In the paper, the Chamber notes that in the last several years, the defined benefit retirement plan system has faced several significant challenges—industry bankruptcies, an overhaul of the funding rules, demographic changes, and a financial crisis affecting every type of industry and investment. “The Chamber believes that this is the appropriate time to review the governance, policies, and practices of the PBGC to ensure that the PBGC and the defined benefit plan system are able to withstand additional challenges in the future,” the paper says.
While premiums are a primary concern, the Chamber believes that additional changes are needed at the PBGC and, therefore, comprehensive reforms should be considered. For example:
The PBGC should strengthen its commitment to encourage plans sponsors to continue to maintain defined benefit plans.
- The PBGC should recommit itself to the goal of fostering private sector defined benefit plans.
- The PBGC should be a conduit between employers and Congress for conveying concerns and gathering information.
- The PBGC could play a larger role in helping to reduce the plan termination rate.
Changes in PBGC governance are needed to ensure its ongoing viability.
- The PBGC should adopt written governance procedures.
- The number of members on the Board of Directors should be increased.
- The Board of Directors should include plan sponsors. The Chamber recommends representatives from small and large businesses and sponsors of multiemployer plans.
- The terms of the board members should overlap to encourage smooth transition periods.
PBGC premiums should be affordable, administrable, fair, consistent, and predictable. Premiums should not be increased except as part of a long-term plan to address the future of private sector defined benefit plans and the PBGC.
- Decisions to increase PBGC premiums should be part of a comprehensive discussion of changes needed at the PBGC, including governance and methodology.
- Congressional approval of PBGC premium increases should continue to be required.
The PBGC Participant and Plan Sponsor Advocate should be a liaison between the business community and the PBGC.
The Participant and Plan Sponsor Advocate should promote the following issues within the PBGC: A corrections program at the PBGC that is similar to corrections programs within other agencies of jurisdiction; and resolution of plan sponsor concerns with ERISA Section 4062(e).
The PBGC should be more transparent about the modeling systems and assumptions used to calculate its deficit.
The Chamber issued a letter signed by employers and business groups asking the U.S. House of Representatives to oppose further efforts by the Pension Benefit Guaranty Corporation (PBGC) to increase premiums, citing a study about the effect of increasing premiums on jobs and economic growth (see “Employers Urge House to Halt PBGC Premium Increases”). In response to the study, PBGC said “Congress has continued to set PBGC premiums and has done so in ways that both underfunds PBGC and is convincing some companies they shouldn't offer pensions at all.”
The Chamber’s position paper is here.
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