referred to

as an involuntary termination). Gains and losses on PBGC’s investments and changes in the value of PBGC’s

future benefit liabilities (e.g., actuarial charges such as changes in interest factors and expected interest) are

included in “Financial Activity”.

As of September 30, 2023, the Single-Employer and Multiemployer Programs reported Cumulative results of

operations of $44,615 million and $1,453 million, respectively. The Single-Employer Program had assets of

$130,873 million, offset by total liabilities of $86,258 million, which include total present value of future

benefits (PVFB) of $73,929 million. As of September 30, 2023, the Multiemployer Program had assets of

$4,046 million, offset by $2,211 million in present value of nonrecoverable future financial assistance. The

Corporation has sufficient liquidity to meet its obligations to both programs for a number of years. The FY

2022 Projections Report shows that under most projection scenarios for the Multiemployer Program, the

SFA provided to eligible plans under ARP likely extends the solvency of PBGC’s Multiemployer Program for

more than 40 years. The SFA program created by ARP is expected to enable PBGC to satisfy long-term

multiemployer obligations by shoring up ongoing plans that are currently insolvent or probable to become

insolvent. The result of which is a significant reduction in PBGC’s liability for the total present value of

nonrecoverable future financial assistance.

PBGC’s $120,858 million of total investments (including cash and cash equivalents and investment income)

represents the largest component of PBGC’s Statements of Financial Position Memorandum Total assets of

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$134,919 million at September 30, 2023. This amount of $120,858 million (as compared to investments under

management of $117,031 million, as reported in section VIII Investment Activities) reflects the fact that

PBGC experiences a recurring inflow of trusteed plan assets that have not yet been incorporated into the

PBGC investment program. For total investments (i.e., not the investment program), cash and fixed-income

securities ($105,385 million) represent 87 percent of the total investments, while equity securities ($13,389

million) represent 11 percent of total investments. Private market assets, real estate, and other investments

($2,084 million), represent 2 percent of the total investments.

SINGLE-EMPLOYER AND MULTIEMPLOYER PROGRAM EXPOSURE

PBGC’s estimate of the total underfunding in single-employer plans was $25,657 million for those sponsored

by companies that have credit ratings below investment grade and that PBGC classified as reasonably

possible of termination, as of September 30, 2023. This is a decrease of $26,375 million from the reasonably

possible exposure of $52,032 million in FY 2022. This decrease is primarily due to the increase in the interest

factors used for valuing liabilities as of the measurement date. These estimates are determined using a

measurement date of December 31 of the previous year (see Note 9). For FY 2023, this exposure is

concentrated in the following sectors: manufacturing, transportation/communications/utilities, and services.

PBGC estimates that as of September 30, 2023, it is reasonably possible that multiemployer plans may require

future financial assistance in the amount of $410 million (see Note 9). This is a decrease of $1,808 million

from the reasonably possible exposure of $2,218 million in FY 2022. The primary reason for the decrease in

exposure was a net decrease in the number of plans classified as reasonably possible to seven plans at

September 30, 2023, down from 12 plans classified as reasonably possible at September 30, 2022. The plans

removed no longer meet the reasonably possible criteria as the plans experienced improved financial

conditions due to better than expected investment returns, higher discount rates in valuing liabilities, and

higher plan contributions. One of the plans was removed since it is eligible for SFA. Additionally, the

reasonably possible aggregate reserve for small plans decreased by $390 million due to improved financial

conditions of the plans, higher discount rates in valuing liabilities and a change in the small plan bulk reserve

estimation methodology. The number of small plans projected to become insolvent within 20 years decreased

from 55 to 41.

There is significant volatility in plan underfunding and sponsor credit quality over time, which makes long-

term estimation of PBGC’s expected claims difficult. This volatility, along with the concentration of claims in

a relatively small number of terminated plans, has characterized PBGC’s experience to date and will likely

continue. Among the factors that will influence PBGC’s claims going forward are economic conditions

affecting interest rates, financial markets, and the rate of business failures.

PBGC’s sources of information on plan underfunding are the most recent Section 4010 and PBGC premium

filings and other submissions to the Corporation. PBGC publishes Table S-49, “Various Measures of

Underfunding in PBGC-Insured Plans,” in its Pension Insurance Data Tables where the limitations of the

estimates are appropriately described.

Under the Single-Employer Program, PBGC is liable for the payment of guaranteed benefits with respect to

underfunded terminated plans. An underfunded plan may terminate only if PBGC or a bankruptcy court

finds that one of the four conditions for a distress termination, as defined in ERISA, is met or if PBGC

initiates terminating a plan under one of five specified statutory tests. The net liability assumed by PBGC is

generally equal to the present value of the future benefits payable by PBGC less amounts provided by the

plan’s assets and amounts recoverable by PBGC from the plan sponsor and members of the plan sponsor’s

controlled group, as defined by ERISA.

Under the Multiemployer Program, if a plan becomes insolvent, it receives traditional financial assistance

from PBGC to allow the plan to continue to pay participants their guaranteed benefits. PBGC recognizes

assistance as a loss to the extent that the plan is not expected to be able to repay these amounts from future

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plan contributions, employer withdrawal liability or investment earnings. Since multiemployer plans do not

receive traditional financial assistance until fully insolvent, the assistance is almost never repaid unless the plan

is approved for SFA. For this reason, such assistance is fully reserved for plans not eligible for SFA.

The ARP created a new Special Financial Assistance (SFA) Program for multiemployer plans that meet

certain criteria (see Note 7), for which PBGC will receive appropriated funds. Unlike the traditional financial

assistance PBGC provides to multiemployer plans in the form of a loan, the SFA is provided via a transfer of

funds with no obligation of repayment.

PBGC reports appropriated funds as Restricted Cash on the Statements of Financial Position and report

income, expenses, and liabilities related to special financial assistance as separate line items on its Statements

of Operations and Statements of Financial Position.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (U.S. GAAP). The preparation of the financial statements,

in conformity with U.S. GAAP, requires PBGC to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period. Estimates and

assumptions may change over time as new information is obtained or subsequent developments occur. Actual

results could differ from those estimates.

RECENT ACCOUNTING DEVELOPMENTS

The American Rescue Plan (ARP) Act of 2021, created a program to provide SFA to financially troubled

multiemployer plans. This new SFA Program is financed by an appropriation from the General Fund and the

funds transferred to PBGC in the SFA appropriation are deemed a contribution from the US Government to

PBGC. In June 2018, the FASB issued Accounting Standards Update (ASU) 2018-08, “Not-for-Profit

Entities” (ASC 958) which clarifies the guidance for contributions received and made. The amendments in

this ASU, applicable to all entities, clarify and improve the scope and the accounting guidance for

contributions received and contributions made. PBGC applies the guidance in this ASU to account for the

SFA contributions as a nonreciprocal transaction to recognize revenue with donor restrictions. The funds

transferred to PBGC in the SFA appropriations are deemed a contribution from the US Government to

PBGC. PBGC applies specific contribution guidance in Accounting Standards Codification 958, Not-for-

Profit Entities - Revenue Recognition-Contributions, to recognize revenue and expenses related to the SFA

Program.

In March 2020 and January 2021, the FASB issued ASUs 2020-04 and ASU 2021-01, respectively, “Reference

Rate Reform” (ASC 848). ASC 848 provides temporary optional guidance to ease the potential burden in

accounting for reference rate reform. Topic 848 provides optional expedients and exceptions for applying

U.S. GAAP to transactions affected by reference rate reform if certain criteria are met. In December 2022,

the FASB issued ASU 2022-06 which deferred the end date of the temporary guidance in ASC 848, Reference

Rate Reform, from December 31, 2022, to December 31, 2024. Topic 848 was effective for PBGC beginning

on March 12, 2020, and PBGC will apply the amendments prospectively through December 31, 2024. PBGC

assessed the impact of adopting these ASUs and concluded there was no material impact on PBGC’s financial

statements.

In February 2016, the FASB issued ASU 2016-02, “Lease (ASC 842).” Under the new standard, PBGC is

required to recognize in its Statements of Financial Position (balance sheet), a right-of-use (ROU) asset,

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representing the right to use the underlying asset for the lease term, and a lease liability, representing the

liability to make lease payments, adjusted for lease payments made at or before lease commencement, lease

incentives, and any initial direct costs, for leases longer than one year. In addition, this ASU requires

expanded disclosures about the nature and terms of lease agreements. This standard is effective for fiscal year

beginning after December 15, 2021, and to interim periods beginning after December 15, 2022. PBGC has

evaluated the impact of this guidance and updated its policy in accordance with ASC 842 upon adoption in

FY 2023. As an all other entity under FASB, PBGC applied the new lease standard at PBGC’s adoption date

of October 1, 2022. PBGC elected the option not to restate comparative financial statements under the

modified retrospective approach and instead recognize a cumulative-effect adjustment at the beginning of FY

2023. Additionally, PBGC elected to apply the practical expedients to account for lease and non-lease

components as a single lease component, and to use the risk-free rate in determining the lease ROU asset and

liability. PBGC has also elected to expense short term leases and not recognize an ROU asset and lease

liability for leases with a duration of 12 months or less.

Effective FY 2023, PBGC updated its methodology in calculating Present Value of Nonrecoverable Future

Financial Assistance for small-sized multiemployer plans. Previously, PBGC calculated small plan probables

using a seven-year historic ratio of new plan terminations or insolvencies to the total unfunded liability for

small plans in a given year. The ratio was then applied to the current unfunded liability for small plans to

calculate the probable exposure. Under the new methodology, PBGC will calculate the standardized projected

Date of Insolvency (DOI) for high risk small-sized plans. If the projected DOI is within 20 years of the

PBGC financial statement date, actuarial calculations are performed on a plan-by-plan basis for

nonrecoverable future financial assistance, utilizing certain generalized assumptions that are appropriate for a

bulk reserve. This updated methodology classifies the financial obligations for these plans into the categories

based on their projected DOI as follows:

• Within 10 years are classified as probable.

• From 10 to 20 years are classified as reasonably possible.

• Greater than 20 years is classified as remote.

The adoption of this methodology aims to standardize and refine the projection and classification of financial

obligations within the Multiemployer Program (see Note 7).

VALUATION METHOD

A key objective of PBGC’s financial statements is to provide information that is useful in assessing PBGC’s

present and future ability to ensure that its plan beneficiaries receive benefits when due. Accordingly, PBGC

values its financial assets at estimated fair value, consistent with the standards for pension plans contained in

the FASB Accounting Standards Codification Section 960, Defined Benefit Pension Plans. PBGC values its

liabilities at the present value of future benefits and present value of nonrecoverable future financial

assistance using assumptions derived from market-based (fair value) annuity prices from insurance

companies, as described in the Statement of Actuarial Opinion. As described in ASC 960, the assumptions are

“those assumptions that are inherent in the estimated cost at the (valuation) date to obtain a contract with an

insurance company to provide participants with their accumulated plan benefit.” Also, in accordance with

ASC 960, PBGC selects assumptions for expected retirement ages and the cost of administrative expenses in

accordance with its best estimate of anticipated experience.

The FASB Accounting Standards Codification Section 820, Fair Value Measurements and Disclosures, defines fair

value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair

value measurements. ASC 820 applies to accounting pronouncements that require or permit fair value

measurements.

