Senator Mike Enzi (R-Wyoming) has introduced S.3240, described as a bill to prohibit the use of premiums paid to the Pension Benefit Guaranty Corporation as an offset for other federal spending.
In an announcement of similar legislation introduced in the House of Representatives in April, it was explained that under current law, pension insurance premiums that are paid by employers to the Pension Benefit Guaranty Corporation (PBGC) are included in the federal budget and are considered “on-budget.” This provides the illusion that this revenue can be used for general government spending, even though these premiums cannot be allocated to other government programs besides the PBGC benefit pension plans, the senator explains.
In recent years, Congress has increased the PBGC premiums several times in order to offset increased spending; most recently increasing premiums through 2025 by $7.65 billion in the Bipartisan Budget Act of 2015.
Confronting these challenges, S. 3240 would ensure that premiums paid to the PBGC are no longer counted as general fund revenue, eliminating the motivation for legislators to raise premiums in order to pay for unrelated initiatives and programs.
In a letter to Enzi, industry groups thanked him for introducing the legislation. “Eliminating the ability to ‘double-count’ these premiums for other spending will keep lawmakers from using pension plans as a piggy bank,” said Lynn Dudley, senior vice president, global retirement and compensation policy for the American Benefits Council.
Information about S. 3240 will be available here.