A new study released this week by the NAM and Pension Coalition confirms what manufacturers have known all along – PBGC premium increases hurt jobs and the economy. The study, entitled Increasing Pension Premiums: The Impact on Jobs and Economic Growth, has already raised some eyebrows in Congress and the media, and is even getting the attention of the PBGC.
The Pension Coalition study was released Wednesday before the media and congressional staff from both the U.S. Senate and House of Representatives. During the congressional briefings, Jeff Werling, author of the study, explained how the Administration’s fiscal year 2014 budget proposal piled on top of the nearly $17 billion over 10 years in PBGC premiums that were enacted in 2013 and 2012, could cost an average of 42,000 jobs per year, translating into a cumulative $51.4 billion hit to the U.S. economy over 11 years.
Since manufacturers pay the most in PBGC premiums out of any industry, NAM member companies participated in the briefing to drive home the significant costs for manufacturers. Etta Strong, Director of Compensation and Benefits for Owens-Illinois (O-I) and Pat Henderson, Director of Government Relations for Quad/Graphics, Inc. discussed how paying more in PBGC premiums negatively impacts plan participants and hinder business investments.
For example, for glass container manufacturer O-I, the additional premium increases takes resources away from building a new furnace to make containers for food and beverage products, and for Quad/Graphics, further premiums could impact their ability to buy a new printing press that would improve efficiency for their global printing business. These two companies also signed on to NAM-led letters to the House and Senate sent just prior to the release of the study. These letters were signed by 68 companies and associations in a united voice against any further PBGC premium increases.
The study was highlighted in the press by Bloomberg BNA (subscription required) and Pensions & Investments. Even Josh Gotbaum, Director of the PBGC issued a statement in direct response to the study, pointing at Congress for setting premiums in ways that could convince some companies that “they shouldn’t offer pensions at all.”
Pension Study Documents
Click here for the press release.
Click here to view the executive summary.
Click here to view the complete study results.