PBGC Issues Flat-Rate Premium Increase and Maximum Benefit Guarantee for 2008

On October 24, 2007, the Pension Benefit Guaranty Corporation (PBGC) announced the inflation-adjusted per capita flat-rate premiums for 2008. The increase is 6.5 percent for single employer plans and 12.5 percent for multiemployer plans.¹

The table below shows the 2008 numbers compared to the 2007 numbers:

On October 30, 2007, the PBGC announced the maximum benefit guarantee for private-sector single employer pension plans that terminate during 2008²: $4,312.50 monthly, which equates to $51,750 annually.³

These increases are what Sibson Consulting estimated and recently published in a Bulletin⁴.

Single employer plans are, of course, also subject to the variable rate premium, which depends on the value of their unfunded vested benefits. Starting in 2008, this applies to all plans that are not fully funded (as measured for premium-payment purposes), even those that were at the full funding limit for funding purposes in 2007.⁵

Plan sponsors and administrators should adjust their 2008 budgets accordingly.

Sibson Consulting can be retained to assist plan sponsors with their retirement plan design and administration.

1	To see the 2008 numbers published on the PBGC’s Web site, click here. (To return to the Compliance Alert text, click here.)
2	To see these numbers published on the PBGC’s Web site, click here. (To return to the Compliance Alert text, click here.)
3	The multiemployer guarantee is not indexed. (To return to the Compliance Alert text, click here.)
4	To see Sibson’s October 2007 Bulletin, “Indexed Numbers for 2008: IRS Dollar Limits, Social Security Factors and the PBGC Guarantee Limit and Premiums,” click here. (To return to the Compliance Alert text, click here.)
5	To see a proposed PBGC regulation on the revisions in the variable rate premium, published May 31, 2007, click here. (To return to the Compliance Alert text, click here.)

Compliance Alert, Sibson Consulting’s periodic electronic newsletter summarizing important developments affecting benefit plan compliance, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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