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Furthermore, PBGC previously implemented FASB Accounting Standards Codification 820, Fair Value

Measurements and Disclosures guidance related to financial statement note disclosures for certain non-Level

1 Net Asset Value (NAV) investments that use a “practical expedient” (i.e., priced without any adjustments –

see FASB Updates 2015-07 and 2018-13). Level 1 NAV investments are not affected by the FASB guidance

since these investments are fair value priced using quoted prices in active markets (market exchanges);

however, Level 2 and Level 3 NAV investments use valuation pricing (observable for Level 2, and not

observable for Level 3) for which the FASB now requires additional disclosure if the practical expedient is

used. Non-Level 1 NAV investments that use the practical expedient are displayed in a NAV only category

and are removed from their Level 2 or Level 3 category and added to the new exclusive NAV only category.

The fair value table affected by this guidance is found in PBGC Financial Statements Note 5, Fair Value

Measurements.

REVOLVING AND TRUST FUNDS

PBGC accounts for its Single-Employer and Multiemployer Programs’ revolving and trust funds on an

accrual basis. Each fund is charged its portion of the benefits paid each year. PBGC includes totals for the

revolving and trust funds for presentation purposes in the financial statements; however, the Single-Employer

and Multiemployer Programs are separate programs by law and, therefore, PBGC also reports them

separately.

ERISA provides for the establishment of the revolving fund where premiums are collected and held. The

assets in the revolving fund are used to cover deficits incurred by trusteed plans and to provide funds for

traditional financial assistance. The Pension Protection Act of 1987 created a single-employer revolving fund

(Fund 7) that is credited with all premiums in excess of $8.50 per participant, including all penalties and

interest charged on these amounts, and its share of earnings from investments. This fund may not be used to

pay PBGC’s administrative costs or the benefits of any plan terminated prior to October 1, 1988, unless no

other amounts are available.

The trust fund includes assets (e.g., pension plan investments) PBGC assumes (or expects to assume) once a

terminated plan has been trusteed, and related investment income. These assets generally are held by

custodian banks. The trust fund supports the operational functions of PBGC.

The trust fund reflects accounting activity associated with:

1) Trusteed plans (plans for which PBGC has legal responsibility). The assets and liabilities are reflected

separately on PBGC’s Statements of Financial Position, the income and expenses are included in the

Statements of Operations, and the cash flows from these plans are included in the Statements of Cash

Flows.

2) Plans pending termination and trusteeship (plans for which PBGC has begun the process for termination

and trusteeship by fiscal year-end). The assets and liabilities for these plans are reported as a net amount

on the Liabilities section of the Statements of Financial Position under “Present value of future benefits,

net.” For these plans, the income and expenses are included in the Statements of Operations, but the

cash flows are not included in the Statements of Cash Flows.

3) Probable terminations (plans that PBGC determines are likely to terminate and be trusteed by

PBGC). The assets and liabilities for these plans are reported as a net amount on the Liabilities section of

the Statements of Financial Position under “Present value of future benefits, net.” The accrued loss from

these plans is included in the Statements of Operations as part of “Losses (credits) from completed and

probable terminations.” The cash flows from these plans are not included in the Statements of Cash

Flows. PBGC cannot exercise legal control over a plan’s assets until it becomes the trustee.

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ALLOCATION OF REVOLVING AND TRUST FUNDS

PBGC allocates assets, liabilities, income, and expenses to the Single-Employer and Multiemployer Programs’

revolving and trust funds to the extent that such amounts are not directly attributable to a specific fund.

Revolving fund investment income is allocated on the basis of each program’s average cash and investments

available during the year. For the administrative expenses, see the Administrative Expense section further

below in Note 2. Revolving fund assets and liabilities are allocated according to the year-end equity of each

program’s revolving fund. Plan assets acquired by PBGC and commingled at PBGC’s custodian bank are

credited directly to the appropriate fund, while the earnings and expenses on the commingled assets are

allocated to each program’s trust fund on the basis of each trust fund’s value, relative to the total value of the

commingled fund.

CASH AND CASH EQUIVALENTS

“Cash” includes cash on hand and demand deposits. “Cash equivalents” are investments with original

maturities of one business day or highly liquid investments that are readily convertible into cash within one

business day.

SECURITIES LENDING COLLATERAL

PBGC participates in a securities lending program administered by its custodian bank. The custodian bank

requires collateral that equals 102 to 105 percent of the value of the securities lent. The collateral is held by

the custodian bank. The custodian bank either receives cash or non-cash as collateral or returns collateral to

cover mark-to-market changes. Any cash collateral received is invested by PBGC’s investment agent. In

addition to the lending program managed by the custodian bank, some of PBGC’s investment managers are

authorized to invest in securities purchased under resale agreements (an agreement with a commitment by the

seller to buy a security back from the purchaser at a specified price at a designated future date), and securities

sold under repurchase agreements.

INVESTMENT VALUATION AND INCOME

PBGC bases market values on the last sale of a listed security, on the mean of the “bid-and-ask” for non-

listed securities, or on a valuation model in the case of fixed income securities that are not actively traded.

These valuations are determined as of the end of each fiscal year. Purchases and sales of securities are

recorded on the trade date. In addition, PBGC invests in and discloses its derivative investments in

accordance with the guidance contained in the FASB Accounting Standards Codification Section 815,

Derivatives and Hedging. Investment income is accrued as earned. Dividend income is recorded on the ex-

dividend date. Realized gains and losses on sales of investments are calculated using first-in, first-out for the

revolving fund and weighted average cost for the trust fund. PBGC marks the plan’s assets to market, and

any increase or decrease in the market value of a plan’s assets occurring after the date on which the plan is

terminated must, by law, be credited to or suffered by PBGC.

SECURITIES PURCHASED UNDER REPURCHASE AGREEMENTS

PBGC’s investment managers purchase securities under repurchase agreements, whereby the seller will buy

the security back at a pre-agreed price and date. Those that mature in more than one day are reported under

“Fixed maturity securities” as “Securities purchased under repurchase agreements” in the Note 3 table

entitled “Investments of Single-Employer Revolving Funds and Single-Employer Trusteed Plans.”

Repurchase agreements that mature in one day are included in “Cash and cash equivalents,” which are

reported on the Statements of Financial Position. Refer to Note 3 for further information regarding

repurchase agreements.

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SPONSORS OF TERMINATED PLANS

The amounts due from sponsors of terminated plans or members of their controlled group represent the

settled, but uncollected, claims for sponsors’ employer liability (underfunding as of date of plan termination)

and for contributions due their plan less an allowance for estimated uncollectible amounts. PBGC discounts

any amounts expected to be received beyond one year for time and risk factors. Some agreements between

PBGC and plan sponsors provide for contingent payments based on future profits of the sponsors. The

Corporation reports any such future amounts in the period they are realizable. Income and expenses related

to amounts due from sponsors are reported in the Underwriting section of the Statements of Operations.

Interest earned on settled claims for sponsors’ employer liability (EL) and due and unpaid employer

contributions (DUEC) is reported as “Income: Other.” The change in the allowances for uncollectible EL

and DUEC is reported as “Expenses: Other.”

PREMIUMS

Premiums receivable represents (1) the plan reported premiums owed, (2) PBGC estimated amounts on

filings not yet due and (3) submitted and past due premiums deemed collectible, including penalties and

interest. The liability for unearned premiums represents annual premium fees that have been received in

advance of the period in which they will be earned by PBGC. They remain as liabilities until they are ratably

earned over the period of time to which the premium applies. “Premium income, net” represents actual and

estimated revenue generated from defined benefit pension plan premium filings as required by Title IV of

ERISA less bad debt expense for premiums, interest, and penalties. For insolvent multiemployer plans, bad

debt expense also includes a reserve for premium payments waived by PBGC and treated as financial

assistance in accordance with ERISA Section 4007 (see Note 11).

CAPITALIZED ASSETS

Capitalized assets include furniture and fixtures, electronic processing equipment, internal-use software, and

lease right-of-use assets. This includes costs for internally developed software incurred during the application

development stage (system design including software configuration and software interface, coding, and

testing). These costs are shown net of accumulated depreciation and amortization. See Note 16, Other Assets,

for further details.

PRESENT VALUE OF FUTURE BENEFITS (PVFB)

The PVFB is the estimated liability for future pension benefits that PBGC is or will be obligated to pay the

participants of trusteed plans and the net liability for plans pending termination and trusteeship. The PVFB

liability (including trusteed plans and plans pending termination and trusteeship) is stated as the actuarial

present value of estimated future benefits less the present value of estimated recoveries from sponsors and

members of their controlled group and the assets of plans pending termination and trusteeship as of the date

of the financial statements. PBGC also includes the estimated liabilities attributable to plans classified as

probable terminations as a separate line item in the PVFB (net of estimated recoveries and plan assets).

PBGC uses assumptions to adjust the value of those future payments to reflect the time value of money (by

discounting) and the probability of payment (by means of decrements, such as for death or retirement).

PBGC also includes anticipated expenses to settle the benefit obligation in the determination of the PVFB.

PBGC’s benefit payments to participants reduce the PVFB liability.

The values of the PVFB are particularly sensitive to changes in underlying estimates and assumptions. These

estimates and assumptions could change and the impact of these changes may be material to PBGC’s

financial statements (see Note 6).

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PVFB is reported as follows:

(1) Trusteed Plans: Represents the present value of future benefit payments less the present value of expected

recoveries (for which a settlement agreement has not been reached with sponsors and members of their

controlled group) for plans that have terminated and been trusteed by PBGC prior to fiscal year-end. Assets

are shown separately from liabilities for trusteed plans. PBGC’s liability under the expanded Missing

Participants Program is included in this category. Under this program that began in FY 2018, most terminated

defined contribution plans, small professional service pension plans, and multiemployer plans can now

transfer the benefits of missing participants to PBGC. Previously, the program covered only insured single-

employer defined benefit plans terminating in a standard termination.

(2) Pending Termination and Trusteeship: Represents the present value of future benefit payments less the

plans’ net assets (at fair value) anticipated to be received and the present value of expected recoveries (for

which a settlement agreement has not been reached with sponsors and members of their controlled group)

for plans for which termination action has been initiated and/or completed prior to fiscal year-end. Unlike

trusteed plans, the liability for plans pending termination and trusteeship is shown net of plan assets.

(3) Settlements and Judgments: Represents estimated liabilities related to settled litigation (see Note 6).

(4) Net Claims for Probable Terminations: In accordance with the FASB Accounting Standards Codification

Section 450, Contingencies, PBGC recognizes net claims for probable terminations which represent PBGC’s

best estimate of the losses, net of plan assets, and the present value of expected recoveries (from sponsors

and members of their controlled group) for plans that are likely to terminate in the future. Under a specific

identification process, PBGC evaluates each controlled group having $50 million or more of underfunding

and recognizes a contingent loss for the estimated net claim of those plans meeting the probable termination

criteria. These estimated losses are based on conditions that existed as of PBGC’s fiscal year-end. PBGC

believes it is likely that one or more events subsequent to the fiscal year-end will occur, confirming the loss.

Criteria used for classifying a specific single-employer plan as a probable termination include, but are not

limited to, one or more of the following conditions: the plan sponsor is in liquidation or comparable state

insolvency proceeding with no known solvent controlled group member; the sponsor has filed or intends to

file for distress plan termination and the criteria will likely be met; or PBGC is considering initiating plan

termination. In addition, PBGC takes into account other economic events and factors in making judgments

regarding the classification of a plan as a probable termination. These events and factors may include, but are

not limited to, the following: the plan sponsor is in bankruptcy or has indicated that a bankruptcy filing is

imminent; the plan sponsor has stated that plan termination is likely; the plan sponsor has received a going

concern opinion from its independent auditors; or the plan sponsor is in default under existing credit

agreement(s).

