For Immediate Release
Washington, DC – A group of 8 associations –The ERISA Industry Committee (ERIC), the American Benefits Council, ASPPA College of Pension Actuaries (ACOPA), the Committee on Investment of Employee Benefit Assets Inc. (CIEBA), the National Association of Manufacturers, the Society for Human Resource Management, U.S. Chamber of Commerce, and WorldatWork –today sent a letter to Senator Mike Enzi (R-WY) thanking him for introducing the Pension and Budget Integrity Act of 2017.
The Act would ensure that Pension Benefit Guaranty Corporation (PBGC) premiums are no longer counted in general fund revenue, eliminating the incentive for legislators to raise premium costs to pay for unrelated initiatives and programs. That change would help to stabilize single-employer pension plans and provides more certainty for America’s companies and their employees.
The PBGC was established in 1974 to ensure adequate funds would be available for pension plans in the event an employer sponsoring a plan enters bankruptcy. In 1980, Section 406 of The Multiemployer Pension Plan Amendments Act allowed PBGC premiums to be calculated as general fund revenue for budget scoring, even though the premiums themselves are not used to pay for unrelated programs. While the premiums are not used to pay for other programs the increases are counted for budget purposes as a revenue raiser, leaving sponsors of single-employer defined benefit plans to shoulder additional financial burdens.
“It is critical for employers to have predictability with PBGC premiums,” said Annette Guarisco Fildes, president and CEO, The ERISA Industry Committee. “Right now there is nothing predictable about premiums, because Congress can raise them at any time to pay for other programs. This legislation is greatly needed to ensure that PBGC premiums are used solely to protect the pension system and not as a budget gimmick to pay for unrelated federal programs.”
“Irresponsible PBGC premium hikes undermine retirement security by increasing the costs of plan sponsorship and pushing healthy employers out of the system. The PBIA would eliminate the perverse incentive to raise premiums and help restore honesty and accountability to the budget process,” said Lynn Dudley, senior vice president, global retirement and compensation policy, at the American Benefits Council.
“The ASPPA College of Pension Actuaries strongly supports the Pension Benefit and Integrity Act,” said Judy Miller, executive director of ACOPA. “In past years, PBGC premium increases for single employer plans have been used as a budget gimmick. The thousands of responsible employers who sponsor defined benefit plans have been penalized simply because they choose to provide this benefit to employees. This legislation will put a stop to this unfair, and frankly deceptive, practice.”
‘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.”