New U.S. Budget Bill Increases PBGC Premiums
For the second time in two years, PBGC premiums have been increased. The Bipartisan Budget Act of 2013 which was signed into law in late December, increases both flat and variable rate PBGC premiums for single-employer plans (not multiemployer plans) beginning in 2015. The previous increase came in the Moving Ahead for Progress in the 21st Century (MAP-21) Act of 2012.
The flat rate premium will go from $49 to $57 per participant in 2015, to $64 per participant in 2016, and will be indexed for wage inflation in 2017 and after. The variable rate premium will go from $14 (per $1000 of underfunding) to at least $24 in 2015, to at least $29 in 2016 (with a $500 per-participant cap), and will be indexed for wage inflation in 2017 and after (with the $500 per-participant cap indexed for wage inflation). For underfunded single-employer plans in particular, these increases will be quite significant.