Impending increases in the premiums plan sponsors pay to the Pension Benefit Guaranty Corp. mean more sponsors of defined-benefit plans should consider borrowing money to fully fund their plans, according to new analysis from Russell Investments.
The Bipartisan Budget Act of 2015 instituted new increases in both the per-participant and variable premium rates sponsors pay to PBGC.
Sponsors that pay a variable premium do so at a rate based on their plans' unfunded liability. That rate is scheduled to go up incrementally to $45 for every $1,000 of unfunded liability by 2019, or a 50 percent increase in the $30 per $1,000 in liability sponsors will pay in 2016.
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