Congressmen Jim Renacci, R-Ohio, and Mark Pocan, D-Wisconsin, have introduced legislation to address Pension Benefit Guaranty Corporation (PBGC) premiums.
A news release on Representative Renacci’s website said, “Under current law, pension insurance premiums that are paid by employers to the Pension Benefit Guaranty Corporation (PBGC) are included in the federal budget and are considered ‘on-budget.’ This provides the illusion this revenue can be used for general government spending, even though these premiums cannot be allocated to other government programs besides the PBGC benefit pension plans. In recent years, Congress has increased the PBGC premiums several times in order to offset increased spending; most recently increasing premiums through 2025 by $7.65 billion in the Bipartisan Budget Act of 2015.
“The Pension and Budget Integrity Act simply moves these premiums ‘off-budget,’ and ensures that Congress is raising premiums only if and when it is appropriate.”
In a statement, the ERISA Industry Committee (ERIC), the American Benefits Council, the American Retirement Association, the Committee on Investment of Employee Benefit Assets, the National Association of Manufacturers, the Society for Human Resource Management, and U.S. Chamber of Commerce said the Act would ensure any future pension premium increases are only used towards retiree payments from the PBGC and not double counted for budget scoring purposes, which was the original intent of Congress when the PBGC was created in 1974.
“Discipline is needed to ensure that PBGC premiums are used solely to protect the pension system and not as a budget gimmick to pay for unrelated federal programs,” says Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee. “The predictability of costs is critical as employers weigh whether to continue sponsoring defined benefit plans and there is nothing predictable about Congress raising premiums at any time to pay for other programs.”
Ratings agency Moody’s predicts that PBGC premiums will become unaffordable.