December 5, 2013 

 

 

Dear Conferee: 

 

The undersigned organizations represent thousands of employers who provide 
retirement benefits to millions of workers. We urge you to protect these job-creators, workers, 
and their retirement security by opposing any efforts to further increase premiums paid to the 
Pension Benefit Guaranty Corporation (PBGC) by sponsors of defined benefit plans. 

 

Employers are still coping with the last increase to PBGC premiums, which has not yet 
been fully implemented. Just last year, Congress imposed a $9 billion increase in PBGC 
premiums under the MAP-21 (PL 112-141) highway law that is to be fully phased in by 2015. In 
the span of just two years, the flat rate premium will have increased by 40 percent and in three 
years, the variable rate premium will have increased by over 100 percent, which translates into 
millions of dollars in additional costs for companies that offer pension benefits to their 
employees. The first increase was implemented this year, and the final increase is not effective 
until 2015. Thus, it is premature for Congress to consider additional premium increases before 
the most recent increases are fully realized. 

 

Employers know firsthand that uncertainty hampers investment, endangers jobs, and 
constrains economic growth. Discussions in Congress about further increasing PBGC 
premiums, which are already indexed to inflation, are occurring more and more frequently . 
particularly, outside of the context of retirement policy. Additional PBGC premium increases, 
when added to the multi-billion dollar increases enacted in 2006 and 2012, could divert 
additional resources from job creation and business investment. 

 

Before the recent $9 billion increase in PBGC premiums, employers were already paying 
over $2.64 billion in premiums annually for the pension benefits they voluntarily provide to 32 
million participants. Every additional dollar that employers must pay to the PBGC is one less 
dollar that can be used to fund participant benefits, expand their businesses, create jobs, and 
grow the economy. 

 

We appreciate the challenges the Budget Conference faces, but further increasing 
PBGC premiums is effectively a tax on plan sponsors. The PBGC is not in crisis. In its 2013 
annual report, the PBGC stated that the �gPBGC still has very substantial assets, and the day 
when we run out of money is years away.�h As such, raising PBGC premiums amounts to a tax 
on employers that maintain defined benefit plans to boost workers�f retirement security. Only the 
employers that voluntarily provide defined benefit pension plan benefits face this tax burden. 

 

Thank you in advance for opposing any additional premium increases that will increase 
pension costs for many employers . costs that could serve as barriers to job creation, 
investment, and economic growth. 

 

Sincerely, 

 

American Automotive Policy Council 

American Benefits Council 

American Society of Pension Professionals & Actuaries 

The Committee on Investment of Employee Benefit Assets 

Edison Electric Institute 


The ERISA Industry Committee 

Financial Executives International 

Kitchen Cabinet Manufacturers Association 

Metal Powder Industries Federation 

Motor & Equipment Manufacturers Association 

National Association of Corporate Treasurers 

National Association of Manufacturers 

National Marine Manufacturers Association 

Newspaper Association of America 

Society for Human Resource Management 

Steel Manufacturers Association 

U.S. Chamber of Commerce 

 

 

CC: Members of the U.S. Senate 

 Members of the U.S. House of Representatives