Budget Deal May Hasten Demise of Traditional Pensions

Employers that still offer workers traditional pension plans are in line for hefty insurance premium increases, under the budget just approved by the Senate.

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.


Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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