ERIC Responds to Support for PBGC Setting Premiums

April 22, 2011 ( – In a letter-to-the-editor of the Washington Post, ERISA Industry Committee (ERIC) President Mark Ugoretz said the group takes issue with a Post editorial supporting the ability of the Pension Benefit Guaranty Corp. to determine how much a company that sponsors a pension plan must pay in premiums based on the company’s financial condition.

“The proposal is terrible public policy. Allowing the PBGC — a party with a clear conflict of interest — to set and collect premiums would give the agency unwarranted discretionary authority to determine the creditworthiness of companies because they sponsor pension plans. The proposal would punish employers recovering from economic difficulty and interfere with companies’ ability to borrow, and it amounts to another incentive for employers to drop their pension plans,” Ugoretz wrote.  

He pointed out that the Government Accountability Office has criticized the PBGC for failing to meet sound governance standards (see PBGC Needs Help with Larger Seized Plans). “Until companies can be assured that the agency is properly governed, the administration’s proposed changes should not be considered,” he wrote.  

Ugoretz concluded: “What needs to be done is to fix pension funding volatility, encourage employers to sponsor pensions and address PBGC governance.”