The Pension Benefit Guarantee Corporation (PBGC) was established by ERISA nearly forty years ago to protect workers from losing pension benefits when a plan is terminated without adequate funding by the plan sponsor. This is accomplished by charging a premium for each person covered by the employers plan. Over the years the premium has increased steadily.
Of course the protection is a good thing and unfortunately necessary because of irresponsible employers and union funds. On the other hand the administrative burden and cost has contributed to the decline in defined benefit pensions (401k) type plans have no insurance).
The new Obama budget contains more changes for the PBGC and perhaps more reasons for employers to get out of the pension business.
Here is a summary from AonHewitt:
The proposed budget also includes a pay freeze on federal civilian workers, Pension Benefit Guaranty Corporation (PBGC) reform, and a federal government reorganization initiative. The budget proposes to save $16 billion over the next decade by giving the PBGC Board the authority to adjust premiums and also directs the PBGC to take into account the risks that different sponsors pose to their retirees and to PBGC, with two years of study and public comment before implementation and gradually phasing in any increases.
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