Overhaul Plan for Pensions Is Outlined (killing defined benefit plans?)

[papau]

http://www.nytimes.com/2005/01/11/business/11pension.ht...

Overhaul Plan for Pensions Is Outlined (killing defined benefit plans)
By MARY WILLIAMS WALSH

ASHINGTON, Jan. 10 - The Bush administration outlined an ambitious plan on Monday to shore up America's pension funds and the federal agency that insures them, calling for a sharp increase in premiums for pension insurance and new controls on how companies with poor credit ratings should handle their plans.

Under the plan, the premiums that companies must pay to insure their defined-benefit pension plans would rise for the first time since 1991, to $30 a year for each active worker and retiree in the plan from the current $19. In the future, the premium rate would also be indexed, to rise with wages.

That would make a dent in the record $23.3 billion deficit of the insurance program, the Pension Benefit Guaranty Corporation. But the administration also intends to charge even higher premiums to companies with credit ratings below investment grade. Such a move would further increase the agency's revenue and give companies an incentive to keep their pension plans in line with what they can afford to pay.

Companies with below-investment-grade credit ratings would also have to meet a higher standard for funding pension plans.<snip>