PBGC Premiums ‘Pop’

Advisors who work with pension plan sponsors should know that those plans will have to fork over more in premiums to the nation’s private pension plan insurer next year — in some cases, a lot more.

According to an update from the Pension Benefit Guaranty Corporation (PBGC), the per-participant flat premium rate for plan years beginning in 2015 is $57 for single-employer plans (up from a 2014 rate of $49) and $13 for multiemployer plans (up from a 2014 rate of $12). 

Variable-rate Premiums

For plan years beginning in 2015, the variable-rate premium (VRP) for single-employer plans is $24 per $1,000 of unfunded vested benefits (UVBs), up from a 2014 rate of $14. The PBGC notes that this $10 increase was provided in The Bipartisan Budget Act of 2013. While the VRP rate is also subject to indexing, but due to statutory rounding rules, indexing had no effect on the 2015 VRP rate.

For 2015, the VRP is capped at $418 times the number of participants (up from a 2014 cap of $412). Plans sponsored by small employers (generally fewer than 25 employees) may be subject to an even lower cap, and multiemployer plans do not pay a VRP, according to the PBGC.

The Bipartisan Budget Act of 2013 calls for the VRP rate to increase another $5 starting with 2016 (on top of indexing). 

Additional information about future rates, as well as a table of current and historical information, is available here.