Budget Deal May Hasten Demise of Traditional Pensions
by: Andrew Schneider, December 19, 2013 5:12:00 am
The estimated $8 billion in new premiums would go towards reducing deficits by a government agency, the Pension Benefit Guaranty Corporation, that covers pension payments to retirees when bankrupt companies can’t. Supporters of the fee increases say they’re crucial to keeping the agency solvent.
Robert Cirkiel heads the actuarial practice at accounting firm UHY.
“Pessimists believe that the increasingly higher cost of doing business when you maintain a pension plan is just accelerating the demise of pension plans.”
The increases come on top of a $9 billion boost in pension premiums that Congress approved last year, in order to finance an earlier spending deal.
Roughly 10% of American private companies offer defined benefit pension plans to their employees, down from more than 90% in the 1970s.