11th-Hour Budget Deal Hikes Pension Premiums, Again
The premiums plan sponsors pay to the PBGC, which already were to rise, were hiked again to pay for a funding deficit just before the House passed the bill.
The Bipartisan Budget Act of 2015 (BBA), passed by the House of Representatives on Tuesday, contains some eye-opening provisions, like suspending the national debt limit through 2017 and significantly raising federal spending caps imposed by the Budget Control Act of 2011.
In the consumer media, less attention is being directed at another aspect of the BBA, but it’s one that has employer groups hopping mad. That is, the act, if passed by the Senate and signed into law as expected, would raise the premiums that pension-plan sponsors pay to fund the Pension Benefit Guaranty Corp.
Until Tuesday, the bill had fixed-rate premiums for single-employer plans increasing from their current, inflation-indexed level of $64 per plan participant in 2016 to $68 in 2017, $72 in 2018, and $78 in 2019. Variable-rate premiums were to be jacked up as well, by $2 over the indexed inflation rate in 2017, $3 in 2018, and $3 in 2019.
But Tuesday, after pro-agriculture legislators successfully lobbied to drop from the bill a proposed cap on the rate of return for federal crop insurance providers, the pension premiums were raised again. Under the amended bill, the single-employer, fixed-rate premium would be $69 in 2017, $74 in 2018, and $80 in 2019, while variable-rate premiums were raised by an additional dollar for all three years. (See chart, provided by the American Benefits Council.) Read more on CFO.