The Senate late Wednesday passed a two-year budget deal that calls for raising premiums paid to the PBGC and increasing federal employee retirement contributions to help offset spending hikes.
The deal, which also trims cost-of-living increases for military retirees, was approved by the Senate in a simple majority vote following House approval last week. President Barack Obama is expected to sign the bill shortly.
The deal will increase Pension Benefit Guaranty Corp. premium levels 50% by 2016, despite PBGC estimates that its deficit in the single-employer program is shrinking. The PBGC did not ask for the premium increase.
“It's a budget gimmick,” said Deborah Forbes, executive director of the Committee on Investment of Employee Benefit Assets, which represents 120 of the largest U.S. corporate pension funds with more than $1.5 trillion in retirement plan assets.
“We're extremely disappointed that it played out this way,” said Ted Godbout, spokesman for the ERISA Industry Committee, “particularly since the prior increases haven't even been fully implemented.”