The federal budget deal crafted this week by Representative PaulRyan and Senator Patty Murray includes a significant increase inthe premiums that businesses with pension plans have to pay the Pension BenefitGuaranty Corporation (PBGC) to protect plan participants in theevent of a plan sponsor's failure. The Wall Street Journal estimates that the total impact of thebudget deal on plan sponsors would be around $7.9 billion. Thiscomes on the heels of an approximately $9 billion increase that waspart of last year's MAP-21 legislation.

Seventeen organizations sent a letter to members of Congresslast week, requesting that they oppose any PBGC premium increases.“Employers are still coping with the last increase to PBGCpremiums, which has not yet been fully implemented,” the letterreads. “In the span of just two years, the flat rate premium willhave increased by 40 percent, and in three years, the variable ratepremium will have increased by over 100 percent, which translatesinto millions of dollars in additional costs for companies thatoffer pension benefits to their employees. … It is premature forCongress to consider additional premium increases before the mostrecent increases are fully realized.”

The ERISA Industry Committee (ERIC), one of the letter'ssigners, released a statement today that it “is deeply troubled” bythe proposed budget. “ERIC is adamantly opposed to the PBGC premiumincrease included in this budget agreement,” says Scott Macey, thegroup's president. “This premium increase will only furtheraccelerate the demise of the pension system, as plan sponsorsbecome increasingly discouraged from voluntarily providingpensions. It only provides another reason for sponsors to exit thissystem.”

Adds James Klein, president of the American Benefits Council,another signer of the letter to Congress: “It is simplyunacceptable that members of Congress of both parties … viewpension plans as a piggy bank for other budget priorities, withoutregard for the real-life policy implications of their actions.”

Both organizations contend that the PBGC's reporteddeficit is overstated. “Even using the PBGC's own numbers inits latest annual report, the agency's so-called pension fundingdeficit for single employer plans actually went down this year,”Macey says.