Multiemployer Premiums Must Go Up, Says PBGC

The Pension Benefit Guaranty Corp. risks becoming insolvent within a decade – or sooner – if premiums paid by multiemployer plans aren’t raised, according to the agency’s latest Five-Year report.

The PBGC is required to file the report to Congress every five years.

Premiums were recently raised by a significant margin; but they will need to be raised again to keep the PBGC solvent, according to the report.

More details from BenefitsPro:

In 2016, enrollees pay a $27 per-participant premium. The Multiemployer Pension Reform Act of 2014 doubled premiums to $26 for 2015.

PBGC’s 2014 projections report estimated that the agency’s premium levels and returns on assets will be enough to sustain the multiemployer program for the next five to nine years.

As of September 2014, the program held $1.8 billion in assets, and had $44.2 billion in expected liabilities. PBGC projects that the program has a greater than 50 percent chance of going insolvent by 2026.

In 2015, PBGC reported the multiemployer plan deficit had widened to $52.3 billion.

The report does not recommend how much premiums need to be increased.

The White House’s 2017 budget proposes giving PBGC authority to increase premiums, and set a variable rate premium that would assess higher rates on financially troubled plans. It estimates that would raise $15 billion for the program.

The budget also proposes a new “exit” premium for sponsors that leave plans.

Under existing law, Congress sets premiums.

Read the full report here.

Photo by Tom Woodward via Flickr CC License