Archived Insight | January 22, 2021
During the next several years, more than 130 plans covering more than 1.4 million workers, retirees and beneficiaries will become insolvent. Those insolvencies could bankrupt the Pension Benefit Guaranty Corporation (PBGC) as soon as 2026 — unless Congress offers some relief.
These changes could come in the form of two recent pieces of proposed legislation. The House of Representatives is evaluating the Democrat-sponsored Emergency Pension Plan Relief Act of 2021 (EPPRA), while Senate Republicans have backed a proposal commonly known as Grassley-Alexander 2020.
Both pieces of proposed legislation take different approaches to addressing the looming insolvency crisis, and any final law would almost certainly vary from what’s currently being discussed. But understanding the differences between these proposed bills can help you understand what the final outcome might look like.
We’ve provided an at-a-glance comparison of the proposed legislation, as well as a deeper dive on the details with our downloadable summary.
This table contrasts the differences of key provisions between the Democrat-sponsored EPPRA 2021 and the Republican-sponsored Grassley-Alexander 2020 proposals.
| Provision | EPPRA 2021 | Grassley-Alexander 2020 |
|---|---|---|
| Special partition program |
Expansive PBGC partition program; few restrictions and conditions |
Narrower PBGC partition program; significant restrictions and conditions |
| PBGC guarantees | Maximum benefit of $24,300 per year for 30 years of service (up from $12,870) | Maximum annual benefit of $20,160 per year for 30 years of service |
| Plan insolvency | No change | Plans must terminate within five years of insolvency; PBGC may petition federal court for plan termination |
| PBGC premiums | No change to premiums (flat rate $31 for 2021) |
Increase flat rate to $86 for 2021; new variable rate capped at $250 per participant or 10% of contributions |
| Other PBGC fees |
None |
Fees charged to plan retirees, employers, and unions; rates vary by zone status |
| MPRA | Repeal benefit suspensions | Expand definition of “declining” status; reforms to improve application process; technical corrections on facilitated mergers |
| Funding relief | Relief for impact of COVID pandemic similar to WRERA 2008 and PRA 2010 | None |
| Funding reform | None | Reforms to zone status rules, limits on actuarial interest assumption |
| Withdrawal liability | Restrictions on partitioned plans | Restrictions on partitioned plans; significant reforms to overall rules |
| Composite plan | Not included | Available to eligible plans |
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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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