Pension risk perspective: Borrowing money to reduce PBGC premiums

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.