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Giving the federal agency that guarantees pension plan participants' benefits authority to set insurance premiums paid by plan sponsors should be examined, but getting lawmakers to relinquish that authority would be challenging, the nominee to head the Pension Benefit Guaranty Corp. says.
Giving up that premium setting authority “is an idea worth considering,” but it would be difficult for Congress to give the PBGC such authority, W. Thomas Reeder Jr. said Thursday at a Senate Finance Committee confirmation hearing.
In May, President Obama nominated Mr. Reeder, currently health care counsel at the Internal Revenue Service, to be the next director of the PBGC. He would, if confirmed by the Senate, succeed Joshua Gotbaum, who resigned in September to take a position at the Brookings Institution in Washington.
At his confirmation hearing, several senators asked Mr. Reeder for his views on multiemployer pension plans and the legislation Congress passed in 2014 that allows financially distressed plans to cut participants' promised benefits to prevent the collapse of the plans.
For example, Sen. Maria Cantwell, D-Wash., asked Mr. Reeder why lawmakers bailed out financially troubled banks, but not multiemployer plans.
“Millions of Americans will be left short,” if multiemployer plans fail, Sen. Cantwell warned.
Mr. Reeder said he wished he “had an easy answer” to Sen. Cantwell's question, adding though, that easing financially troubled multiemployer pension problems will involve a combination of steps, including, as the 2014 law allows, reducing participants benefits.
In addition, a high priority should be to make sure the law is administered fairly, Mr. Reeder said.
Lawmakers' focus on multiemployer pension plans is understandable. The 2014 deficit in the PBGC's insurance program that guarantees multiemployer plan benefits in the event of a plan failure was $42.43 billion — more than five times higher than just a year earlier. That $42 billion deficit compares to the $122 million in premiums the nation's 1,400 multiemployers paid the PBGC in 2014 insurance premiums.
Finance Committee Chairman Orrin Hatch, R-Utah, warned Mr. Reeder that, if confirmed by the Senate, that he will have his “work cut out” for him.
Sen. Ron Wyden, D-Ore., said Mr. Reeder “is the right person for this position. We need Mr. Reeder's expertise and integrity,” Sen. Wyden said.
Prior to joining the IRS in 2013, Mr. Reeder was senior benefits counsel on the Finance Committee from 2009 to 2013. From 2000 to 2013, Mr. Reeder also held several positions at the U.S. Treasury Department, including benefits tax counsel and deputy benefits tax counsel.
The number of single-employer pension plans insured by the Pension Benefit Guaranty Corp. continues to tumble.