The PBGC wasted no time in responding to a study critical of proposed increases in PBGC premiums. It issued its response on May 14, the same day the Pension Coalition released “Increasing Pension Premiums: The Impact on Jobs and Economic Growth,” reports BenefitsPro. The PBGC agreed that premiums need to be reformed, but also sought to deflect blame for the proposed hikes.
The study by the Pension Coalition, an organization that represents and promotes retirement benefit providers, noted that employer sponsors are still feeling the effects of $17 billion in premium increases already put in place. It also likened the proposed PBGC premium increases to raising taxes.
The Obama administration originally proposed in the 2012 budget giving PBGC's Board the power to set premium rates based on how financial sound a company sponsors were.
In the PBGC’s statement, PBGC Director Josh Gotbaum indicated that the agency concurs that premiums should be reformed, but also laid at least some of the blame for the proposals at Congress’ feet.
In the statement, Gotbaum said, "We agree that PBGC premiums need to be reformed. It's important to understand that this Administration and the previous one supported premium reforms. The President's proposal would allow PBGC's Board to both raise and lower premiums in a way that is fair, affordable, and preserves pensions.
"Unlike the FDIC and other Federal insurance programs, 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."
On the day before the study was released, ASPPA and other groups that represent thousands of employers urged the House and Senate to oppose any efforts to further increase PBGC premiums.
John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.
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