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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
In testimony before the Health, Employment, Labor and Pensions Subcommittee of the House Committee on Education and the Workforce, Josh Gotbaum, director of the Pension Benefit Guaranty Corporation (PBGC), detailed the agency's financial challenges and outlined an Administration proposal to redress them by reforming how the PBGC sets premiums.
Gotbaum acknowledged the $26 billion gap between what the PBGC owes and its assets. Premiums are too low for the insurance the PBGC provides, he told the House panel. The agency is funded entirely through insurance premiums paid by plan sponsors, assets from failed plans, investment earnings on assets, and recoveries in bankruptcy.
Gotbaum urged passage of an administration proposal to allow the PBGC's board of directors to set the agency's insurance premiums based on the risk presented by the insured. The proposal allows premiums to be set as they are in other government insurance programs and in private insurance companies.
To illustrate the disparity in present premiums, Gotbaum cited the case of American Airlines, which has paid a total of $260 million over 37 years. American is presently seeking to terminate its four pension plans, adding some $9 billion to PBGC's deficit - after receiving some one billion dollars in pension funding relief.
"Think how hard it is to convince companies to keep their plans while you're asking them to pay for the losses of others," Gotbaum said. "Without the tools to set its financial house in order and to encourage responsible companies to keep their plans, PBGC may face, for the first time, the need for taxpayer funds. That's a situation no one wants to face," he added.
Threats to retirement security
In his testimony, Gotbaum also addressed issues affecting retirement security. "Thanks to better health, better technology, and better lifestyles, today we're living longer, healthier lives," Gotbaum said. "That's great news, but it also means that retirement costs more."
"Today, most people don't think they have enough money to retire - and they're right," Gotbaum said. "The Administration is committed to do what we can do to strengthen retirement security, which is an important priority not only for workers and retirees but also for our economy and our nation."
Gotbaum noted that there were many government efforts to enhance retirement security, including efforts to preserve existing plans by reducing regulatory burden, helping establish additional options, such as hybrid DB/DC approaches, and continuing to help people understand their plans and choices.
Source: PBGC News Release No. 12-16, February 2, 2012.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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