For Immediate Release
Washington, DC – A group of 7 associations –The ERISA Industry Committee (ERIC), the American Benefits Council, ASPPA College of Pension Actuaries, the Committee on Investment of Employee Benefit Assets, the National Association of Manufacturers, the Society for Human Resource Management, and the U.S. Chamber of Commerce –today sent a letter to Senator Mike Enzi (R-WY) thanking him for introducing the Pension and Budget Integrity Act of 2016. The Act would ensure that premiums paid to the Pension Benefit Guaranty Corporation (PBGC) are no longer counted as general fund revenue, eliminating the motivation for legislators to raise premiums in order to pay for unrelated initiatives and programs.
Established in 1974, the PBGC was created to guarantee adequate funds would be available for pension plans in the event an employer sponsoring a plan enters bankruptcy. The Multiemployer Pension Plan Amendments Act of 1980 changed how premiums were counted and allowed them to be calculated as general fund revenue for budget scoring, even though the premiums are not used to pay for unrelated programs. This change forced sponsors of single-employer defined benefit plans to assume additional financial burdens. In 2015, premium increases were made despite projections that show the single-employer pension system in a good financial health for the next decade.
“The pensions of hard working Americans should not be used by Congress as a gimmick to help raise funds for unrelated programs,” said Annette Guarisco Fildes, president and CEO, The ERISA Industry Committee. “Employers need stability and predictability of cost when sponsoring pension plans. Congress’s history of repeatedly raising PBGC premiums at will is extremely harmful for plan sponsors, plan participants, and the pension system as a whole.”
“In recent years, Congress has been treating PBGC premiums like a piggy bank and single employer premiums are far higher than they should be as a result,” said Judy Miller, Executive Director of the ASPPA College of Pension Actuaries. “The Pension and Budget Integrity Act will end the shell games that Congress plays to raise fake revenue at the expense of the defined benefit system.”
“Every additional dollar that manufacturers must pay to the PBGC is one less dollar that can be used to fund employee benefits, business investments and jobs,” said National Association of Manufacturers Director of Tax Policy Christina Crooks. “Manufacturers support the Pension and Budget Integrity Act to end the cycle of unnecessary PBGC premium increases that are effectively a tax on the employers that provide defined benefit pension plans.”
“The PBGC itself has affirmed that the single-employer pension insurance system is in good health and further premium increases would be detrimental to the system. Eliminating the ability to ‘double-count’ these premiums for other spending will keep lawmakers from using pension plans as a piggy bank,” said Lynn Dudley, senior vice president, global retirement and compensation policy for the American Benefits Council.
In April, Congressmen Jim Renacci (R-OH) and Mark Pocan (D-WI) submitted a version of the Pension and Budget Integrity Act of 2016 in the U.S. House of Representatives.