A federal agency's proposal to give companies that maintain healthy pension plans a sort of safe driver discount has raised the hackles of Corporate America. Pension plan sponsors and groups that protect their interests say it would mean hefty premium increases and spur more employers to eliminate pension benefits.

The suggestion, currently part of the congressional budget deadlock, comes from the Pension Benefit Guaranty Corp. The federal agency insures the pension benefits of 44 million Americans covered by 27,500 private sector pension plans. The insurance program is not taxpayer funded. Companies whose pension benefits are insured pay premiums and the PBGC invests the money. When a company can't keep its pension promises, the agency pays benefits to its retirees. More than 1.5 million retirees are getting checks from the PBGC.

Currently, premiums are set by Congress. Companies that sponsor their own pension plans pay a flat $35 per participant. They also pay variable premiums if their plans are underfunded.

PBGC director Joshua Gotbaum wants Congress to give the agency the authority to set premiums the way most insurers do: Let the companies with the sickest pension plans pay higher premiums and healthy plans pay less. Mr. Gotbaum notes that the Federal Deposit Insurance Corp., which insures bank deposits, has been using risk-based premiums for years.

The proposal would raise $16 billion in premiums over 10 years.

"What we think is lost when Congress sets the rate is the ability to do justice, the ability to be fair," Mr. Gotbaum said in an interview. "We want to reward our customers for offering sound pension plans."

Companies do not see it that way. They insist premiums are really taxes and that giving the PBGC authority to set rates would be taxation without representation.

"The PBGC proposal is a new corporate tax borne solely by employers who have done the right thing -- voluntarily sponsoring pension plans to provide retirement security," companies and special interest groups wrote in a Nov. 2 letter to Congress.

The 83 companies and organizations that signed the letter include four companies based in the region: U.S. Steel, PPG Industries, MSA and Neville Chemical Co.

"This legislation as proposed is really going to lead to the demise of pension plans," MSA spokesman Mark Deasy said.

The Cranberry safety products company currently pays $100,000 in premiums annually to the PBGC. That could double if Congress approves the proposal, Mr. Deasy said.

In their letter, business groups warned that every pension fund would see its premiums nearly double "no matter how well funded its pension plan" is.

"I come from the business community. I know malarkey when I see it," said Mr. Gotbaum, who was the bankruptcy trustee for Hawaiian Airlines and an investment banker for Lazard. He also held posts in the Clinton and Carter administrations.

Meanwhile, companies are boosting pension fund contributions to comply with federal funding requirements. More than two-thirds of private sector companies will see their required contributions increase 50 percent this year, according to Mercer, a benefits consultant. Mercer predicts minimum contributions will double for at least 25 percent of the companies it looked at.

"We're going to see an even bigger jump for 2012," said Arthur Noonan, a partner in Mercer's Pittsburgh office.

MSA had a pension surplus at the end of last year: $1.08 for each $1 in pension benefits it has promised. U.S. Steel and PPG were running deficits. The steel producer had only 81 cents for each $1 in benefits it has promised, while PPG had 83 cents.

The PBGC is no better off. The agency is expected to issue financial statements for the fiscal year ended Sept. 30 this week. Its ledger showed a $23 billion deficit last year, leaving the PBGC only 78 percent funded.

While he understands companies do not want to pay higher premiums, Mr. Gotbaum said it would be irresponsible to postpone improving the agency's finances.

"If a private pension plan took that approach, we'd roast them," he said.

Mr. Noonan said companies that don't expect to turn their pensions plans over to the PBGC viewed the premiums as a piece of overhead they can do without. Premium increases are a factor pension plans consider when deciding whether to keep providing the benefits to employees, he said.

Giving the PBGC the power to determine premiums also worries the plans sponsors.

"There is concern about should they be making this call ... and how they are going to be making this call," Mr. Noonan said.

The premiums are chump change compared with the impact government-engineered low interest rates and Wall Street's underperformance have on pension plans. Nevertheless, Corporate America will do its best to persuade Congress not to give premium-setting authority to the agency that cleans up their pension messes.

Look at it from Corporate America's point of view. Would you want some bureaucrat setting your insurance premiums? Or would you feel more comfortable having it set by a group of 535 individuals -- nearly half of them like-minded millionaires -- who rely on you annually for millions of dollars in campaign contributions?