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ASPPA Urges Congress to Oppose Higher PBGC Premiums

ASPPA and other groups that represent thousands of employers urged the U.S. Senate and the House of Representatives in separate letters to oppose any efforts to further increase premiums paid to the Pension Benefit Guaranty Corporation by sponsors of single-employer DB plans. “We urge you to protect these job-creators, workers, and their retirement security,” wrote ASPPA and the other signatories. 

They argue that Congress already has recently passed legislation to hike PBGC premiums by almost $17 billion over 10 years, and that came when employers were already paying more than $2.64 billion in premiums annually to protect the pension benefits they voluntarily provide more than 32 million participants. 

Increased premiums, they maintain, will be detrimental to employers and the economy. “Every additional dollar that employers must pay to the PBGC is one less dollar that can be used to fund participant benefits, expand their businesses, create jobs, and grow the economy. Additional PBGC premium increases, when added to the multi-billion dollar increases enacted in 2006, 2012, and 2013, could divert additional resources from job creation and business investment,” the letters assert.  

They point out that employers must budget and plan in advance for cost increases, and that in many cases, a PBGC tax hike means they will have less money for other investments. They estimate that Congress could save an average of 24,500 jobs per year by rejecting additional premium increases, such as the proposal to expand the PBGC’s authority to set premiums. 

Further increasing PBGC premiums is effectively a tax on employers, they argue. But it would only be imposed on employers that voluntarily provide DB plan benefits, they add. 

And they question whether the PBGC even needs the money in the first place. They point out that in the 2013 PBGC annual report, the agency said that the “PBGC still has very substantial assets, and the day when we run out of money is years away.” In its 2013 annual report, the PBGC stated that the “PBGC still has very substantial assets, and the day when we run out of money is years away.” 

John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.