PBGC Premiums Sap Economic Growth

Study indicates that increases in premiums over the past few years will have a cumulative effect of loss of 42,000 jobs per year.

A study released last week by the Pension Coalition—a group of trade associations including the ERISA Industry Committee, the National Association of Manufacturers, and the U.S. Chamber of Commerce—projects that the increases in Pension Benefit Guaranty Corp. (PBGC) premiums slated for later this year will act as a significant damper on the U.S. economy. Researchers used the Long-term Inter-industry Forecasting Tool (LIFT) to predict the macroeconomic effects of the repeated increases in PBGC premiums that were included in the 2012 MAP-21 law, the 2013 Bipartisan Budget Act, and the Obama administration’s 2014 budget proposal. The LIFT approach combines an input-output model across industries with extensive use of regression analysis.

The result of this analysis pegs the cumulative effects of the PBGC premium hikes as:

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