Pension Benefit Guaranty Corporation's Proposal to Increase Premium Rate for the Single Employer Basic Benefits Insurance Program

HRD-78-2: Published: Oct 6, 1977. Publicly Released: Oct 6, 1977.

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Review of the Pension Benefit Guaranty Corporation's (PBGC) proposed premium rate increase for participants of a defined benefit pension plan under the single employer basic benefits insurance program indicated that the present $1.00 per plan participant per year premium is not adequate to fully fund the program. Although PBGC took into consideration numerous factors and made assumptions which could substantially affect the adequacy of the proposed $2.25 premium rate, there is no reason to question the methodology used by PBGC.

The programmatic and data trend assumptions made relating to such matters as forecast of future claims, return on investment, and collectibility of employer liability are subject to variations which could substantially affect premium rate requirements. However, in view of the limited experience of this relatively new federal operation, there is no basis for computing a better estimate.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Because of the uncertainty in the assumptions and the data used to determine the premium rate, PBGC should undertake thorough annual reviews of its premium rates to ascertain whether adjustments in the rates are warranted. The results of the annual premium rate reviews should be provided to Congress for its consideration because of its role in approving the rates.

 

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