Pension premium increase
Thursday, Oct. 27, 2005
WASHINGTON - Premiums that companies pay to insure employee pensions would rise by $11 per person next year under a plan approved Wednesday by a House committee.
The government's Pension Benefit Guaranty Corp., facing a $23 billion deficit, could get an additional $6.2 billion over the coming five years under the measure offered by Rep. John Boehner, R-Ohio, chairman of the House Education and Workforce Committee.
The annual $19 premium that companies pay for each participant in plans insured by the PBGC hasn't been raised by Congress since 1991.
The government-run PBGC insures the benefits of some 44 million people in 31,000 pension plans much in the same way the Federal Deposit Insurance Corp. insures the accounts of depositors in banks and savings and loan institutions.
The agency, however, does not guarantee the same benefit a company promised its workers.
The maximum annual PBGC benefit for plans taken over in 2005 is $45,614 for workers who wait until 65 to retire. Workers who retire before 65 get smaller benefits.
After an increase to $30 in 2006, the agency could seek annual premium increases of up to 20 percent for the next four years.
Congress, however, could disapprove any increase.
The Senate Health, Education, Labor and Pensions Committee passed its own version of the plan last week that would raise the premium to $46.75.