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Faizan
2015 Flat, Variable, Termination Rates
According to the PBGC, flat rate premiums will increase $8 per participant from $49 in 2014 to $57 beginning in 2015 for single-employer plans. This amount denotes a $26 per participant increase since 2007. For multiemployer plans, the flat rate will be $13 per participant, up from 2014's rate of $12. In 2007, the premium was $7 per participant.
The variable-rate premium (VRP) is also slated to increase beginning in 2015. The VRP for single-employer plans will be $24 per $1,000 of unfunded vested benefits (UVBs), up from a 2014 rate of $14. Multiemployer plans do not pay a VRP.
Provisions in the Bipartisan Budget Act of 2013 allowed for the $10 increase in single-employer plans. Before that, the rate from 2007-2013 was $9 per UVBs. While the VRP rate is subject to indexing as well as premium rate increases, indexing had no effect on the VRP for 2015 due to statutory rounding rules.
Beginning in 2015, the VRP is capped at $418 times the number of participants versus in 2014, when the cap was $412 times the number of participants. Plans sponsored by 'small employers,' usually defined as fewer than 25 employees, may be subject to a lower cap.
Looking ahead to 2016, the Bipartisan Budget Act of 2013 calls for the VRP to increase an additional $5, apart from indexing. Rates subject to indexing in 2016 include: the VRP for single-employer plans and the per participant rate for flat-rate premiums in multiemployer plans. Therefore, these rates may actually be higher than what is forecast.
After 2016, all rates will be subject to indexing. As of now, there are no scheduled increases after 2016 other than indexing.
For certain distress or involuntary terminations, a special termination premium must be paid to the PBGC for three years after the termination of the plan. The premium is $1,250 per participant except for certain airline-related plans, and has not changed from last year. More specifics can be found on the PBGC's Termination Premiums page.
For an overview about upcoming premium increases as well as historical data, see the PBGC's tables on its website.
Financial Assistance Provided to Struggling Multiemployer Plans
The PBGC recently announced that the agency sent its first installment to cover benefits in two insolvent multiemployer plans in New York. The two plans-Teamsters Local 531 Pension Plan and Local 976 International Longshoremen's Association Pension Fund-have depleted their funds and are unable to pay promised benefits.
According to the PBGC, it will send both plans quarterly payments to cover guaranteed benefits for current and future retirees. The PBGC's financial commitment to the two plans is estimated at almost $25 million-$14.9 million for the Teamsters Local 531 and $9.8 million for Local 976 ILA.
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