Obama renews call to hike PBGC premiums

WASHINGTON—President Barack Obama, in proposals Wednesday to reduce the federal budget deficit by $4 trillion over 12 years, repeated his plan to give the Pension Benefit Guaranty Corp. authority to set premiums.

The proposal, outlines in President Obama’s fiscal year 2012 federal budget on Feb. 14, would give the agency the authority to increase premiums that companies pay into the system.

That increase was projected to save the PBGC an estimated $16 billion over a decade.

Congress controls

Congress, which currently holds authority to adjust the premium, most recently raised it in 2005 to $30 per year per plan participant. The base premium is indexed to inflation and currently is $35 per year per participant. Underfunded plans pay an additional so-called variable-rate premium.

The debt-reduction plan announced Wednesday also notes that President Obama “does not believe that Social Security is in crisis or is a driver of our near-term deficit problems” but faces long-term challenges that must be addressed soon. He called on Republicans and Democrats to work together to strengthen Social Security without privatizing the program.

Timothy Inklebarger is a reporter for Pensions & Investments, a sister publication of Business Insurance.