The Underfunding of Single Employer Pension Plans

Published: Jun 24, 1986. Publicly Released: Jun 24, 1986.

Additional Materials:


Office of Public Affairs
(202) 512-4800

In response to a congressional request, GAO provided information on private pension plan underfunding, specifically: (1) its extent and effects; (2) factors contributing to underfunding; (3) the potential of the Single Employer Pension Plan Amendments Act of 1986 to alleviate the effects of underfunded terminations; and (4) alternatives for controlling underfunding. GAO found that: (1) of the 14,500 plans it reviewed, over 2,300 were underfunded by more than $18 billion; (2) over 90 percent of the total underfunding occurred in 275 plans; (3) plan underfunding adversely affects the government's pension plan insurance program and results in employers granting pension benefit increases and funding them over time; (4) as long as employers eventually pay these unfunded benefits and the insurance program remains viable, plan underfunding has a negative impact on few participants; (5) most of the employers with terminated plans experienced business hardship during the 5 years before termination; and (6) the 1986 amendments should help avoid claims from some underfunded plans and better finance claims that do occur, but it is uncertain that they will ensure the insurance program's long-term viability. GAO suggested modifying existing laws to: (1) require more rapid payment of unfunded benefits; (2) require employers to make minimum contributions to their underfunded plans earlier in the plan year; (3) further limit the guarantee of benefit increases; and (4) raise the premium rate for revenue to retire the program's deficit and pay for estimated future claims.

Mar 7, 2018

Mar 5, 2018

Feb 21, 2018

Jan 8, 2018

Oct 18, 2017

Aug 24, 2017

Jul 20, 2017

Apr 24, 2017

Dec 20, 2016

Nov 21, 2016

Looking for more? Browse all our products here