A last-minute federal funding deal in December that added to an already record federal deficit did little to calm fears among plan sponsors that Congress may not be done hiking premiums paid to the Pension Benefit Guaranty Corp. as a way to pay for unrelated things.
Plan sponsor groups vow to push for passage of the Pension Budget Integrity Act to prevent what they see as a budget gimmick, and instead to get Congress to help the PBGC solve what Director Gordon Hartogensis described as "a difficult financial position." A $56.5 billion deficit caused by a growing multiemployer pension crisis will make the PBGC's own multiemployer program insolvent by 2025, and in the meantime is making single-employer plan sponsors nervous that the single-employer program's $8.7 billion positive net position will be too rich to ignore in a crisis.
Meanwhile, negotiations in the Senate on a proposal to help critically underfunded multiemployer pension funds and prevent more are expected to start up again in early 2020. Despite a sense of urgency and bipartisanship, there is a sizable divide between a House-approved plan known as the Butch Lewis Act that would create a federal loan program for struggling plans whose sponsors could also apply for financial assistance from the PBGC, and the Senate's opening bid, which would affect all multiemployer pension plans, including healthier ones.
Aimed at preventing more plan failures and having stakeholders bear the principle cost, the Senate plan so far calls for higher PBGC premiums and guarantees, a new co-payment and more resources for the PBGC to do partitions to allow a struggling plan to spin off some liabilities and keep going. Plan sponsors would also face new rules for measuring liabilities and funding levels and determining their plan funding zone status, along with new rules on withdrawal liability aimed at encouraging employers to stay in plans.
