<nobr>Dec 21, 2005</nobr>

Senate Amends Budget Bill Containing PBGC Premium Hike; House Action Required

The Senate passed a budget reconciliation bill that increases PBGC premium taxes (S.1932, Title VIII, section 8201) on December 21 with the Vice-President breaking a 50-50 tie. The Senate failed to waive budget rules that required the chair to remove three provisions in the bill unrelated to the rate increase, requiring that the House agree to the modified version before the bill can be sent to the president for his signature. On Sunday, the House approved 212-206 the original bill. The House will likely try to pass the Senate version tomorrow by voice vote when it reconvenes. If a roll call vote is required, action on the bill could be delayed significantly with the House scheduled to recess until the end of January and many Members having already left town.

The bill increases PBGC fixed-rate premiums effective January 1, 2006 and may take precedence over premium increase provisions included in H.R.2830 and S.1783. Under the budget bill, the flat rate premium would increase to $30 (indexed) beginning in 2006. The variable-rate premium is not affected. A special premium of $1250 per participant would apply for up to three years to companies emerging from bankruptcy that had turned their plans over to the PBGC after December 31, 2005 or that had filed for bankruptcy prior to October 18, 2005. The bill also would request a study from the Government Accountability Office (GAO) on the effect of this special PBGC premium on plan sponsors who have filed for Chapter 11 bankruptcy protection.

Text Files:

S. 1932

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