The Administration’s proposed 2020 budget aims to significantly raise the premiums paid by collectively bargained plans by “shifting the premium burden to underfunded plans”. Currently, the multiemployer program, which is separate from PBGC’s single-employer program, faces a deficit of $54 billion and is expected to run out of reserves by 2025.
- The proposal would impose an additional $18 billion in new premiums over a ten-year period and is projected to extend the program’s solvency by 20 years. The bulk of the additional premium revenue would come from increasing the variable-rate cap to $900 per participant, up from the current cap of $541.
- In addition, for employers that withdraw from a multiemployer plan, an exit premium equal to 10 times the cap would also be imposed. Although additional details on how the premiums would be assessed were not presented in the proposed budget, the expected receipts from the increase are projected to total $1.86 billion in 2021 and grow to $4.65 billion by 2026.