NAM urges Congress to resist premium increases on pension plans
The Hill (11/18, Schroeder) reports that a coalition of companies and business groups, including the NAM, urged Congress in a letter sent Tuesday to refrain from imposing more increases to pension plans, after drawing on them to help cover costs in the recent two-year budget agreement.
The coalition argued that higher premiums employers must pay to the Pension Benefit Guaranty Corp. mean there’s less money “to fund participant benefits, expand businesses, create jobs, or grow the economy.”
The Hill notes that under the budget pact reached last month, Congress will tap almost $12 billion of an “extra $80 billion in spending … by increasing premiums on pension plans paid to” the PBGC. The budget also increased “premiums paid by participants in single-employer pensions” by 25%, with “underfunded pension plans” also to face higher premiums — increases that businesses say are effectively a tax on employers that provide pensions.
In the NAM’s Shopfloor (11/17) blog, Director of Tax Policy Christina Crooks explains that PBGC premiums have become a “major cost” for manufacturers and other employers because Congress has “scored” the payments as a way to raise revenue, “even though the money goes directly from companies to” the federal agency.
Crooks notes that a 2014 study by the NAM and the Pension Coalition “found that significant premium increases piled on top of the previous hikes may mean the loss of 42,000 jobs per year on average and a $51.4 billion hit to the U.S. economy.”
PBGC Posts Record Deficit For Fiscal 2015. The AP (11/17, Gordon) cites the PBGC, which “insures pensions for about 40 million Americans,” as reporting Tuesday that its deficit in fiscal year 2015 widened 23%, to $76.4 billion.
“The agency’s program for so-called multi-employer pension plans continues to account for a large share of the deficit, $52.3 billion,” the AP says, describing those as “pension agreements between labor unions and a group of companies, usually in the same industry.”
For single-employer plans, the deficit grew to $24.1 billion from $19.3 billion in fiscal 2014. The total shortfall is the biggest since the PBGC was formed in 1974, and continues a 13-year streak of deficits. However, the rate of increase in the fiscal year that ended Sept. 30 was slower than in 2014, which saw a near-doubling of the agency’s deficit.
Associated Industries of Missouri is the sole official designated partner of the National Association of Manufacturers in Missouri.