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Bills Would Change Treatment of PBGC Premiums

Legislation before the House and Senate would change the treatment of Pension Benefit Guaranty Corporation (PBGC) premiums so they are no longer counted as general fund revenue.

The Senate version of the Pension and Budget Integrity Act of 2016 (S. 3240) was introduced by Sen. Mike Enzi (R-Wyo.); Rep. Jim Renacci (R-Ohio) introduced the House version, H.R. 4955, on April 15.

“Under current law, pension insurance premiums that are paid by employers to the Pension Benefit Guaranty Corporation (PBGC) are included in the federal budget and are considered ‘on-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,” said Renacci in a press release. “In recent years, Congress has increased the PBGC premiums several times in order to off-set increased spending; most recently increasing premiums through 2025 by $7.65 billion in the Bipartisan Budget Act of 2015. The Pension and Budget Integrity Act simply moves these premiums ‘off-budget,’ and ensures that Congress is raising premiums only if and when it is appropriate,” he continued.

On July 14, a group of 7 associations — ASPPA College of Pension Actuaries (ACOPA), the ERISA Industry Committee (ERIC), the American Benefits Council, 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 Senator Mike Enzi (R-WY) thanking him for introducing the bill.

“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.”