US - The proposed budget reconciliation bill, which will increase premiums paid by sponsors to the PBGC, are "contrary to the interests of plan participants and violate the mission of the PBGC" stipulated in ERISA, according to its committee.
In a letter to senator Mike Enzi (pictured), chairman of the senate health, education, labor, and pensions (HELP) committee, and senator Ted Kennedy, ERIC complained PBGC premium taxes are an inappropriate source for budget reductions, because they are not linked to the PBGC’s need or its mandate to keep premiums low as possible.
The letter explained: “ERISA section 4002 explicitly states that the PBGC is to maintain premiums... at the lowest level consistent with carrying out its obligations.”
Areas of concern to ERIC include; the level of increases in premiums from US$19 per pension plan participant to $46.75 (a hike of 146%); automatically indexing premium tax increases in the future; and a new premium tax of up $3,750 per participant.
“The punitive tax on emergence from bankruptcy, as much as $185.5m for a company with 50,000 employees, would likely force dissolution of most if not all companies that might otherwise emerge from bankruptcy at a cost of hundred and thousands of jobs.” the letter warned.
ERIC has accepted a premium increase was necessary but encouraged members of the HELP committee to support senator Jeff Bingham’s amendment of a $30 fee.
Here are key takeaways from our 2019 Asset Allocation Outlook on how we are positioning asset allocation portfolios in light of our outlook for the global economy and markets.
This week's top stories included a Freedom of Information request revealing more than 100,000 savers could face six-figure tax bills as a result of GMP equalisation.
The Pearson Pension Plan has entered into a £500m pensioner buy-in with Legal & General (L&G) in the insurer's first deal of 2019.