It’s no secret that the private pension system in the United States is in crisis. Last week, the Pension Benefit Guaranty Corporation (PBGC), which insures pensions for about 44 million Americans, announced that it has a startling deficit of $23 billion, fueled largely by having to take over pension plan liabilities of bankrupt airlines.
But a reform plan to protect employee pensions may be on the way. A day after the PBGC’s announcement, the U.S. Senate voted 97 to 2 to approve a measure (S. 1783) that would renovate the private pension system. The proposal would, among other things: set strict rules requiring companies to fully fund their pension plans and to put more money into their plans when finances are good; boost per-participant premiums employers are required to pay to the PBGC, to $30 from the current rate of $19; and impose new disclosure obligations to ensure that employees have access to plan information.
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The White House has indicated that while it supports pension overhaul, it opposes some provisions included in the Senate measure, including special relief on funding requirements for airlines. The White House warned that the president would likely veto a bill that doesn’t include tougher funding obligations.
The House is considering a companion pension bill–which doesn’t include the special relief for airlines–and may vote on it after the Thanksgiving recess. From there, the House and Senate will attempt to reach compromise legislation to send on to the White House.
Additional Resource:
S. 1783 (Pension Security and Transparency Act)