Retirement plan sponsors are no strangers to new costs, but one expense is rapidly moving up their list of concerns. As many as two thirds of U.S. corporate pensions may change their plan policies in response to recent insurance rate hikes, according to a recent client poll by NEPC, a Boston-based independent investment consultant.
The Bipartisan Budget Act of 2015 will raise Pension Benefit Guaranty Corp. premiums significantly, boosting the federal agency’s annual fixed rates from $64 to $80 per participant by 2019. The extra fees will add up: With plan sponsors struggling to meet funding goals thanks to low interest rates and tepid economic growth, the PBGC is projected to gather an additional $4 billion through 2025 off the latest hikes.