In addition, a reserve for small unidentified probable losses is recorded for the estimated future contingent

losses stemming from insured single-employer plans with an aggregate underfunding of less than $50 million.

The reserve is based on the historical three-year rolling average of losses related to actual plan terminations

(with an aggregate underfunding of less than $50 million) and indexed to the S&P 500 to reflect changes in

economic conditions. See Note 6 for further information on Net Claims for Probable Terminations.

PBGC identifies certain plan sponsors as high risk if the plan sponsor is in Chapter 11 proceedings or the

sponsor’s senior unsecured debt is rated CCC+/Caa1 or lower by S&P or Moody’s, respectively. PBGC

specifically reviews each plan sponsor identified as high risk and classifies pension plans as probable if, based

on available evidence, PBGC concludes that plan termination is likely (based on criteria described in (4)

above). Otherwise, high risk plan sponsors are classified as reasonably possible.

In accordance with the FASB Accounting Standards Codification Section 450, Contingencies, PBGC’s exposure

to losses from plans of companies that are classified as reasonably possible is disclosed in the footnotes. In

order for a plan sponsor to be specifically classified as reasonably possible, it must first have $50 million or

more of underfunding, as well as meet additional criteria. Criteria used for classifying a company as

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reasonably possible include, but are not limited to, one or more of the following conditions: the plan sponsor

is in Chapter 11 reorganization; a funding waiver is pending or outstanding with the Internal Revenue Service

(IRS); the sponsor missed a minimum funding contribution; the sponsor’s bond rating is below investment-

grade for Standard & Poor’s (BB+) or Moody’s (Ba1); or the sponsor has no bond rating but the Dun &

Bradstreet Failure Score (formerly Financial Stress Score) is below the threshold considered to be investment

grade (see Note 9).

PRESENT VALUE OF NONRECOVERABLE FUTURE FINANCIAL ASSISTANCE (PVNFFA)

In accordance with Title IV of ERISA, PBGC provides traditional financial assistance to multiemployer

plans, in the form of loans, to enable the plans to pay guaranteed benefits to participants and reasonable

administrative expenses of the plan. These loans, issued in exchange for interest-bearing promissory notes,

constitute an obligation of each plan.

The present value of nonrecoverable future financial assistance represents the estimated nonrecoverable

payments to be provided by PBGC in the future to multiemployer plans that will not be able to meet their

benefit obligations. The present value of nonrecoverable future financial assistance is based on the difference

between the present value of future guaranteed benefits and expenses and the market value of plan assets,

including the present value of future amounts expected to be paid by employers, for those plans that are

expected to require future assistance. The amount reflects the rates at which, in the opinion of PBGC, these

liabilities (net of expenses) could be settled in the market for single-premium nonparticipating group annuities

issued by private insurers (see Note 7).

A liability for a particular plan is included in the “Present Value of Nonrecoverable Future Financial

Assistance” when it is determined that the plan is currently, or will likely become in the future, insolvent and

will require assistance to pay the participants their guaranteed benefits. In accordance with the FASB

Accounting Standards Codification Section 450, Contingencies, PBGC recognizes net claims for probable

insolvencies for plans that are likely to become insolvent and may require future financial assistance.

Projecting a future insolvency requires considering several complex factors, such as an estimate of future cash

flows, future mortality rates, and age of participants not in pay status.

Each year, PBGC analyzes insured multiemployer plans to identify plans that are at risk of becoming

probable and reasonably possible claims on the insurance program. Regulatory filings with PBGC, IRS, and

DOL are important to this analysis and determination of risk, especially the designation of critical and

declining status, which means the plan is projecting insolvency within 15-20 years. In general, if a terminated

plan’s assets are less than the present value of its liabilities, PBGC considers the plan a probable risk of

requiring financial assistance in the future.

PBGC uses specific criteria for classifying multiemployer plans as insolvent (PBGC’s insurable event for

multiemployer plans), probable, and reasonably possible. The criteria are as follows:

• Any multiemployer plans currently receiving traditional financial assistance are classified as insolvent.

• Terminated, underfunded multiemployer plans (i.e., “wasting trusts”) are classified as probable.

• Ongoing multiemployer plans projected to become insolvent:

o Within 10 years are classified as probable.

o From 10 to 20 years are classified as reasonably possible.

In general, the date of insolvency is estimated by projecting plan cash flows using actuarial assumptions.

PBGC uses information provided by the plan actuary for assumptions such as termination of employment

rates, retirement rates, average ages, the plan’s schedule of future withdrawal liability payments owed, and

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contributions. PBGC uses assumptions set by PBGC for purposes of projecting returns on plan assets, future

contributions, future withdrawal liability payments, plan expenses, mortality rates, and guaranteed benefits.

In addition, a bulk reserve method is employed to estimate future contingent losses for small multiemployer

plans with fewer than 2,500 participants. Probable losses for plans are accrued, and reasonably possible losses

are disclosed. This small plan bulk reserve uses an aggregate method to estimate liability and exposure, rather

than reviewing each plan individually. In FY 2023, PBGC updated its methodology for determining the

probable liability for small-sized multiemployer plans, aligning it with the current method used for medium-

sized plans. Effective FY 2023, PBGC will calculate the standardized projected Date of Insolvency (DOI) for

high risk small-sized plans. If the projected DOI is within 20 years of the PBGC financial statement date,

actuarial calculations are performed on a plan-by-plan basis for nonrecoverable future financial assistance,

utilizing certain generalized assumptions that are appropriate for a bulk reserve. This updated methodology

classifies the financial obligations for these plans into the categories based on their projected DOI as follows:

• Within 10 years are classified as probable.

• From 10 to 20 years are classified as reasonably possible.

• Greater than 20 years is classified as remote.

MPRA provides that certain plans may apply to the U.S. Treasury to suspend benefits, and provides for a

participant vote on the benefit suspension. These plans also may apply to PBGC for financial assistance,

either for a facilitated merger or for a partition. Plans applying for a partition are also required to apply to

U.S. Treasury for a suspension of benefits. These actions do not affect the determination of the

nonrecoverable future financial assistance liability until U.S. Treasury has issued the final authorization to

suspend benefits in the case of a benefit suspension application, or until PBGC has approved the application

for financial assistance, in the case of a facilitated merger or a partition request.

The present value of nonrecoverable future financial assistance is presented in the Liability section of the

Statements of Financial Position (see Note 7).

ADMINISTRATIVE EXPENSES

These operating expenses (for either the Single-Employer or Multiemployer Programs) are amounts paid

and accrued for services rendered or while carrying out other activities that constitute PBGC’s ongoing

operations (e.g., payroll, contractual services, office space, materials, and supplies). An expense allocation

methodology is used to fully capture the administrative expenses attributable to either the Single-Employer

or Multiemployer Programs.

For the year-ending September 30, 2023, the Administrative Expense Reimbursement Ratio is determined

to be the most representative methodology to allocate actual indirect administrative expenses, as well as to

record the actual direct expenses attributable to the Single-Employer and Multiemployer Programs. The

Administrative Expense Reimbursement Ratio calculates the ratios of direct administrative expenses for

both the Single-Employer and Multiemployer Programs over the total direct administrative expenses. These

ratios are then used to allocate the indirect administrative expenses for both the Single-Employer and

Multiemployer Programs. This is PBGC’s change in estimate based on the updated methodology for

allocating administrative expenses. Prior to September 30, 2021, the Single-Employer and Multiemployer

Ongoing Plans Expense Ratio was calculated to allocate administrative expenses between the Single-

Employer Program and the Multiemployer Program.

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OTHER EXPENSES

These expenses represent an estimate of the net amount of receivables deemed uncollectible during the

period. The estimate is based on the most recent status of the debtor (e.g., sponsor), the age of the receivables

and other factors that indicate to what degree the receivables outstanding may be uncollectible.

LOSSES FROM COMPLETED AND PROBABLE TERMINATIONS

Amounts reported as losses from completed and probable terminations represent the difference as of the

actual or expected date of plan termination (DOPT) between the present value of future benefits (including

amounts owed under Section 4022(c) of ERISA) assumed, or expected to be assumed, by PBGC, less related

plan assets, and the present value of expected recoveries from sponsors and members of their controlled

group (see Note 12). When a plan terminates, the previously recorded probable net claim is reversed and

newly estimated DOPT plan assets, recoveries, and PVFB are netted and reported on the line “PVFB - Plans

pending termination and trusteeship” (this value is usually different from the amount previously reported),

with any change in the estimate recorded in the Statements of Operations. In addition, the plan’s net income

from DOPT to the beginning of PBGC’s fiscal year is included as a component of losses from completed

and probable terminations for plans with termination dates prior to the year in which they were added to

PBGC’s inventory of terminated plans.

ACTUARIAL ADJUSTMENTS AND CHARGES (CREDITS)

PBGC classifies actuarial adjustments related to insurance-based changes in method and the effect of

experience as underwriting activity; actuarial adjustments are the result of the movement of plans from one

valuation methodology to another, e.g., non-seriatim (calculating the liability for the group) to

seriatim (calculating a separate liability for each person), and of new updated data (e.g., deaths, revised

participant data). Actuarial charges (credits) are related to changes in interest factors, and expected interest is

classified as financial activity. These adjustments and charges (credits) represent the change in the PVFB that

results from applying actuarial assumptions in the calculation of future benefit liabilities (see Note 6).

DEPRECIATION AND AMORTIZATION

PBGC calculates depreciation on the straight-line basis over estimated useful lives of five years for equipment

and ten years for furniture and fixtures. PBGC calculates amortization for capitalized software, which

includes certain costs incurred for purchasing and developing software for internal use, on the straight-line

basis over estimated useful lives not to exceed five years, commencing on the date that the Corporation

determines that the internal-use software is implemented. Routine maintenance and leasehold improvements

(the amounts of which are not material) are charged to operations as incurred. Capitalization of software cost

occurs during the development stage, and costs incurred during the preliminary project and post-

implementation stages are expensed as incurred. See Note 16, Other Assets, for further details.

SPECIAL FINANCIAL ASSISTANCE

ARP established the SFA Program that provides that certain multiemployer plans may apply to PBGC to

receive SFA funding. The SFA liability will be recorded when the following conditions are met: (1) the initial

application for SFA has been received by PBGC, (2) the multiemployer plan applicant has been determined

to be eligible, (3) the application has been deemed to be complete, and (4) the application has been approved.

Upon approval of the application, SFA will be paid in a timely manner by PBGC. Unlike the traditional

financial assistance loans PBGC provides to multiemployer plans, SFA will be in the form of a transfer of

funds with no obligation to repay. No SFA transfers may be made after September 30, 2030.

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PBGC applies specific contribution guidance in ASC 958-605, Not-for-Profit Entities, to recognize revenue

from the U.S. Treasury General Fund appropriations related to the SFA Program. The contribution guidance

in Subtopic 958-605 requires an entity to determine whether a transaction is conditional, which affects the

timing of the revenue recognized. Conditional contributions received are classified as Contributed Transfer

Appropriation. Once the barriers to entitlement are overcome (i.e., approval of an SFA application), the

contribution is recognized as unconditional and classified as Contributed Transfer Appropriation Income.

