US - The Deficit Reduction Act of 2005, which was signed into law yesterday, hikes the premium rates paid to the Pension Benefit Guaranty Corporation (PBGC) by sponsors of defined benefit pension plans from US$19 to $30 a year.
Under the new legislation, flat rate premiums for single-employer pension plans will increase to $30 a year for each plan participant. A previous proposal had set the hike to $46.75 - a figure hotly disputed by the ERISA Industry Committee (ERIC) who claimed it contravened the “interests of plan participants and violate[d] the mission of the PBGC.”
The legislation, effective for plan years beginning on or after 1 January 2006, also commits multi-employer plans to yearly premium rises $8 per participant from $8 and introduces a new termination premium payable when a company transfers its underfunded pension plan to the PBGC.
The new premium is set at $1,250 per participant per year, payable for three years after plan termination.
Under funded pension plans pay an additional variable-rate premium of $9 per $1,000 of unfunded vested benefits. The rate is unchanged by the measure enacted today.
The current working deficit of the PBGC is estimated at US$23bn.
By Daniel Flatt
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers