The Pension Benefit Guaranty Corp., which insures retirement plans covering 44 million workers and retirees, says the net loss for its multiemployer-plan program widened significantly in fiscal year 2006. It also reports that multiemployer plans, which cover millions of retirees and workers in construction and other industries, remain severely underfunded, though there was improvement from 2005.

In its annual management report, sent to Congress Nov. 15, the PBGC said its multiemployer-plan insurance program recorded a net loss of $404 million in fiscal 2006, compared with a $99-million loss in 2005. The agency said its aid to multiemployer plans rose by $257 million, offset only partly by a $32-million increase in premium revenue.

PBGC also estimates multiemployer plans' underfunding at $150 billion, down from $200 billion in 2005.

Recently enacted pension legislation includes provisions aimed at strengthening multiemployer plans. But the results from those changes, which were backed by an industry-labor coalition, aren't expected to be seen for a couple of years. Heidi Blumenthal, Associated General Contractors' congressional relations director for tax and fiscal affairs, says that multiemployer plan trustees are "all looking for ways to make their plans healthier."

About half of the 1,540 PBGC-insured multiemployer plans, and 30% of the nearly 10 million workers and retirees those plans cover, are in construction. Multiemployer plans are pension programs that are collectively bargained between unions and multiple employers, usually in the same industry.

When a multiemployer plan becomes statutorily insolvent, the PBGC steps in with loans to the plan to pay benefits at a guaranteed level. Workers with 30 years under a multiemployer plan are guaranteed a maximum of $12,870 per year, a much lower sum than the guarantees under PBGC's single-employer pension plan program.

PBGC's program for single-employer plans is much larger, covering about 34 million workers and retirees in 28,800 plans. When a single-employer plan is terminated, the agency takes over the plan as its trustee.

Looking at its overall picture, combining results from single- and multi-employer programs, the agency reports its total deficit narrowed in 2006 to $18.1 billion, from $22.8 billion the year before. It attributes most of the improvement to provisions granting relief to airline companies in the new Pension Protection Act, signed into law Aug. 17. As a result of those provisions, some major airline plans that had been categorized as "probable" terminations were reclassified, which had a positive effect on PBGC's balance sheet.

Senate Finance Committee Chairman Charles Grassley (R-Iowa) said, "It's good to see the new pension reforms already working as intended…But I don't want to overstate the reforms as a panacea for all pension funding problems. They'll make a difference, but Congress needs to stay on top of the situation."