Magazine article HRMagazine

SHRM Supports Bill to Safeguard PBGC Premium Payments

Magazine article HRMagazine

SHRM Supports Bill to Safeguard PBGC Premium Payments

Article excerpt

SHRM recently backed proposed legislation aimed at clarifying that premiums paid to the federal Pension Benefit Guaranty Corp. (PBGC) can be used only for their intended purpose: to ensure that adequate funds are available to safeguard U.S. pension plans. The bipartisan legislation, dubbed the Pension and Budget Integrity Act, was introduced to the U.S. House of Representatives in April; SHRM is one of a number of organizations supporting it.

Under current law, the pension insurance premiums that employers pay to the PBGC are included in the federal budget. This provides "the illusion this revenue can be used for general government spending, even though these premiums cannot be allocated to other government programs besides the PBGC benefit pension plans," according to a statement by the bill's congressional sponsors, who have labeled the tactic "a budget gimmick."

Unfortunately, the result of the current law has been an increase in the financial burden borne by pension plan sponsors. In recent years, Congress has raised PBGC premiums several times in order to give the appearance of offsetting higher federal spending-most recently, hiking premiums by $7.65 billion through 2025 in the Bipartisan Budget Act of 2015. …

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