White House Proposes Risk-Based PBGC Premiums

February 14, 2011 (PLANSPONSOR.com) – The White House’s latest budget blueprint released Monday calls for pension insurance premiums charged by the Pension Benefit Guaranty Corp. (PBGC) to go up by $16 billion over ten years.

The Wall Street Journal reports that in a significant policy shift, would levy higher premiums on the riskiest companies. Rather than seeking a simple increase, the administration is asking Congress to give the PBGC authority to fashion a new approach in which premiums would be linked to the financial health of the employer sponsoring the underlying pension plan, the Journal reported.

Under the Obama proposal, the changes wouldn’t take effect for two years-at the earliest-to give the agency time to devise the new system and go through a formal rule-writing process, the Journal said.

“This proposal is both good government and better for business,” PBGC Director Joshua Gotbaum told the Journal. “It protects retirement security while encouraging and rewarding responsible business behavior.”