Companion legislation has been introduced in the U.S. Senate toa bill that would prohibit Congress from counting revenues to thePension Benefit Guaranty Corp. withinthe general federal budget.

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In April, Rep. James Renacci, R-OH, introduced the PensionBudget and Integrity Act of 2016, which has since garneredconsiderable bipartisan support: 10 Democrats are among the bill’s19 co-sponsors, according to Congress.gov.

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Related: Borrowing to fund pensions

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Sen. Mike Enzi, R-WY, sponsored the companion legislation in theSenate.

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The bill would re-amend the Employee Retirement Income SecurityAct. In 1980, five years after ERISA was passed and the PBGC wascreated, Congress passed the Multiemployer Pension Plan AmendmentsAct, which allowed lawmakers to count premium receipts within thefederal budget. ERISA originally did not include PBGC receipts aspart of the federal budget.

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Related: PBGC steps in to save pensions

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Under ERISA, only Congress has the ability to set premium ratesassessed within PBGC’s separate single-employer and multiemployerinsurance programs.

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In 2015, premium revenue to the single-employer program wasabout $4.1 billion, according to PBGC. Premium revenues to thesingle-employer program first eclipsed the $1 billion threshold in1996, and then declined in the ensuing six years. Premium revenueshave doubled since 2011.

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In allowing those premiums to be counted within the federalbudget, lawmakers have been incentivized to raise premiums on thesingle-employer program, as a way to offset unrelated federalspending in other areas of the budget, say many pensionexperts.

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The Pension Budget and Integrity Act, which is spare in lengthby Congressional standards — it is barely longer than three pages —notes that PBGC revenues are double-counted, first as part ofPBGC’s general operating budget, and second as part of the federalbudget.

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“Double-counting revenue is inconsistent with sound budgetarypolicy and good governance,” the bill says. The bill would apply tofiscal years beginning after Sept. 30, 2016.

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Premium increases

The question of increased premiums in PBGC’s single-employerprogram has been a sore subject for sponsors of defined benefitplans in the private sector.

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Last year, Congress authorized yet another round of premiumincreases during budget negotiations.

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The per-participant flat-rate premium for single-employer planswas raised to $64 in 2016, from $57 in 2015. The budget dealincreased that rate to $68 in 2017, $73 in 2018, and $78 in2019.

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In the wake of last year’s increases, Alan Glickstein, seniorretirement consultant at Towers Watson, likened the new increasesto a corporate tax, and suggested added costs to pension sponsorswould likely expedite an already active pension de-riskingmarket.

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“These are very large increases, which have already been hikedseveral times in the past few years. It means more uncertainty forsponsors, and that is not good for the country’s retirement incomesecurity issues,” Glickstein told BenefitsPro.

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“There is no good reason for Congress to go back to the sameplace to raise revenue and encourage more plan sponsors to de-risktheir pension plans, which is exactly what these new increases willdo,” he added.

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The latest premium increases come as PBGC is reporting the stateof the single-employer program is sound, and even stands the chanceof running a surplus by 2025.

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In response to the introduction of companion legislation todecouple PBGC revenues from the general federal budget fund, LynnDudley, senior vice president of the AmericanBenefits Council, said: “The PBGC itself has affirmed that thesingle-employer pension insurance system is in good health andfurther premium increases would be detrimental to the system.Eliminating the ability to ‘double-count’ these premiums for otherspending will keep lawmakers from using pension plans as a piggybank.”

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The American Benefits Council, a Washington, D.C.-based tradegroup, advocates for sponsors of the largest pension and healthcare plans.

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The trade group says a recent poll of its members showed nearlyhalf of all sponsors of large pensions are planning to exit thesystem in some capacity.

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“The primary reason for these exits is PBGC premium increases,”said Dudley in a statement. “We need timely solutions like PBIA tocounteract this trend.”

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.