US - The Deficit Reduction Act, designed to ease the Pension Benefit Guarantee Corporation's (PBGC) nearly US$23bn deficit, is to hit President Bush's desk after the US House voted to pass the legislation.
The Deficit Reduction Act is designed to provide the PBGC with additional financial resources to fight against its deteriorating financial health.
According to a statement made by Chairman of the US House Education & the Workforce Committee, John Boehner, the bill would increase premiums paid by employers for each worker participating in its pension plan, from $19 to $30 per per participant and call upon managers of multi-employer pension plans to pay the PBGC higher premiums from $2 to $8 beginning in 2006.
The legislation establishes an employer-paid termination premium of $1250 per plan participant for three consecutive years for companies that terminate their pension plans, sunsetting after five years.
“Today’s vote demonstrates our willingness to make difficult choices that ensure we won’t leave our budget woes for our children and grandchildren,” said Boehner.
In addition, the PBGC has added to its multi-billion burden after resuming responsibility for the pensions of almost 2000 former employees of the bankrupt Atlanta-based furniture store Rhodes Inc.
The 56% funded, Rhodes Inc., Employees Pension Plan has $14.9m in assets to cover approximately $26.5m in liabilities. The agency expects to be liable for nearly all of the $11.6m windfall.
By Daniel Flatt
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