The Pension Coalition unveiled a new study today, Increasing Pension Premiums: The Impact on Jobs and Economic Growth, revealing the significant economic impact and job loss that would accompany the proposed billions of dollars in increases to Pension Benefit Guaranty Corporation (PBGC) premiums. The proposed increases—essentially a tax hike—limit the ability to invest, create jobs and grow the economy. Employers sponsoring pension plans are already reeling from $17 billion in premium increases enacted over the past two years—adding billions more in unnecessary costs will put an anchor on economic growth.
Key study findings include the following:
- The PBGC’s proposed new authority to raise premiums, piled on top of the two recent increases, would translate into a cumulative $51.4 billion hit to the U.S. economy over 11 years.
- PBGC premiums would cost an average of 42,000 jobs per year, peaking at a loss of more than 67,000 jobs in 2017.
- Manufacturers would lose nearly 7,500 jobs in 2017 alone, and social services and nonprofits would face the loss of 4,700 jobs as a result of higher PBGC premiums.
- Congress could save an average of 24,500 jobs per year by rejecting additional premium hikes, including the proposal to grant the PBGC authority to set risk-based premiums.
“For Owens-Illinois, it’s simple: The more money we are forced to spend on PBGC premiums, the less money we have to spend on something else,” said Owens-Illinois Director of Compensation and Benefits Etta Strong. “Every additional dollar that we have to pay in PBGC premiums is one less dollar we are able to put toward our more than 38,000 pension plan participants. Increased costs associated with our pension program also mean less flexibility for us to make investments that strengthen the competitiveness of our company and have a positive economic impact.”
“The PBGC provides a valuable service, but when premiums are increased to unsustainable levels, it begins to impact a business’s ability to grow and create jobs,” said Quad/Graphics Director of Government Affairs Patrick Henderson. “Congress ought to understand that these premiums are a tax, and the money raised should reflect the true risk and not be used for other spending priorities.”
“With economic growth sputtering, we can’t afford to be giving jobs and investment opportunities away,” said National Association of Manufacturers Director of Tax Policy Christina Crooks. “Businesses are already struggling with recent PBGC premium increases—adding billions more will be as helpful as fighting fire with gasoline. Congress and the Obama Administration must turn away from this disguised tax increase and instead focus on economic policies that will boost growth.”
“It is imperative that Congress rejects any further increases in PBGC premiums as well as the proposal to allow the agency to set risk-based premiums,” said The ERISA Industry Committee Senior Vice President of Retirement Security Kathryn Ricard. “Not only would additional premium increases be harmful for job creation and economic growth, further increases would only provide another incentive for employers to flee the defined benefit pension system, harming the very participants who benefit from the system and the PBGC itself.”
“The Chamber of Commerce opposes increasing PBGC premiums outside of the context of comprehensive retirement reform—without full consideration of the policy implications, the increase in premiums amounts to a tax on employers that sponsor defined benefit plans,” said Chamber of Commerce Executive Director of Retirement Policy Aliya Wong. “Every additional dollar that employers must pay to the PBGC is one less dollar that can be used to fund participant benefits, expand the business, create jobs and grow the economy.”
Click here to view the executive summary.
Click here to view the complete study results.
The Pension Coalition is a group of more than 100 trade associations, professional organizations and companies that collectively provide retirement benefits to millions of workers and retirees.
Owens-Illinois, Inc., is the world’s largest glass container manufacturer and preferred partner for many of the world’s leading food and beverage brands. The company had revenues of $7 billion in 2013 and employs approximately 22,500 people at 77 plants in 21 countries, including 5,000 people at 17 plants in the United States. With global headquarters in Perrysburg, Ohio, Owens-Illinois delivers safe, sustainable, pure, iconic, brand-building glass packaging to a growing global marketplace. For more information, visit www.o-i.com.
Quad/Graphics, a leading global printer and media channel integrator, is redefining print in today’s multichannel media world by helping marketers and publishers capitalize on print’s ability to complement and connect with other media channels. With consultative ideas, worldwide capabilities, leading-edge technology and single-source simplicity, Quad/Graphics has the resources and knowledge to help its clients maximize the revenue they derive from their marketing spend through channel integration and minimize their total cost of print production and distribution through a fully integrated national distribution network. The company provides a diverse range of print and media solutions as well as logistics services from multiple locations throughout North America, Latin America and Europe.