Obama signs bill boosting PBGC premiums, dumping automatic enrollmentReprints
Budget legislation signed into law Monday by President Barack Obama will sharply increase insurance premiums employers pay the Pension Benefit Guaranty Corp., while also repealing the health care reform law's automatic enrollment provision.
Under the new law, the PBGC flat-rate premium paid by all defined benefit plan sponsors, will rise to $69 per plan participant in 2017, $74 in 2018 and $80 in 2019.
That compares with the $57 per plan participant rate this year and $64 next year, rates that were set under a 2013 law.
In addition, the new law — the Bipartisan Budget Act of 2015 — will increase the variable-rate premium to $33 per $1,000 of plan underfunding in 2017, $37 in 2018 and $41 in 2019. That compares with $24 this year and $30 next year under existing law.
Earlier, employer groups blasted the sharp hike in premiums, saying that the additional funds will be used to offset the federal budget deficit rather than to meet a new PBGC revenue need.
A Congressional Budget Office analysis of an earlier, similar measure, which called for slightly lower premium increases, projected the measure would result in employers paying an additional $4 billion in PBGC premiums from 2016 through 2025. Last year, employers paid the PBGC just over $3.8 billion in premiums.
Meanwhile, repeal of automatic enrollment involved a health care reform law provision for which rules never were issued because regulators had given it a low priority.
Benefit experts warned that if the automatic enrollment requirement had been implemented, it would have led to messy situations, such as when employers automatically enrolled employees and then found out the employee was enrolled in a health care plan offered by their spouse's employer.