Heritage Foundation Leadership for America

As David John has written, "The probability of a taxpayer bailout of PBGC is high and rising." Thus, it is important that Congress raise PBGC premiums to reduce the size of any likely bailout.

Unfortunately, the conference report seems to have followed the House approach, which was slightly inferior to the Senate's. Rather than raise PBGC premiums to $46 per worker, as the Senate proposed, the conference opted to boost them to $30. Still, these would be indexed to inflation and PBGC would be allowed to further increase those premiums by up to 20 percent each year starting in 2007.

As well, the conference report would impose a special termination fee of $1,250 per participant for each of three years on companies that terminate their pension plans when they file for bankruptcy. This fee would start when the employer emerges from bankruptcy.

Overall, these changes should save about $6.2 billion over five years.