The SFA Program provides PBGC appropriated SFA funds (outside the revolving fund) to cover assistance

to eligible multiemployer plans and PBGC’s SFA administrative expenses. Unlike traditional financial

assistance which PBGC provides to multiemployer plans in the form of a loan, SFA will be provided via a

transfer of funds with no obligation of repayment. At the end of each fiscal year, any unused (i.e.,

unobligated) appropriated SFA funds must be returned to the U.S. Treasury General Fund.

NOTE 3: INVESTMENTS

Premium receipts are invested through the revolving fund in U.S. Treasury securities. The trust funds include

assets that PBGC assumes or expects to assume with respect to terminated plans (e.g., recoveries from

sponsors) and investment income thereon. These assets generally are held by custodian banks. The basis and

market value of the investments by type are detailed below, as well as related investment profile data. The

basis indicated is the cost of the asset if assumed after the date of plan termination or the market value at date

of plan termination if the asset was assumed as a result of a plan’s termination. PBGC marks the plan’s assets

to market, and any increase or decrease in the market value of a plan’s assets occurring after the date on

which the plan is terminated must, by law, be credited to or suffered by PBGC. Investment securities

denominated in foreign currency are translated into U.S. dollars at the prevailing exchange rates at period

ending September 30, 2023. Purchases and sales of investment securities, income, and expenses are translated

into U.S. dollars at the prevailing exchange rates on the respective dates of the transactions. The portfolio

does not isolate that portion of the results of operations resulting from changes in foreign exchange rates of

investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations

are included with the net realized and unrealized gain or loss on investments. For PBGC’s securities,

unrealized holding gains and losses are both recognized by including them in earnings. Unrealized holding

gains and losses measure the total change in fair value — consisting of unpaid interest income earned or

unpaid accrued dividend and the remaining change in fair value from holding the security.

To Be Announced (TBA) and Bond Forward transactions are recorded as regular buys and sells of

investments and not as derivatives. TBA is a contract for the purchase or sale of mortgage-backed securities

to be delivered on a future date. The term TBA is derived from the fact that the actual mortgage-backed

security that will be delivered to fulfill a TBA trade is not designated at the time the trade is made. The

securities are to be announced 48 hours prior to the established trade settlement date. TBAs are issued by the

Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA),

and Government National Mortgage Association (GNMA). In accordance with FASB Accounting Standards

Codification Section 815, Derivatives and Hedging, TBA and Bond Forward contracts are deemed regular way

trades as they are completed within the time frame generally established by regulations and conventions in the

marketplace or by the exchange on which they are executed. Thus, recording of TBA and Bond Forward

contracts recognizes the acquisition or disposition of the securities at the full contract amounts on day one of

the trade.

Bond Forwards are reported to “Receivables, net – Sale of securities”, and “Due for purchases of securities”;

TBAs are reported to “Receivables, net – Sale of securities”, “Due for purchases of securities”, and “Fixed

maturity securities” from derivative contracts receivables and payables. As of September 30, 2023, TBA

receivables were $1,184 million and no Bond Forward receivables were reported. In addition, as of September

30, 2023, TBA payables were $3,936 million and no Bond Forward payables were reported.

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INVESTMENTS OF SINGLE-EMPLOYER REVOLVING FUNDS

AND SINGLE-EMPLOYER TRUSTEED PLANS

(Dollars in millions) Basis

Market

Value

Basis

Market

Value

Fixed maturity securities:

U.S. Government securities $62,443 $52,166 $64,326 $54,831

Commercial paper/securities purchased 354 354 - -

under repurchase agreements

Asset backed securities 12,753 11,629 10,715 9,684

Pooled funds

Domestic 1,882 1,306 3,000 2,246

International 0 * 0 * - -

Global/other 1 1 2 2

Corporate bonds and other 20,073 17,176 22,110 18,295

International securities 7,047 6,248 7,281 5,911

Subtotal 104,553 88,880 107,434 90,969

Equity securities:

Public equity

Domestic 832 879 91 105

International 2,481 2,618 3,056 2,632

Private equity

Pooled funds

Domestic 3,426 7,239 3,612 6,701

International 1,538 2,616 2,106 3,049

Global/other 22 22 22 22

Subtotal 8,299 13,374 8,887 12,509

Private equity 1,101 195 1,115 242

Real estate and real estate investment trusts 1,865 1,613 1,712 1,502

Insurance contracts and other investments 107 277 67 282

Total

$115,925 $104,339

$119,215 $105,504

* Less than $500,000

Total includes securities on loan at September 30, 2023, and September 30, 2022, with a market value of $7,409 million and

$5,195 million, respectively.

This total of $104,339 million of investments at market value represents the single-employer assets only.

INVESTMENTS OF MULTIEMPLOYER REVOLVING FUNDS AND MULTIEMPLOYER TRUSTEED PLANS

(Dollars in millions) Basis

Market

Value

Basis

Market

Value

Investment securities:

Fixed U.S. Government securities $2,734 $2,161 $2,696 $2,439

Equity securities - - - -

Total $2,734 $2,161 $2,696 $2,439

2023

2022

September 30,

2023

2022

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

INVESTMENT PROFILE

September 30,

2023

2022

Fixed Income Assets

Average Quality

AA-

Average Maturity (years)

10.4

10.7

Duration (years)

5.9

7.2

Yield to Maturity (%)

5.5

4.8

Equity Assets

Average Price/Earnings Ratio

20.6

18.3

Dividend Yield (%)

2.4

2.8

Beta

1.0

DERIVATIVE INSTRUMENTS

PBGC assigns investment discretion and grants specific authority to all of its investment managers to invest

according to specific portfolio investment guidelines the Corporation has established. PBGC further limits

the use of derivatives by investment managers through tailored provisions in the investment guidelines with

investment managers consistent with PBGC’s investment policy statement and overall risk tolerance. These

investment managers, who act as fiduciaries to PBGC, determine when it may or may not be appropriate to

utilize derivatives in the portfolio(s) for which they are responsible. Investments in derivatives carry many of

the same risks of the underlying instruments and carry additional risks that are not associated with direct

investments in the securities underlying the derivatives.

Risks may arise from the potential inability to terminate or sell derivative positions, although derivative

instruments are generally more liquid than physical market instruments. A liquid secondary market may not

always exist for certain derivative positions. Over-the-counter derivative instruments also involve

counterparty risk that the other party to the derivative instrument will not meet its obligations.

The use of derivatives in the PBGC investment portfolio is also further restricted insofar as they may not be

used to create leverage in the portfolio. Thus, derivatives are not permitted to be utilized to leverage the

portfolio beyond the maximum risk level associated with a fully invested portfolio of physical securities.

Derivative instruments are used to mitigate risk (e.g., adjust duration or currency exposures), enhance

investment returns, and/or as liquid and cost-efficient substitutes for positions in physical securities. These

derivative instruments are not designated as accounting hedges consistent with FASB Accounting Standards

Codification Section 815, Derivatives and Hedging, which requires an active designation as a prerequisite for any

hedge accounting. PBGC uses a no-hedging designation, which results in the gain or loss on a derivative

instrument to be recognized currently in earnings. Derivatives are accounted for at fair value in accordance

with the FASB Accounting Standards Codification Section 815, Derivatives and Hedging. Derivatives are marked

to market with changes in value reported as a component of financial income on the Statements of

Operations. PBGC presents all derivatives at fair value on the Statements of Financial Position.

PBGC’s investment managers invested in investment products that used various U.S. and non-U.S. derivative

instruments. Those products included, but are not limited to: index futures; options; money market futures;

government bond futures; interest rate, credit default, and total return swaps and swaption (an option on a

swap) contracts; stock warrants and rights; debt option contracts; and foreign currency futures, forward, and

option contracts. Some of these derivatives are traded on organized exchanges and thus bear minimal

counterparty risk. The counterparties to PBGC’s non-exchange-traded derivative contracts are major financial

institutions subject to ISDA (International Swaps and Derivatives Association, Inc.) master agreements or

IFEMAs (International Foreign Exchange Master Agreements) and minimum credit ratings required by

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investment guidelines. PBGC monitors PBGC’s counterparty risk and exchanges collateral under most

contracts to further support performance by counterparties. Required margin (collateral) for exchange traded

and non-exchange traded centrally cleared derivatives is maintained by a clearinghouse to support the

performance by counterparties, which are members of the clearinghouse, and collateral is exchanged directly

with counterparties for non-exchange traded non-centrally cleared derivatives. A clearinghouse reduces the

settlement risks by netting offsetting transactions between multiple counterparties and by requiring higher

levels of collateral deposits or margin requirements compared to bilateral arrangements. Settlement risks are

also reduced by the clearinghouse providing independent valuation of trades and margin, monitoring the

credit worthiness of the clearing firms, and providing a guarantee fund, which could be used to cover losses

that exceed a defaulting clearing firm’s margin on deposit.

A futures contract is an agreement between a buyer or seller and an established futures exchange

clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial

instrument at a specified price on a specific date (settlement date) in the future. The futures exchanges and

clearinghouses clear, settle, and guarantee transactions occurring through their facilities. Upon entering into a

futures contract, an “initial margin” amount (in cash or liquid securities) of generally 1 to 6 percent of the face

value indicated in the futures contract is required to be deposited with the broker. Open futures positions are

marked to market daily. Subsequent payments known as “variation margin” are made or received by the

portfolio dependent upon the daily fluctuations in value of the underlying contract. PBGC maintains

adequate liquidity in its portfolio to meet these margin calls.

PBGC also invests in forward contracts. A forward foreign currency contract is a commitment to purchase or

sell a foreign currency at the settlement date (in the future) at a negotiated rate or to make settlement based

on comparable economics, but without actually delivering the foreign currency. Foreign currency forward,

futures, and option contracts may be used as a substitute for cash currency holdings. This is in order to

minimize currency risk exposure to changes in foreign currency exchange rates and to adjust overall currency

exposure to reflect the investment views of the fixed income and equity portfolio managers regarding

relationships between currencies.

A swap is an agreement between two parties to exchange different financial returns on a notional investment

amount. The major forms of swaps traded are interest rate swaps, credit default swaps, and total return

swaps. These swaps are netted for reporting purposes. PBGC uses swap and swaption contracts to adjust

exposure to interest rates, fixed income securities exposure, credit exposure, and equity exposure, and to

generate income based on the investment views of the portfolio managers regarding interest rates, indices,

and individual securities.

Interest rate swaps involve exchanges of fixed-rate and floating-rate interest. Interest rate swaps are often

used to alter exposure to interest rate fluctuations by swapping fixed-rate obligations for floating-rate

obligations, or vice versa. The counterparties to the swap agree to exchange interest payments on specific

dates, according to a predetermined formula. The payment flows are usually netted against each other, with

one party paying the difference to the other.

A credit default swap is a contract between a buyer and seller of protection against pre-defined credit events.

PBGC may buy or sell credit default swap contracts to seek to increase the portfolio’s income or to mitigate

the risk of default on portfolio securities.

A total return swap is a contract between a buyer and seller of exposures to certain asset classes, such as

equities. PBGC may buy or sell total return contracts to seek to increase or reduce the portfolio’s exposure to

certain asset classes.

An option contract is a contract in which the writer of the option grants the buyer of the option the right to

purchase from (call option) or sell to (put option) the writer a designated instrument at a specified price

within a specified period of time.

Stock warrants and rights allow PBGC to purchase securities at a stipulated price within a specified time limit.

