US - The proposed Deficit Reduction Act would ease the financial burden on the Pension benefit Gauranty Corp by enforcing a fee on companies that dump their pensions on the debt-ridden agency.
The House of Representatives narrowly passed the conference agreement on the Deficit Reduction Act with a vote of 212-206, which would achieve net savings of nearly US$40bn in mandatory spending.
As one of the stipulations in the bill, an companies will be forced to pay termination premium of $1250 per plan participant of $3750 - three yearly instalments of $1250 - if they terminate plans while in bankruptcy. The bill would also increase the premium paid to the PBGC by managers of multi employer pension plans from $2.60 to $8 per participant, beginning in 2006.
This would come as welcome news to the PBGC, which currently protects the pensions of 44m workers and is saddled with a deficit of nearly $23bn.
John Boehner, chairman of the House Education & the Workforce Committee said the Act finally placed the PBGC on more solid financial ground.
“This proposal also adds momentum to House and Senate efforts to finish work early next year on comprehensive reforms to our nation’s outdated pension laws,” he said.
Bill Thomas, chairman of the Ways and Means Committee said this bill was an important step in removing “wasteful and unnecessary” spending from the budget.
I urge the Senate to quickly pass this legislation and send it to the President’s desk, said Thomas.
This week's edition of Professional Pensions is out now.
The government is in talks with the UK and Irish pensions regulators over how to protect members of cross-border schemes in the event of a no-deal Brexit.
The equalisation of guaranteed minimum pensions (GMPs) is at least two years away from being completed, and could take longer than four years for some schemes, a poll has found.
The Pensions Regulator will consider if schemes should be required to have professional trustees and assess the case for greater regulation of administrators and system providers, PP can reveal.