PBGC's Critical Needs

Jones, Edwin M.
November 1982
Labor Law Journal;Nov82, Vol. 33 Issue 11, p699
Academic Journal
The article discusses the need for the U.S. Pension Benefit Guaranty Corp. to protect participants and beneficiaries in terminated defined pension plans against loss of their basis pension benefits. In 1974, when the Employee Retirement Income Security Act was passed, the annual premium imposed by the U.S. Congress on single employer plans was one dollar per participant. By 1977, when it became clear that the premium was not adequate to cover claims against the system. The average claim against the Corporation from terminating plans is currently over one million dollars, compared to just under $300,000 in 1977. The amount of claims incurred by the Corporation is equal to the present value of basic benefits in terminated plans less the sum of plan assets turned over to the Corporation on plan termination and less any amounts recovered by the Corporation under the employer liability provision. The Corporation's premium study forecasts that a premium increase to six dollars would cover projected new benefit claims through the end of 1986 and amortize, by the end of 1987, the $236 million deficit that will exist at the end of fiscal year 1982.


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