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For the fiscal years ended September 30, 2023 and 2022, gains and losses from settled margin calls are

reported in “Investment income” on the Statements of Operations. Securities and cash are pledged as

collateral for derivative contracts (e.g., futures and swaps) and are recorded as a receivable or payable.

FASB Accounting Standards Codification Section 815, Derivatives and Hedging, requires the disclosure of fair

values of derivative instruments and their gains and losses in its financial statements of both the derivative

positions existing at period ending September 30, 2022 and the effect of using derivatives during the

reporting period.

The following three key tables present PBGC’s use of derivative instruments and its impact on PBGC’s

financial statements:

• Fair Values of Derivative Instruments – Identifies the location of derivative fair values on the Statements

of Financial Position, as well as the notional amounts.

• Offsetting of Derivative Assets – Presents the impact of legally enforceable master netting agreements on

derivative assets.

• Offsetting of Derivative Liabilities – Presents the impact of legally enforceable master netting agreements

on derivative liabilities.

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FAIR VALUES OF DERIVATIVE INSTRUMENTS

Asset Derivative

September 30, 2023 September 30, 2022

Statements of Financial Statements of Financial

(Dollars in millions) Position Location Notional FMV Position Location Notional

FMV

Futures Derivative Contracts $6,671 $357 Derivative Contracts $6,976 $172

Swap contracts

Interest rate swaps Investments-Fixed 2,956 79 Investments-Fixed 2,005 115

Other derivative swaps Investments-Fixed 1,077 6 Investments-Fixed 1,279 (1)

Option contracts Investments-Fixed 8 5 Investments-Fixed 117 2

Forwards - foreign exchange Investments-Fixed 14,942 21 Investments-Fixed 12,899 70

Investments-Equity - - Investments-Equity - -

Liability Derivative

September 30, 2023 September 30, 2022

Statements of Financial Statements of Financial

(Dollars in millions) Position Location Notional

FMV

Position Location Notional

FMV

Futures Derivative Contracts $12,765 ($140) Derivative Contracts $7,193 ($210)

Option contracts Derivative Contracts 11 (4) Derivative Contracts 9 (1)

Additional information specific to derivative instruments is disclosed in Note 4 – Derivative Contracts, and Note 5 – Fair Value Measurements.

PBGC uses a net presentation on the Statements of Financial Position for those derivative financial

instruments entered into with counterparties under legally enforceable master netting agreements. Derivative

receivables and derivative payables are netted on the Statements of Financial Position with the same

counterparty and the related cash collateral receivables and payables when a legally enforceable master netting

agreement exists (i.e., for over-the-counter derivatives). Master netting agreements are used to mitigate

counterparty credit risk in certain transactions, including derivatives transactions, repurchase agreements and

reverse repurchase agreements. The master netting agreement also may require the exchange of cash or

marketable securities to collateralize either party’s net position. Any cash collateral exchanged with

counterparties under these master netting agreements is also netted against the applicable derivative fair

values on the Statements of Financial Position.

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OFFSETTING OF DERIVATIVE ASSETS FAIR VALUE

September 30, 2023

September 30, 2022

(Dollars in millions)

Gross

Amount of

Recognized

Assets

Gross

Amounts

Offset in

Statements of

Financial

Position

Net Amounts of

Assets

Presented

in Statements of

Financial

Position

Gross Amount

of Recognized

Assets

Gross

Amounts

Offset in

Statements of

Financial

Position

Net Amounts

of Assets

Presented

in Statements of

Financial

Position

Derivatives

Interest-rate contracts

$ -

($7)

Foreign exchange contracts

304

(231)

484

(380)

104

Other derivative contracts

Cash collateral nettings

Total Derivatives

$305

($215)

$90

$493

($387)

$106

Other financial

instruments

Repurchase agreements

966

660

Securities lending collateral

6,753

4,581

Total derivatives and

other financial

instruments

$8,024

($215)

$7,809

$5,734

($387)

$5,347

September 30, 2023

September 30, 2022

(Dollars in millions)

Gross Amounts Not Offset in

Statements of Financial Position

Gross Amounts Not Offset in

Statements of Financial Position

Net Amount of

Assets Presented

in Statements of

Financial

Position

Collateral

Received

Net Amount

Net Amount of

Assets Presented

in Statements of

Financial

Position

Collateral

Received

Net Amount

Repurchase agreements

$966

$660

Security lending collateral

6,753

(6,753)

4,581

(4,581)

Total

$7,719

($6,753)

$966

$5,241

($4,581)

$660

* Less than $500,000

Other derivative contracts include total return swaps, currency swaps, and credit default swaps.

Under subheading “Other financial instruments”, repurchase agreements and securities lending collateral are presented on a gross basis within the

table and on the Statements of Financial Position.

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OFFSETTING OF DERIVATIVE LIABILITIES FAIR VALUE

September 30, 2023

September 30, 2022

(Dollars in millions)

Gross Amount

of Recognized

Liabilities

Gross

Amounts

Offset in

Statements of

Financial

Position

Net Amounts of

Assets

Presented

in Statements of

Financial

Position

Gross

Amount

Recognized

Liabilities

Gross

Amounts

Offset in

Statements of

Financial

Position

Net Amounts of

Assets

Presented

in Statements of

Financial

Position

Derivatives

Interest-rate contracts

$20

($7)

$13

Foreign exchange contracts

283

(231)

415

(380)

Other derivative contracts

Cash collateral nettings

Total Derivatives

$284

($231)

$53

$436

($361)

$75

Other financial instruments

Resale agreements

Securities lending collateral

6,753

4,581

Total derivatives and other

financial instruments

$7,037

($231)

$6,806

$5,017

($361)

$4,656

* Less than $500,000

Other derivative contracts include total return swaps, currency swaps, and credit default swaps.

Under subheading “Other financial instruments”, repurchase agreements and securities lending collateral are presented on a gross basis within the

table and on the Statements of Financial Position.

September 30, 2023

September 30, 2022

(Dollars in millions)

Gross Amounts Not Offset in

Statements of Financial Position

Gross Amounts Not Offset in

Statements of Financial Position

Net Amount of

Liabilities

Presented in

Statements of

Financial

Position

Collateral

Received

Net Amount

Net Amount of

Liabilities

Presented in

Statements of

Financial

Position

Collateral

Received

Net Amount

Resale agreements

Security lending collateral

6,753

(6,753)

4,581

(4,581)

Total

$6,753

($6,753)

$4,581

($4,581)

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The following table identifies the location of derivative gains and losses on the Statements of Operations as

of September 30, 2023, and September 30, 2022.

EFFECT OF DERIVATIVE CONTRACTS ON THE STATEMENTS OF OPERATIONS

Amount of Gain or (Loss)

Location of Gain or Recognized in Income on

(Loss) Recognized Derivatives

in Income on Sept. 30, Sept. 30,

(Dollars in millions) Derivatives 2023 2022

Futures

Contracts in a receivable position Investment Income-Fixed $1,059 $2,047

Contracts in a receivable position Investment Income-Equity 0 * -

Contracts in a payable position Investment Income-Fixed (680) (1,761)

Contracts in a payable position Investment Income-Equity - -

Swap agreements

Interest rate swaps Investment Income-Fixed 21 115

Other derivative swaps Investment Income-Fixed (2) (45)

Option contracts

Options purchased (long) Investment Income-Fixed (21) (12)

Options purchased (long) Investment Income-Equity - -

Options written (sold short) Investment Income-Fixed 9 16

Options written (sold short) Investment Income-Equity - 0 *

Forward contracts

Forwards - foreign exchange Investment Income-Fixed (22) 122

Investment Income-Equity 0 * 0 *

* Less than $500,000

Additional information specific to derivative instruments is disclosed in Note 4 - Derivative Contracts, and

Note 5 - Fair Value Measurements.

SECURITIES LENDING

PBGC participates in a securities lending program administered by its custodian bank. The custodian bank

requires initial collateral that equals 102 to 105 percent of the value of the securities lent. The collateral is held

by the custodian bank or its agent. The custodian bank either receives cash or non-cash as collateral or

returns collateral to cover mark-to-market changes. Any cash collateral received is invested by PBGC’s

investment agent. In addition to the lending program managed by the custodian bank, some of PBGC’s

investment managers are authorized to invest in securities purchased under resale agreements (an agreement

with a commitment by the seller to buy a security back from the purchaser at a specified price at a designated

future date).

The average value of securities on loan through September 30, 2023, and through September 30, 2022, was

$6,436 million and $6,296 million, respectively. The average value of lendable securities was $38,606 million

through September 30, 2023, and $44,590 million through September 30, 2022. The ratio of the average value

of securities on loan and the average value of lendable securities is the average utilization rate. This average

utilization rate was 17 percent through September 30, 2023, and 14 percent through September 30, 2022.

The average value of U.S. Corporate Bonds and Equity securities on loan through September 30, 2023, was

$1,327 million, as compared to $2,373 million through September 30, 2022. The average value of U.S.

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Corporate Bonds and Equity securities on loan is 21 percent of the $6,436 million average value of securities

on loan through September 30, 2023, as compared to 38 percent of the $6,296 million average value of

securities on loan through September 30, 2022. The average value of lendable U.S. Corporate Bonds and

Equity securities was $22,154 million through September 30, 2023, or 57 percent of PBGC’s overall average

value of lendable securities; while the average value of lendable U.S. Corporate Bonds and Equity securities

was $26,168 million through September 30, 2022, or 59 percent of PBGC’s overall average value of lendable

securities. The average utilization of U.S. Corporate Bonds and Equity securities was 6 percent through

September 30, 2023, and 9 percent through September 30, 2022. U.S. Corporate Bonds and Equity securities

utilization decreased due to a change in strategy to increase securities lending fees. The increased fees more

than compensated for the slightly lower levels of utilization for U.S. Corporate Bonds and Equity securities

that resulted and led to increased lending earnings.

The average value of U.S. Government securities on loan through September 30, 2023, was $5,025 million, as

compared to $3,855 million through September 30, 2022. The average value of U.S. Government securities

on loan was 78 percent of the $6,436 million average value of securities on loan through September 30, 2023,

as compared to 61 percent of the $6,296 million average value of securities on loan through September 30,

2022. The average value of lendable U.S. Government securities through September 30, 2023, was $12,685

million, or 33 percent of PBGC’s overall average value of lendable securities; whereas the average value of

lendable U.S. Government securities through September 30, 2022, was $14,765 million, or 33 percent of

PBGC’s overall average value of lendable securities. The average utilization of U.S. Government securities

was 41 percent through September 30, 2023, and 26 percent through September 30, 2022. Utilization of U.S.

Government securities increased year over year because of a higher level of demand for U.S. Government

Securities from borrowers. The following table presents utilization rates of investment securities in the

custodian administered securities lending program.

UTILIZATION RATES IN THE SECURITIES LENDING PROGRAM

Daily Utilization

Rates at Sept. 30,

2023

Sept. 30, 2023

Average Utilization

Rates

Sept. 30, 2022

Average Utilization

Rates

U.S. Corporate Bond & Equity

U.S. Government Securities

55%

41%

26%

Non-U.S. Corporate Bond & Equity

Non-U.S. Fixed Income

0%*

Total PBGC Program

20%

17%

14%

*Less than 1%.

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The amount of cash collateral received for securities on loan at September 30, 2023, and September 30, 2022,

was $6,753 million and $4,581 million, respectively. These amounts are recorded as assets and are offset with

a corresponding liability. For lending agreements collateralized by securities, no accompanying asset or

liability is recorded, as PBGC does not sell or re-pledge the associated collateral. For those securities lending

activities that PBGC directs through its custodian manager, the Corporation chooses to invest proceeds from

securities lending in the PBGC Collateral Fund.

