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Employers join forces to oppose new PBGC premium hikes

Employers join forces to oppose new PBGC premium hikes

New hikes in Pension Benefit Guaranty Corp. premiums will have a negative economic impact, resulting in job losses and less money for business investment, according to a letter signed by dozens of employers and sent to federal lawmakers Tuesday.

“Every additional dollar that employers must pay to the PBGC is one dollar less that can be used to fund participant benefits, expand their businesses, create jobs and grow the economy,” according to the letter signed by members of the Pension Coalition, a group of more than 100 employers, trade associations and professional organizations.

“Increased costs associated with our pension program also means less flexibility for us to make investments that strengthen the competitiveness of our company and have a positive economic impact,” Etta Strong, director of compensation and benefits at Owens-Illinois Inc. in Perrysburg, Ohio, said in a statement. Owens-Illinois is a member of the Pension Coalition.

The groups' letter comes amid worries by some business trade groups that federal lawmakers might attach a PBGC premium hike measure — or an administration proposal to transfer from Congress to the PBGC authority to set premium levels — to a broader bill.

Congress last boosted PBGC premiums in December as part of a broader federal budget agreement. The PBGC flat-rate premium, which is paid by all defined benefit plan sponsors, will rise in 2015 to $57 per plan participant and to $64 in 2016. The premium now is $49 per plan participant.

In addition, the variable-rate premium, which is paid by employers with underfunded plans, will increase to $24 per $1,000 of plan underfunding in 2015, up from $14 this year, and to $29 per $1,000 of plan underfunding in 2016.


PBGC executives say the current premium system has to be changed. “We agree that PBGC premiums need to be reformed,” said PBGC Director Josh Gotbaum in a statement Wednesday.

“It's important to understand that this administration and the previous one supported premium reforms. The President's proposal would allow PBGC's Board to both raise and lower premiums in a way that is fair, affordable, and preserves pensions,” he said.