The Pension Benefit Guaranty Corp.'s advocate for plan sponsors and plan participants is backing plan sponsors in a call for funding stabilization and premium relief, according to an annual report dated Dec. 31.
In the 2020 annual report to Congress and administration officials, Constance A. Donovan, the PBGC participant and plan sponsor advocate, noted that the past year "was a year like no other" that presented challenges for both groups.
The coronavirus pandemic led to increased activity at the PBGC, with companies assessing their financial capabilities and liabilities, "including their defined benefit plan obligations which are rising to unaffordable levels for many plan sponsors due to historically low interest rates," the report said.
Despite limited relief from the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, allowing sponsors to defer 2020 contributions until Jan. 4, the advocate's office heard from more than a dozen plan sponsors of all types that more funding relief legislation is needed to deal with "rising and debilitating pension obligations," including rising PBGC premiums.
"The need for funding stabilization and an extended amortization period remains real and necessary, and without such relief, companies may face layoffs and other adverse consequences such as being unable to invest in their businesses since these resources are instead consumed by pension costs, limiting their ability to get their businesses back on track," the report said.