In addition to its custodian agent lending program, PBGC invests in commingled index funds that participate

in securities lending. PBGC does not own the securities in a commingled fund but owns units in the fund.

The index fund provider utilizes an affiliated lending agent that lends the securities in the fund and receives

collateral in return. The lending agent monitors and manages the collateral levels as well as monitors the

credit quality and operations of their lending counterparties. The lending agent performs this service on

behalf of the many clients that are invested in the commingled funds that participate in securities

lending. This collateral is not valued or recorded on PBGC’s financial statements as PBGC only owns units in

the commingled funds.

PBGC’s earnings from its agency securities lending programs as of September 30, 2023, and September 30,

2022, was $19 million and $14 million, respectively. Also contributing to PBGC’s securities lending income is

its participation in the commingled index funds mentioned above. Net income from securities lending is

included in “Investment income – Fixed” on the Statements of Operations.

PBGC does not have the right by contract or custom to sell or re-pledge non-cash collateral, and therefore it

is not reported on the Statements of Financial Position. Non-cash collateral, which consists of highly rated

debt instruments, has increased on an absolute basis year over year.

REPURCHASE AGREEMENTS

PBGC’s repurchase agreements entitle and obligate the Corporation to repurchase or redeem the same or

substantially the same securities that were previously transferred as collateralized securities. In addition,

repurchase agreements require the Corporation to redeem the collateralized securities, before maturity at a

fixed determinable price.

As of September 30, 2023, PBGC had $966 million of repurchase agreements. Repurchase agreements

include maturities of one day which is reported as an asset and included in the “Cash and cash equivalents”

balance. Those that mature in more than one day are reported under “Fixed maturity securities.” There was

no associated liability for these secured borrowings reported as “Securities sold under repurchase

agreements.” PBGC has no restrictions placed on the cash received for all its outstanding repurchase

agreements as of September 30, 2023.

NOTE 4: DERIVATIVE CONTRACTS

PBGC’s derivative financial instruments are recorded at fair value and are included on the Statements of

Financial Position as investments and derivative contracts. Foreign exchange forwards are included in “Fixed

maturity securities.” Swaps are netted for the individual contracts and are also included in “Fixed maturity

securities.” Swaps listed in the tables below represent the receivables and payables in an open trade position.

Contracts for Futures in the tables below represent margin variation receivables and payables. The amounts

subject to credit risk related to derivative instruments are generally limited to the amounts, if any, by which

the counterparty’s obligations exceed PBGC’s obligations with that counterparty. PBGC considers this risk

remote and does not expect the settlement of these transactions to have a material effect in the Statements of

Operations and Statements of Financial Position.

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Amounts in the table below represent the derivative contracts in a receivable position at September 30, 2023.

Collateral deposits of $333 million, which represent cash paid as collateral on certain derivative contracts, are

shown below.

DERIVATIVE CONTRACTS

September 30, September 30,

(Dollars in millions) 2023 2022

Receivables on derivatives:

Collateral deposits $333

$362

Futures contracts 356 172

Interest rate swaps (open trade receivable)

31 121

Other derivative swaps (open trade receivable) 41 0 *

Total $761 $655

*Less than $500,000

For FY 2022, where a legally enforceable master netting agreement exists, amounts for “Receivables, net – Derivative Contracts” and

“Payables, net – Derivative Contracts” will include net of cash collateral deposited for non-exchange traded derivatives which are subject to

master netting agreements. Collateral deposits receivable are $362 million ($409 million gross collateral deposits receivable less $47 million due

to a netting of collateral deposits receivable and payable).

For FY 2023, where a legally enforceable master netting agreement exists, amounts for “Receivables, net – Derivative Contracts” and

“Payables, net – Derivative Contracts” will include net of cash collateral deposited for non-exchange traded derivatives which are subject to

master netting agreements. Collateral deposits receivable are $333 million ($381 million gross collateral deposits receivable less $48 million due

to a netting of collateral deposits receivable and payable).

Amounts in the Derivative Contracts table below represent derivative contracts in a payable position at

September 30, 2023, which PBGC reflects as a liability. Collateral deposits of $495 million, which represent

cash received as collateral on certain derivative contracts, are included.

DERIVATIVE CONTRACTS

September 30, September 30,

(Dollars in millions) 2023 2022

Payables on derivatives:

Collateral deposits $495

$312

Futures contracts 140 210

Interest rate swaps (open trade payable) 31 118

Other derivative swaps (open trade payable) 41 0

Options fixed/equity – income 4 1

Total $711 $641

*Less than $500,000

For FY 2023, where a legally enforceable master netting agreement exists, amounts for “Receivables, net – Derivative Contracts” and “Payables,

net – Derivative Contracts” will include net of cash collateral deposited for non-exchange traded derivatives which are subject to master netting

agreements. Collateral deposits payable are $495 million ($543 million gross collateral deposits payable less $48 million due to a netting of

collateral deposits receivable and payable).

For FY 2022, where a legally enforceable master netting agreement exists, amounts for “Receivables, net – Derivative Contracts” and “Payables,

net – Derivative Contracts” will include net of cash collateral deposited for non-exchange traded derivatives which are subject to master netting

agreements. Collateral deposits payable are $312 million ($359 million gross collateral deposits payable less $47 million due to a netting of

collateral deposits receivable and payable).

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NOTE 5: FAIR VALUE MEASUREMENTS

FASB Accounting Standards Codification Section 820, Fair Value Measurements and Disclosures, provides a

consistent definition of fair value and establishes a framework for measuring fair value in accordance with

U.S. GAAP. It does not require the measurement of financial assets and liabilities at fair value. The standard

is intended to increase consistency and comparability in, and disclosures about, fair value measurements by

giving users better information about how extensively PBGC uses fair value to measure financial assets and

liabilities, the inputs PBGC used to develop those measurements and the effect of the measurements, if any,

on the financial condition, results of operations, liquidity, and capital.

Section 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability

(an “exit price”) in the principal or most advantageous market for an asset or liability in an orderly transaction

between market participants on the measurement date. When PBGC measures fair value for its financial

assets and liabilities, PBGC considers the principal or most advantageous market in which the Corporation

would transact. PBGC also considers assumptions that market participants would use when pricing the asset

or liability. When possible, PBGC looks to active and observable markets to measure the fair value of

identical, or similar, financial assets or liabilities. When identical financial assets and liabilities are not traded in

active markets, PBGC looks to market observable data for similar assets and liabilities. In some instances,

certain assets and liabilities are not actively traded in observable markets, and as a result PBGC uses

alternative valuation techniques to measure their fair value.

In addition, Section 820 establishes a hierarchy for measuring fair value. That hierarchy is based on the

observability of inputs to the valuation of a financial asset or liability as of the measurement date. The

standard also requires the recognition of trading gains or losses related to certain derivative transactions

whose fair value has been determined using unobservable market inputs.

PBGC believes that its valuation techniques and underlying assumptions used to measure fair value conform

to the provisions of Section 820. PBGC has categorized the financial assets and liabilities that PBGC carries

at fair value in the Statements of Financial Position based upon the standard’s valuation hierarchy. The

hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level

1), the next highest priority to pricing methods with significant observable market inputs (Level 2), and the

lowest priority to significant unobservable valuation inputs (Level 3). In addition, PBGC, for certain non-

Level 1 Net Asset Value (NAV) investments, uses a “practical expedient” (i.e., priced without any

adjustments). Non-Level 1 NAV investments that use the practical expedient are displayed in a NAV only

category and are removed from their Level 2 or Level 3 category and added to the new exclusive NAV only

category. The fair value table affected by this guidance is found in PBGC Financial Statements Note 5, Fair

Value Measurements.

If the inputs used to measure a financial asset or liability cross different levels of the hierarchy, the

categorization is based on the lowest level input that is significant to the fair value measurement. PBGC’s

assessment of the significance of a particular input to the overall fair value measurement of a financial asset or

liability requires judgment, and considers factors specific to that asset or liability, as follows:

Level 1 - Financial assets and liabilities whose values are based on unadjusted quoted prices for identical

assets or liabilities in an active market. PBGC’s Level 1 investments primarily include exchange-traded equity

securities and certain U.S. Government securities.

Level 2 - Financial assets and liabilities whose values are based on quoted prices for similar assets and

liabilities in active markets. PBGC also considers inputs that are observable for the asset or liability, either

directly or indirectly, for substantially the full term of the asset or liability. Level 2 inputs to the valuation

methodology include:

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

• Quoted prices for similar assets or liabilities in active markets. This includes cash equivalents, securities

lending collateral, U.S. Government securities, asset backed securities, fixed foreign investments,

corporate bonds, repurchase agreements, bond forwards, and swaps.

• Quoted prices for identical or similar assets or liabilities in non-active markets. This includes corporate

stock, pooled funds fixed income, pooled funds equity, and foreign investments equity.

• Pricing models whose inputs are observable for substantially the full term of the asset or liability –

included are insurance contracts and bank loans.

• Pricing models whose inputs are derived principally from or are corroborated by observable market

information through correlation or other means for substantially the full term of the asset or liability.

Level 3 - Financial assets and liabilities whose values are based on prices or valuation techniques that require

inputs that are both unobservable in the market and significant to the overall fair value measurement. These

inputs reflect PBGC’s judgment about the assumptions that a market participant would use in pricing the

asset or liability and based on the best available information. The inputs or methodology used for valuing

securities are not necessarily an indication of the risk associated with investing in those securities. PBGC

includes instruments whose values are based on a single source such as a broker, pricing service, or dealer,

which cannot be corroborated by recent market transactions. These include fixed maturity securities such as

corporate bonds that are comprised of securities that are no longer traded on the active market and/or not

managed by any asset manager. Equity securities such as corporate stocks are also included, comprised of

securities that are no longer traded on the active market and/or not managed by any asset manager. Real

estate funds that invest primarily in U.S. commercial real estate are valued based on each underlying

investment within the fund/account; they incorporate valuations that consider the evaluation of financing

and sale transactions with third parties, expected cash flows and market-based information, including

comparable transactions, and performance multiples, among other factors. The assets and liabilities that

PBGC carries at fair value are summarized by the three levels required by Section 820 in the following table.

The fair value of the asset or liability represents the “exit price” – the price that would be received to sell the

asset or paid to transfer the liability.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS AS OF SEPTEMBER 30, 2023

(Dollars in millions)

Investment

Measured at

Net Asset

Value (NAV)

Quoted

Market Prices

in Active

Markets

(Level 1)

Pricing Methods

with Significant

Observable

Market

Inputs

(Level 2)

Pricing

Methods with

Significant

Unobservable

Market Inputs

(Level 3)

Total Net

Carrying

Value in

Statements

Financial

Position

Assets

Cash and cash equivalents

$ -

$ 111

$13,542

$ -

$13,653

Securities lending collateral

6,753

Investments:

Fixed maturity securities

U.S. Government securities

54,327

Commercial paper/securities

purchased under repurchase

agreements

354

Asset backed/Mortgage backed

securities

11,630

Pooled funds

Pooled funds fixed maturity

securities at NAV

at NAV

2,3

1,304

Corporate bonds and other

17,171

16,255 ,-

International securities

6,225

14,042

Total Fixed Maturity Securities

1,304

89,707

91,041

Equity securities:

Domestic

824

International

2,618

Pooled funds

Pooled funds equity securities

NAV

2,3

9,848

Total Equity Securities

9,848

3,471

13,374

Private equity at NAV

195

Real estate and real estate

investment trusts

1,087

Real estate and real estate

investment trusts at NAV

522

Total Real Estate

522

1,087

1,613

Insurance contracts and other

Investments

259

277

Receivables:

Derivative contracts

356

405

761

xxx

Liabilities

Payables:

Derivative contracts

145

566

711

xxx

* Less than $500,000.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

For securities lending details, please refer to the Securities lending section in Note 3 – Investments.

