ERISA Industry Committee wants the federal government to establish a stakeholder advisory group for the PBGC, according to an ERIC news release.
The recommendation is in response to President Barack Obama's executive order, issued Jan. 18, calling on federal agencies to identify regulations that could be made more effective and less burdensome.
ERIC's response says regulatory reforms over the last three decades, although designed to increase retirement security, instead increased regulatory burdens, resulting in a decline in defined benefit pension plans.
The stakeholder advisory group would review Pension Benefit Guaranty Corp. regulations and their impact on the country's pension system and identify major issues before regulations are proposed.
ERIC also recommends expanding the PBGC board to include directors that represent stakeholders' interests. The current three-member PBGC board is made up of the secretaries of the Treasury, Commerce and Labor departments.
The recommendation notes that a proposal by Mr. Obama to give the PBGC sole authority to increase premium rates based on the creditworthiness of the plans and employers demonstrates the need for a stakeholder representative on the board.
“The risk of being assessed unpredictable premiums based on a conflicted governmental agency's assessment of creditworthiness would accelerate the flight from the defined benefit system; and it would ensure that employers who do not have defined benefit pension plans never create them,” ERIC President Mark Ugoretz said in the news release.
Mr. Ugoretz said in a telephone interview that the board should include six or seven members representing employers, participants, labor, the public sector and the investment community. He said the current board “never meets, except for a few times over the last 20 years.”
PBGC Director Joshua Gotbaum said in an e-mail: “No one should be surprised that an industry group is opposed to their premiums going up whether it is by government or anyone else. However, the fact is, PBGC premiums will be raised; the question is if it will be done fairly, consistent with other government insurance programs, or like pension insurance programs around the world. We think retirement security is helped when responsible employers are rewarded for having sound plans and not forced to pay for risky behavior of others.”
