Congress may rise premiums paid by companies for the federal pension-guaranty program, as these provisions are included in the new budget plan. However, this plan may meet with opposition as opponents insist that it could take away the incentive for companies to carry traditional pension plans.

Last week Congress passed the resolution instructing the House Education and the Workforce Committee and Senate Health, Education, Labor and Pensions Committee to almost double current level of the premiums so as to add $6.6 billion to the Pension Benefit Guaranty Corp in the next five years. This should reduce the deficit of the PBGC that has doubled in 2004 from its 2003 levels to hit $23.3 billion as the entity assumed the pension obligations of some failed companies that had underfunded pension plans.

The employers are relieved, however, that the proposed $18 billion increase in the five years failed. The proposed increase is the first since 1991.

Companies that have underfunded plans may see their premiums increase even more. At the moment, those firms that have underfunded plans, pay premiums based on a variable rate. The number of such companies may be increased according to the new legislature.