BUDGET

46 MEETING OUR GREATEST CHALLENGES: OPPORTUNITY FOR ALL
same plan even if he switches jobs. The
Budget also funds pilots for States and nonprofits
to design, implement, and evaluate
new approaches to expand retirement and
other employer-provided benefit coverage,
with a focus on developing models that are
portable across employers and can accommodate
contributions from multiple employers
for an individual worker. Policies proposed
in this Budget, as well as past Budgets, to
expand access to IRAs should also increase
portability since workers can continue contributing
to their IRA even if they change
jobs, though their employers cannot.
Finally, recognizing the challenges workers
face in this new economy, the President proposes
to allow long-term unemployed individuals to
withdraw up to $50,000 per year for two years
from any tax-preferred retirement account so
they can draw upon their savings, not go further
into debt, to make ends meet.
Protecting Workers’ Retirement Security.
The Pension Benefit Guaranty Corporation
(PBGC) acts as a backstop to insure pension
payments for workers whose companies or plans
have failed. PBGC’s single-employer program
covers plans that are sponsored by an individual
company; the multiemployer program covers
plans maintained pursuant to one or more collective
bargaining agreements involving more than
one unrelated employer. Both programs are underfunded,
with combined liabilities exceeding
assets by $76 billion at the end of 2015. While
the single-employer program’s financial position
is projected to improve over the next 10 years, in
part because the Congress has raised premiums
in that program several times in recent years,
the multiemployer program is projected to run
out of funds in 2024. Particularly in the multiemployer
program, premium rates remain much
lower than what a private financial institution
would charge for insuring the same risk and well
below what is needed to ensure PBGC’s solvency.
To address these concerns, the Budget proposes
to give the PBGC Board the authority to
adjust premiums. The 2016 Budget proposed to
raise premiums by $19 billion, with premiums
to be split between the multiemployer and single-employer
programs based on the size of their
deficits. Given the $4 billion in recent premium
increases enacted in the Bipartisan Budget Act of
2015, and the single-employer program’s improving
financial projections, the Budget directs the
Board to raise $15 billion in additional premium
revenue within the Budget window only from the
multiemployer program. The Administration
believes additional increases in single-employer
premiums are unwise at this time and would
unnecessarily create further disincentives to
maintaining defined benefit pension plans. This
level of additional multiemployer premium
revenue would nearly eliminate the risk of the
multiemployer program becoming insolvent over
the next 20 years.
The Budget assumes that the Board would
raise these revenues by using its premium-setting
authority to create a variable-rate premium
(VRP) and an exit premium in the multiemployer
program. A multiemployer VRP would
require plans to pay additional premiums based
on their level of underfunding—as is done in the
single-employer program. An exit premium assessed
on employers that withdraw from a plan
would compensate the PBGC for the additional
risk imposed on it when healthy employers exit.
Helping Workers Who Lose Their
Jobs and Reducing Job Loss
The Budget proposes a cost-neutral suite
of reforms to strengthen and modernize the
Unemployment Insurance (UI) program. UI
provides critical income support to unemployed
workers. But after cutbacks in coverage by
States and broader changes in the evolving
economy, fewer than one out of every three unemployed
workers today receives UI benefits,
the lowest level in half a century. The Budget’s
reforms would address this by providing coverage
for more workers—including more part-time
workers, low-wage and intermittent workers,
and workers who must leave a job for compelling
family reasons. The Budget would also
help unemployed workers get back to work more
quickly; reform UI to help prevent layoffs; make