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Flat-rate PBGC premium to jump 12% for 2016

Premiums paid by defined benefit plan sponsors to the Pension Benefit Guaranty Corp. will rise to $64 per person for plan years beginning in 2016, up from a 2015 rate of $57, the agency announced Monday.

Underfunded single-employer plans will see variable-rate premiums increase to $30 from $24 per $1,000 of unfunded vested benefits. Variable-rate premiums are capped at $500 times the number of participants, up from $418 in 2015. Variable-rate premiums also saw a $1 increase due to inflation indexing.

The premium hikes were dictated by the Bipartisan Budget Act of 2013, which sought to raise federal revenue by an estimated $7.9 billion over 10 years. In 2012, PBGC premiums were also increased in a highway funding bill. Before 2012, the flat-rate premium was $35 per participant and the variable rate, $9.

Multiemployer plan premiums, which were not affected by the 2013 budget act, will increase to $27 from $26 in 2015, the agency announced.

The only scheduled increases for single- and multiemployer plans after 2016 are related to indexing.