Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
April 15 — A new House bill would prohibit Congress from using PBGC premium increases as an accounting gimmick to help balance the federal budget.
The Pension and Budget Integrity Act of 2016 (H.R. 4955), introduced April 15 by Reps. Jim Renacci (R-Ohio) and Mark Pocan (D-Wis.), seeks to ensure that any future single-employer pension plan premium increases are only used toward retiree payments from the Pension Benefit Guaranty Corporation. Four other House members, two from each side of the aisle, joined the proposal.
In the past, Congress has been criticized for using premium increases that plans must pay to the PBGC to be calculated as a revenue raiser through budget scoring. This is what Congress did last October when, as part of a budget deal, it raised flat-rate PBGC premiums for single-employer pension plans by 12 percent in 2016 and the variable-rate premiums that underfunded plans pay by 25 percent (207 PBD 207, 10/27/15).
Former PBGC Director Joshua Gotbaum, now a guest scholar with the Brookings Institution in Washington, told Bloomberg BNA at the time premiums were raised in October that “it’s unfortunate that Congress pretends to balance the budget by punishing employers who offer pensions. Raising PBGC premiums doesn’t add a dime to the U.S. Treasury, but it does give businesses another reason to stop providing pensions. In the end, neither taxpayers nor pensioners will be better off.”
Several industry groups, including the ERISA Industry Committee, the American Benefits Council, the American Retirement Association, 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 sent a letter to the two sponsoring House members thanking them for introducing the bill.
In the letter, ERIC's president and chief executive officer, Annette Guarisco Fildes, said that “discipline is 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.”
Also in the letter, Lynn Dudley, senior vice president for global retirement and compensation policy for ABC, said that the “trend over the past few years of increasing PBGC premiums to offset deficit spending elsewhere in the federal budget, without regard to the true financial condition of the PBGC, is shortsighted because it removes good policy from the equation and perpetuates the image of a broken legislative process.”
Will Hansen, ERIC's senior vice president of retirement policy, told Bloomberg BNA on April 15 that the best chance for the bill to pass in the current congressional session would be as part of a much larger bill, such as in future budget or omnibus legislation.
Hansen said that a companion Senate bill is expected to be introduced in the next few days. He said the bill is expected to be referred to the House Budget, Education and the Workforce, and Ways and Means committees.
To contact the reporter on this story: David B. Brandolph in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Text of H.R. 4955 is at http://src.bna.com/eaA.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)