The base premium—now $33 a year per plan participant—will increase to $34. That increase is a result of a federal law that requires that the premium be adjusted to reflect changes in the national average weekly wage during the prior year.
In fiscal 2007, the last year for which information is available, the PBGC collected about $1.1 billion in base premiums in its single-employer insurance program; $358 million in variable-rate premiums, which are paid by employers with underfunded plans; and $61 million in termination premiums. Termination premiums are imposed on employers that terminate an underfunded plan as part of the bankruptcy process. A $1,250-per-participant premium is due in each of the three years after emergence from Chapter 11 protection.
The premiums collected by the PBGC are used to help pay benefits to participants in plans taken over by the PBGC, which in 2007 had a $13.1 billion deficit in its single-employer insurance program.
Separately, the PBGC announced an increase in the maximum annual benefit it will guarantee to participants who retire at 65 and are in underfunded plans that the agency takes over. The cap in 2009 will be $54,000, up from $51,700 for plans that terminated in 2008.