Bill would take PBGC premiums 'off budget'
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Joining their House of Representatives colleagues, a group of senators introduced legislation that would end a widely reviled budget-balancing “gimmick” of increasing the premiums employers must pay to the Pension Benefit Guaranty Corp.
The legislation, S. 3240, introduced Thursday by Sen. Mike Enzi, R-Wyo., and co-sponsored by Sens. Lamar Alexander, R-Tenn., and Johnny Isakson, R-Ga., would repeal part of a 1980 law that allows PBGC premiums to be counted as general revenue when it comes to balancing the federal budget.
The premiums, however, are used exclusively to help the PBGC pay pension benefits in plans it has taken over from employers who get in financial trouble or go out of business.
“The proposed measure would ensure that premiums paid to the PBGC are no longer counted as general fund revenue. This would eliminate the perverse incentive for Congress to raise PBGC premiums in order to pay for unrelated spending, as has happened three times in the last four years,” the American Benefits Council in Washington said in a statement.
The flat-rate PBGC premium that all defined benefit plan sponsors must pay is $64 per participant this year. Under legislation passed last year, that rate will rise annually, reaching $80 in 2019.
In addition, the 2015 law raised the so-called variable-rate premium for underfunded plans to $33 per $1,000 of plan underfunding in 2017, $37 in 2018 and $41 in 2019. That compares with $30 this year.
According to an earlier Congressional Budget Office report, the 2015 law will cost employers an additional $4 billion in PBGC premiums through 2025.
Similar legislation, H.R. 4955, was introduced in the House in April by Rep. Jim Renacci, R-Ohio. No congressional action has been taken on that bill.
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