Under the bill approved by the House Education and Workforce Committee, the yearly charge for having private-sector pensions insured by the Pension Benefit Guaranty Corporation (PBGC) would go from the current $19 to $30 in 2006, according to an Associated Press report. After that, the bill gives the agency the right to seek annual premium increases of up to 20% for the next four years. Congress, however, could disapprove any increase.
The proposed increase would pump $6.2 billion over the next five years into the agency’s coffers; it currently labors under a $23 billion shortfall.
The committee approved the measure as part of package for cutting federal budget deficits by $35 billion over the next five years. It also would charge companies that have gone through bankruptcy and terminated their pension plans $3,750 for each participant in the plan.
The Senate Health, Education, Labor and Pensions Committee passed its own version of the plan last week that would raise the PBGC premium to $46.75. The Senate version, however, does not include the option to enact future premium increases of up to 20% annually.
Both the House and Senate also are working on comprehensive pension reform bills that, in addition to raising the premium, would tighten funding rules to guarantee that employees get benefits promised them when they retire. Both of those bills also include a premium boost to $30.
US Representative John Boehner,(R-Ohio), chairman of the House Education and Workforce Committee said that while his amendment will provide the PBGC with short-term help, any “comprehensive reform” passed this year will take precedence over this measure.
“The health of our nation’s worker pension system is a bottom line concern for American taxpayers,” Boehner said in a statement. “While today’s vote to strengthen PBGC funding is an important reflection of that fact, it is far more critical that we enact a comprehensive measure to overhaul our antiquated pension laws on behalf of workers, retirees, and taxpayers.”
Representative George Miller (D-California), the House panel’s senior Democrat, said he reluctantly supported the proposal but added that the “increases will serve no purpose” without it.
More information about the pension reform debate held by Boehner’s committee is here .
More information about the Bush Administration’s pension proposal is here .