As companies move pension risk off of their balance sheets, whether by buying annuities for retirees, as Verizon announced recently that it plans to do, or offering plan participants lump sums, their efforts have two effects on the U.S. Pension Benefit Guaranty Corp. (PBGC), according to an article in Business Insurance.
The lessening in companies' pension obligations reduces the premiums companies owe to the PBGC, thus undermining its finances. (Companies currently pay the PBGC $35 per plan participant, which will rise to $49 per participation by 2014.) On the other hand, the PBGC's exposure to pension risk is lessened.
Josh Gotbaum, the head of the PBGC, said last week that Congress should give the PBGC the leeway to set premiums according to plan sponsors' financial risk.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
