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Compliance November 11, 2011
Groups Call on Congress to Reject PBGC Premium Increase
November 11, 2011 (PLANSPONSOR.com) - The ERISA Industry Committee (ERIC), along with the American Benefits Council, Business Roundtable, and the U.S. Chamber of Commerce on November 11 warned that the PBGC’s purported deficit is a “non-event on the horizon,” and called on Congress to oppose the proposal to increase PBGC premiums.
Reported by Rebecca Moore
The organizations contend that the PBGC’s justification for the increase is factually incorrect. Last year, the PBGC, based on what is argued to be artificially low interest rates, reported that it had a deficit of $23 billion, and it is expected that the agency in the near future will announce a much larger deficit in order to justify its premium demands.
They argue that the PBGC’s entire deficit is a product of artificially low interest rates.
The proposal to raise PBGC premiums while taking into account an employer’s credit rating is under consideration by the 12-member deficit reduction “Super Committee” that has a November 23 deadline to report out a deficit reduction package of up to $1.5 trillion (see ERIC Pushes Back on PBGC Premium Proposal).
The pension “tax” and the ability of the PBGC to not only increase its own premiums and to base the premiums on the PBGC’s determination of the credit rating of plan sponsors is unprecedented and unacceptable, according to ERIC. Since 1974, Congress has determined the PBGC’s premiums after hearing testimony to justify the request.
The agency recently reported that premiums paid by retirement plan sponsors to the PBGC will remain the same for 2012 (see PBGC Premiums Unchanged for 2012).
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