Pension risk perspective: Borrowing money to reduce PBGC premiums

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By Chris Jasperson, William H. Clark-Shim | 14 January 2016
In recent years, Congress raised PBGC premiums sharply for single-employer defined benefit pension plans. In 2016, the increased premiums will act as an effective tax of 3.0% per year on unfunded pension liabilities, with additional increases scheduled through 2019. This article discusses plan sponsors borrowing money to fully fund their pension plans, thereby eliminating these PBGC premiums.