Pooled funds fixed and Pooled funds equity consists of domestic, international and global/other.

Certain investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent) practical expedient have been

excluded from fair value hierarchy. See Significant Accounting Policies – Note 2.

Where a legally enforceable master netting agreement exists, amounts for “Receivables, net – Derivative Contracts” and “Payables, net –

Derivative Contracts” will include net of cash collateral deposited for non-exchange traded derivatives which are subject to master netting

agreements. Collateral deposits receivable are $333 million ($381 million gross collateral deposits receivable less $48 million due to a netting

of collateral deposits receivable and payable). Collateral deposits payable are $495 million ($543 million gross collateral deposits payable less

$48 million due to a netting of collateral deposits receivable and payable).

Derivative contracts receivables are comprised of open receivable trades on futures, swaps, and collateral deposits. See the Derivative Contracts

table under Note 4.

Derivative contracts payables are comprised of open payable trades on futures, swaps, options, and collateral deposits. See the Derivative

Contracts table under Note 4.

CHANGES IN LEVEL 3 ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A

RECURRING BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2023

(Dollars in

millions)

Fair Value

September

30, 2022

Total

Realized

and

Unrealized

Gains

(Losses)

included in

Income

Purchases

Sales

Transfers

Into

Level 3

Transfers

Out of

Level 3

Fair Value

September

30, 2023

Change in

Unrealized

Gains

(Losses)

Related to

Financial

Instruments

held at

September

30, 2023

Assets:

Fixed Securities

$21

(1)

(21)

$40

Equity Securities

(2)

Private Equity

$ -

Real Estate &

Real Estate

Investment

Trusts

$10

(2)

(4)

($1)

Insurance and

Other

$282

(28)

(83)

$259

($42)

* Less than $500,000

Amounts included in this column solely represent changes in unrealized gains and losses and cannot be derived from other columns from this table.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

Pursuant to FASB Accounting Standards Codification Section 820, Fair Value Measurement, Disclosures for

Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent); additional disclosures for

Investments priced at Net Asset Value are discussed below.

FAIR VALUE MEASUREMENTS OF INVESTMENTS THAT ARE MEASURED AT NET ASSET

VALUE PER SHARE (OR ITS EQUIVALENT) AS A PRACTICAL EXPEDIENT FOR THE YEAR

ENDED SEPTEMBER 30, 2023

Net Asset Value

(in millions)

Unfunded

Commitments

1,2

Redemption

Frequency (If

Currently Eligible)

Redemption

Notice Period

Real estate (a)

$ 522

$ 17

n/a

Private equity (b)

195

n/a

Pooled funds (c)

11,152

n/a

Total

$11,869

$74

Unfunded amounts include recallable distributions. A substantial portion of the unfunded commitments is unlikely to be called.

These amounts include unfunded commitments that are measured at Net Asset Value.

a. This class includes public and private real estate investments that invest primarily in U.S. commercial real

estate and U.S. residential real estate. For the private real estate investments, the fair value of each

individual investment in this class has been estimated using the net asset value of PBGC's ownership

interest in partners’ capital. Generally, these investments do not have redemption provisions.

Distributions from each asset include periodic income payments and the proceeds from the sale of the

underlying real estate assets. The underlying real estate assets can generally be held indefinitely from the

inception date of the investment. There are no plans to sell PBGC’s interest in private real estate fund

investments in this class in the secondary market. The public real estate investment is an investment in a

unit trust that is intended to match the return of a REIT index. Units reflect a pro-rata share of the fund’s

investments. The per unit net asset value is determined each business day based on the fair value of the

fund’s investments. Issuances and redemptions are possible at least monthly when a per unit value is

determined and are based upon the closing per unit net asset value.

b. This class includes private market investments that invest primarily in U.S. buyout and U.S. venture

capital funds. These investments do not generally have redemption provisions. Instead, investments in

this class typically make distributions which result from liquidation of the underlying assets of the funds.

These distributions can extend 10 years or more from the inception of each individual fund. The fair

value of each individual investment has been estimated using the net asset value of PBGC's ownership

interest in partners’ capital.

c. This class includes investments in unit trusts that are intended to match or outperform the returns of

domestic and international indices. Units reflect a pro-rata share of the fund’s investments. The per unit

net asset value is determined each business day based on the fair value of the fund’s investments.

Issuances and redemptions are possible at least monthly when a per unit value is determined and are

based upon the closing per unit net asset value.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

PBGC uses recent prices of group annuities to derive the interest factors used to calculate the present value

of future benefit-payment obligations. PBGC determines the interest-factor set that, when combined with a

specified mortality table, produces present values that approximate the prices private insurers would charge to

annuitize the same benefit-payment obligations.

Based on this valuation and in accordance with the provisions of the FASB Accounting Standards

Codification Section 820, Fair Value Measurements and Disclosures, the significant unobservable inputs for the

liability is the interest factor risk for Level 3 fair value measurements. A change in interest factors has an

impact to the calculation of PBGC’s PVFB, and the impact will be reflected in the “Due to change in interest

factors.” The table below summarizes the hypothetical results of using a 100 basis point difference causing

the PVFB liability to increase (decrease) with a corresponding decrease (increase) in the interest factors.

Furthermore, any such hypothetical change in the PVFB liability would have a corresponding effect on “Due

to change in interest factors” expense.

HYPOTHETICAL AND ACTUAL INTEREST FACTOR SENSITIVITY CALCULATIONS OF PVFB

SINGLE-EMPLOYER TRUSTEED PLANS AND MULTIEMPLOYER PROGRAM

September 30, 2023

Sensitivity Factors

Official Factors

Sensitivity Factors

(Dollars in millions)

Curve of One-Year Spot

Rates (Interest Factors) -

Varies Annually from 5.30%

in year 1 for 30 years, 4.55%

thereafter

Curve of One-Year Spot

Rates (Interest Factors) -

Varies Annually from 6.30%

in year 1 for 30 years, 5.55%

thereafter

Curve of One-Year Spot

Rates (Interest Factors) -

Varies Annually from 7.30%

in year 1 for 30 years, 6.55%

thereafter

Single-Employer Program

$79,287

$73,775

$69,040

Multiemployer Program

2,422

2,211

2,031

Total

$81,709

$75,986

$71,071

Level 3 Fair Value Measurements.

Actual Spot Curve factors and PVFB amounts calculated for September 30, 2023, fiscal year-end financial statements.

Gross PVFB liability for trusteed plans prior to the netting of recoveries.

Liability for the Single-Employer Program included the 10/01/2023 $498 million benefit payment made on 09/29/2023.

NOTE 6: PRESENT VALUE OF FUTURE BENEFITS

The present value of future benefits (PVFB) is the estimated liability for future pension benefits that PBGC is

or will be obligated to pay for trusteed plans and plans pending termination and trusteeship. For financial

statement purposes, the net assets of plans pending termination and trusteeship (including estimated

recoveries, assets, and miscellaneous liabilities) are included in the line item “Plans Pending Termination and

Trusteeship.” The estimated losses on probable future plan terminations are also included in the total PVFB

liability. The PVFB liability is stated as the actuarial present value of estimated future benefit payments.

PBGC uses a curve of interest factors to determine the estimated actuarial present value of future benefit

payments (as well as projected multiemployer nonrecoverable future financial assistance as discussed in Note

7). PBGC surveys insurance industry group annuity prices through the American Council of Life Insurers

(ACLI) to obtain input needed to determine interest factors and then derives a 30-year curve of interest

factors that together with the latest Society of Actuaries’ (SOA) mortality table best matches the private sector

average group annuity prices from the ACLI surveys.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

The yield curve of interest factors is adjusted to best fit the average survey group annuity prices which include

unobserved factors such as: actual insurer mortality tables and mortality improvement expectations,

regulatory capital requirements, risk perspective, profit expectations, etc. Many factors including Federal

Reserve policy, changing expectations about longevity risk, and competitive market conditions may affect

these interest factors.

The interest factors determined as the best fit for the price information from the two most recent ACLI

surveys, as of June 30, 2023 and March 31, 2023, have been adjusted to the date of the financial statements

using market interest rates. For this purpose, underlying market interest rates are based on a weighted average

of corporate and treasury bond rates using rate information obtained from the Intercontinental Exchange

(ICE) index data platform. Corporate bond rates are from the ICE AAA-A3 market-weighted corporate bond

spot curve which is based primarily on single A bond rates. Treasury rates are from the ICE U.S.

Government spot curve. In PBGC’s opinion, the liability for future benefit payments, net of administrative

expenses, could be settled in the market for single-premium nonparticipating group annuities issued by

private insurers at September 30, 2023 using these developed interest factors.

To derive the curve of interest factors, PBGC used the latest Society of Actuaries’ (SOA) mortality table (Pri-

2012 blended table based on the Employee and Non-Disabled mortality tables) and the MP-2021 mortality

improvement scales. The latest SOA mortality table is PBGC’s best estimate of the mortality assumption

being used by insurance companies to determine group annuity premiums.

The table below shows a comparison of the September 30, 2023 and September 30, 2022 spot rate yield

curves. Future payments are discounted by the single spot rate applicable for the future year in which the

payment is made. For September 30, 2023, the spot rate yield curve starts with an interest factor of 6.30% in

year 1 and changes as the future period for discounting gets longer until year 30 when the factor becomes

5.55% and is assumed to remain level thereafter. For September 30, 2022, the spot rate yield curve started

with an interest factor of 5.12% in year 1 and changed as the future period for discounting got longer until

year 30 when the interest factor became 4.76% and was assumed to remain level thereafter.

CURVE OF SPOT RATES FOR SEPTEMBER 30, 2023 AND SEPTEMBER 30, 2022

Period

(in

Years)

09/30/2023 09/30/2022 Change

Period

(in

Years)

09/30/2023 09/30/2022 Change

1 6.30% 5.12% 1.18% 16 6.07% 5.43% 0.64%

2 6.07% 5.28% 0.79% 17 6.11% 5.48% 0.63%

3 5.95% 5.44% 0.51% 18 6.14% 5.52% 0.62%

4 5.88% 5.48% 0.40% 19 6.17% 5.56% 0.61%

5 5.83% 5.47% 0.36% 20 6.18% 5.58% 0.60%

6 5.81% 5.43% 0.38% 21 6.19% 5.59% 0.60%

7 5.80% 5.37% 0.43% 22 6.18% 5.57% 0.61%

8 5.81% 5.32% 0.49% 23 6.15% 5.54% 0.61%

9 5.82% 5.28% 0.54% 24 6.11% 5.48% 0.63%

10 5.85% 5.26% 0.59% 25 6.05% 5.41% 0.64%

11 5.88% 5.26% 0.62% 26 5.98% 5.31% 0.67%

12 5.91% 5.27% 0.64% 27 5.89% 5.19% 0.70%

13 5.95% 5.30% 0.65% 28 5.79% 5.06% 0.73%

14 5.99% 5.33% 0.66% 29 5.67% 4.91% 0.76%

15 6.03% 5.38% 0.65% 30 5.55% 4.76% 0.79%

5.55% 4.76% 0.79%

Longer Periods

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

PBGC uses a fully generational mortality assumption, in combination with the spot rates above, to measure

the PVFB. Based on the results of a preliminary 2022 study of PBGC’s single-employer mortality experience

(completed September 14, 2022), an updated mortality assumption was adopted for the September 30, 2022,

and subsequent Financial Statements. The study was based on PBGC’s single-employer experience from fiscal

years 2017 through 2021. The study recommended the use of the Pri-2012 Total Dataset Mortality tables

combined with specific ten-year age band adjustments from ages 55 to 104 for healthy participants and setting

ages forward or backward for disabled participants depending on a disabled participant’s gender and eligibility

for Social Security. The resulting tables are projected generationally using the most currently available

projection scale, which is Scale MP-2021. The preliminary 2022 mortality study was finalized on February 17,

2023. As a result, the mortality assumption was updated for the June 30, 2023 and subsequent financial

statements. The final morality study includes an additional experience year (2022) in the analysis and

recommended revisions to the previously updated healthy and disabled mortality tables. Separate base

mortality rates for annuitants and non-annuitants are now being applied and were determined based on

experience through September 30, 2019, resulting in changes to the age band adjustments developed in the

preliminary mortality study. In addition, adjustments to the mortality improvement assumption were

developed based on mortality experience for the calendar years 2020-2022 to reflect anticipated future effects

of the COVID-19 pandemic. The updates to the MP-2021 mortality improvement scale for anticipated excess

mortality are as follows: 2023: 5%, 2024: 4%, 2025: 3%, 2026: 2%, 2027: 1%, 2028 and beyond: 0%.

Thus, the mortality tables PBGC used to determine liabilities as of September 30, 2023, consisted of the Pri-

2012 Total Dataset Annuitant and Non-Annuitant Mortality Tables Healthy Male and Female with the age

band adjustments noted above projected generationally with the MP-2021 improvement scales and

adjustments for expected excess mortality for years 2023-2027.

Based on the results of a 2023 study of PBGC’s case administration expenses, an updated expense

assumption was adopted for the September 30, 2023, and subsequent financial statements. The expense

reserve remained as 0.68% of the PVFB but the additional reserves decreased for plans in which plan asset

valuations, participant database audits, and actuarial valuations were not yet complete. In addition to the

completion of these milestones, PBGC continues to base the reserve on plan size, number of participants,

and time since trusteeship. The expense loading factor of 0.68% for ongoing benefit payments represents the

estimate of expenses incurred from the ongoing payment of administrative expenses for participants receiving

benefits. The expense factors are applied to current data to calculate expense liabilities for each financial

statement close. For September 30, 2023, year-end, PBGC used the new expense reserve factors for

administrative expenses.

PBGC has in place a policy that allows the Corporation to not decrease a final benefit determination that is

overstated by $5 or less. The effect of this policy is carried through to the calculation of the PVFB liability.

The PVFB for trusteed plans for FY 2023 and FY 2022 reflect the payment of benefits and the changes in

interest and mortality assumptions, expected interest, and the effect of experience. The resulting liability

represents PBGC’s best estimate of the measure of anticipated experience under these programs.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

The table below summarizes the actuarial adjustments, charges, and credits that explain how the

Corporation’s Single-Employer Program liability for the PVFB changed for the fiscal year ended September

30, 2023, and for the fiscal year ended September 30, 2022.

RECONCILIATION OF THE PRESENT VALUE OF FUTURE BENEFITS FOR THE YEARS

ENDED SEPTEMBER 30, 2023 AND 2022

(Dollars in millions)

September 30,

2023

2022

Present value of future benefits, at beginning

of year -- Single-Employer, net

$78,332

$108,929

Estimated recoveries, prior year

128

150

Assets of terminated plans pending trusteeship, net, prior year

2,885

3,643

Present value of future benefits at beginning of year, gross

81,345

112,722

Settlements and judgments, prior year

(17)

Net claims for probable terminations, prior year

(221)

(254)

Actuarial adjustments -- underwriting:

Changes in method and assumptions

520

(1,636)

Effect of experience

(611)

299

Total actuarial adjustments -- underwriting

(91)

(1,337)

Actuarial charges -- financial:

Expected interest

3,909

483

Change in interest factors

(2,941)

(24,061)

Total actuarial charges -- financial

968

(23,578)

Total actuarial charges, current year

877

(24,915)

Terminations:

Current year

1,425

600

Changes in prior year

(3,544)

Total terminations

(2,119)

613

Benefit payments, current year

(6,061)

(7,042)

Estimated recoveries, current year

(165)

(128)

Assets of terminated plans pending trusteeship, net, current year

(13)

(2,885)

Settlements and judgments, current year

Net claims for probable terminations:

Future benefits

668

523

Estimated plan assets and recoveries from sponsors

(382)

(302)

Total net claims, current year

286

221

Present value of future benefits,

at end of year -- Single-Employer, net

73,929

78,332

Present value of future benefits,

at end of year -- Multiemployer

Total present value of future benefits, at end of year, net

$73,929

$78,332

* Less than $500,000 (actual amount is $21,902 and $31,481 for the 10 Pre-MPPAA (Multiemployer Pension Plan Amendments Act) trusteed

multiemployer plans at September 30, 2023, and September 30, 2022, respectively).

The benefit payments of $6,061 million for FY 2023, include a net credit of $259 million due to the reversal of accrued benefit payments for J.C.

Penney as the company completed a standard termination and for benefits paid from plan assets prior to trusteeship, compared to $7,042 million for

FY 2022, which includes $158 million payment in FY 2022, for benefits paid from plan assets prior to trusteeship.

PBGC determined it is highly unlikely that more than half of the total potential future Page/Collins settlement liability will be paid. Accordingly,

PBGC estimates that PBGC's future Page/Collins settlement liability amount was $17 million at both September 30, 2023, and September 30, 2022.

Net claims of future benefits for probable terminations of $286 million and $221 million at September 30, 2023, and September 30, 2022,

include $174 million and $3 million, respectively, for specifically identified probable terminations, and $112 million and $218 million,

respectively, for not specifically identified probables.

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

The following table details the assets that make up single-employer terminated plans pending termination and

trusteeship:

ASSETS OF SINGLE-EMPLOYER PLANS PENDING TERMINATION

AND TRUSTEESHIP, NET

Basis Market Basis Market

(Dollars in millions) Value Value

U.S. Government securities $ - $ - -$ -$

Corporate and other bonds 3 3 1,839 1,833

Equity securities 7 7 1,311 1,307

Private equity - - 5 7

Insurance contracts 0 * 0 * 2 2

Other 3 3 (264) (264)

Total, net $13 $13 $2,893 $2,885

* Less than $500,000

September 30, 2023

September 30, 2022

NET CLAIMS FOR PROBABLE TERMINATIONS

Factors that at present are not fully determinable may be responsible for why these claim estimates differ

from actual experience. Included in net claims for probable terminations is a provision for future benefit

liabilities for plans not specifically identified. This reserve for small unidentified probable losses is recorded

for the estimated future contingent losses stemming from insured single-employer plans with an aggregate

underfunding of less than $50 million. The reserve is based on the historic three-year rolling average of actual

plan terminations (with an aggregate underfunding of less than $50 million) and indexed to the S&P 500 to

reflect changes in economic conditions. The September 30, 2023, Net Claims for Probable Terminations is

$286 million, of which $174 million is from a specific identification process and $112 million is from the

reserve for small unidentified probable losses.

The values recorded in the following reconciliation table have been adjusted to the expected dates of

termination.

RECONCILIATION OF NET CLAIMS FOR PROBABLE TERMINATIONS

September 30,

(Dollars in millions)

2023

2022

Net claims for probable terminations, at beginning of year

$221

$254

New claims

174

Actual terminations

(135)

Deleted probables

(3)

Change in benefit liabilities

(106)

Change in plan assets

Loss (credit) on probables

(33)

Net claims for probable terminations, at end of year

$286

$221

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

F Y 2 0 23 | A N N U A L R E P O R T

The following table itemizes specifically identified single-employer probable exposure by industry:

PROBABLES EXPOSURE BY INDUSTRY (PRINCIPAL CATEGORIES)

(Dollars in millions)

FY 2023

FY 2022

Retail

$ -

Manufacturing

Transportation, Communication and Utilities

174

Total

$174

Total excludes a small unidentified bulk reserve of $112 million and $218 million for September 30, 2023 and September 30, 2022, respectively.

For further detail regarding single-employer probables, see Note 2 under Present Value of Future Benefits

(PVFB) subpoint (4).

The following table shows what has happened to plans classified as probable. This table does not include

those plans that were classified as probable and then subsequently terminated within the same fiscal year.

ACTUAL PROBABLES EXPERIENCE

As Initially Recorded Beginning in 1987

(Dollars in millions)

Status of Probables from 1987-2022 at September 30, 2023

Beginning in 1987, number of plans reported

as Probable:

Number

of Plans

Percent

of Plans

Net Claim

Percent

of Net

Claim

Probables terminated

391

79%

$35,941

75%

Probables not yet terminated or deleted

Probables deleted

104

21%

12,058

25%

Total

495

100%

$47,999

100%

P E N S I O N B E N E F I T G U A R A N T Y C O R P O R A T I O N

100

F Y 2 0 23 | A N N U A L R E P O R T

NOTE 7: MULTIEMPLOYER FINANCIAL ASSISTANCE

PBGC provides traditional financial assistance to multiemployer defined benefit pension plans in the form of

loans (generally unsecured). Since these loans for non-SFA eligible plans are not generally repaid, an

allowance is set up to the extent that repayment of these loans is not expected. Given the enactment of ARP,

plans eligible to receive SFA funds once approved, are required to repay the traditional financial assistance

received (a plan obligation) and thus are reflected in PBGC’s notes receivable net balance below.

NOTES RECEIVABLE MULTIEMPLOYER TRADITIONAL FINANCIAL ASSISTANCE

September 30, September 30,

(Dollars in millions) 2023 2022

Gross balance at beginning of year $2,726 $2,634

Financial assistance payments 176 218

Financial assistance - premiums waived 3 3

Write-offs related to settlement agreements - 0 *

SFA Repayments (147) (213)

Change in accrued interest on notes receivable 156 84

Subtotal 2,914 2,726

Allowance for uncollectible amounts (2,865) (2,528)

Net balance at end of year $49

$198

* Less than $500,000

¹ This receivable balance of $49 million (financial assistance plus interest that is expected to be returned to PBGC) represents

the reduction to the allowance for uncollectible amounts relating to the insolvent plans that became eligible for Special

Financial Assistance (SFA).

The Underwriting losses from financial assistance (insolvent plans) and probable financial assistance reflected

in the Statements of Operations include period changes in the estimated present value of nonrecoverable

future financial assistance. The financial expenses related to financial assistance are presented as actuarial

charges, credits, and adjustments for plans that are known to be insolvent as of the valuation date and/or

have begun or are about to begin receiving financial assistance. In addition, a change in the valuation of the

liability due to new data received (e.g., new plan expenses, more recent valuation liabilities, and new

withdrawal payment schedules) is included as financial assistance from insolvent and probable plans on the

Statements of Operations. This valuation data change is a separate line item from actuarial adjustments and

actuarial charges.