[Federal Register Volume 74, Number 233 (Monday, December 7, 2009)]
[Unknown Section]
[Pages 64347-64348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X09-241207]
[[Page 64347]]
PENSION BENEFIT GUARANTY CORPORATION (PBGC)
Statement of Regulatory and Deregulatory Priorities
The Pension Benefit Guaranty Corporation (PBGC) protects the pensions
of about 44 million people in about 28,500 private defined benefit
plans. PBGC receives no funds from general tax revenues. Operations are
financed by insurance premiums, investment income, assets from pension
plans trusteed by PBGC, and recoveries from the companies formerly
responsible for the trusteed plans.
To carry out these functions, PBGC issues regulations interpreting such
matters as the termination process, establishment of procedures for the
payment of premiums, reporting and disclosure, and assessment and
collection of employer liability. The Corporation is committed to
issuing simple, understandable, and timely regulations to help affected
parties.
PBGC's intent is to issue regulations that implement the law in ways
that do not impede the maintenance of existing defined benefit plans or
the establishment of new plans. Thus, the focus is to avoid placing
burdens on plans, employers, and participants, wherever possible. PBGC
also seeks to ease and simplify employer compliance whenever possible.
PBGC Insurance Programs
PBGC administers two insurance programs for private defined benefit
plans under title IV of the Employee Retirement Income Security Act of
1974 (ERISA): a single-employer plan termination insurance program and
a multiemployer plan insolvency insurance program.
Single-Employer Program. Under the single-employer program,
PBGC pays guaranteed and certain other pension benefits to
participants and beneficiaries if their plan terminates
with insufficient assets (distress and involuntary
terminations).
Multiemployer Program. The smaller multiemployer program
covers about 1500 collectively bargained plans involving
more than one unrelated employer. PBGC provides financial
assistance (in the form of a loan) to the plan if the plan
is unable to pay benefits at the guaranteed level.
Guaranteed benefits are less than single-employer
guaranteed benefits.
At the end of fiscal year 2009, PBGC had a $22 billion deficit in its
insurance programs.
Regulatory Objectives and Priorities
As described below, PBGC's current regulatory objectives and priorities
are to complete implementation of the Pension Protection Act of 2006
(PPA 2006) by issuing simple, understandable, and timely regulations
that do not impose undue burdens that could impede maintenance or
establishment of defined benefit plans. PBGC is also working on several
regulatory projects not related to PPA 2006. These regulatory
objectives and priorities are developed in the context of the
Corporation's statutory purposes:
To encourage voluntary private pension plans;
To provide for the timely and uninterrupted payment of pension
benefits; and
To keep premiums at the lowest possible levels.
PBGC also attempts to minimize administrative burdens on plans and
participants, improve transparency, simplify filing, provide relief for
small businesses, and assist plans to comply with applicable
requirements.
Transparency
The Corporation seeks to improve transparency of information to plan
participants, investors, and PBGC, in order to better inform them and
to encourage more responsible funding of pension plans. PPA 2006
requires disclosure of certain information to participants regarding
the termination of their underfunded plan. PBGC published a final
regulation on this disclosure of termination information in November
2008.
PPA 2006 makes changes to the plan actuarial and employer financial
information required under section 4010 of ERISA to be reported to PBGC
by employers with large amounts of pension underfunding. PBGC published
a final regulation implementing those changes in March 2009.
Electronic filing
PBGC has simplified filing by increasing use of electronic filing
methods. Electronic filing of premium information has been mandatory
for all plans for plan years beginning on or after January 1, 2007.
Filers have a choice of using private-sector software that meets PBGC's
published standards or using PBGC's software. Electronic premium filing
simplifies filers' paperwork, improves accuracy of PBGC's premium
records and database, and enables more prompt payment of premium
refunds. Most of the premium changes under PPA 2006 have now been
incorporated into software so that it will be easy to comply with the
premium changes under the new law.
Employers with large amounts of underfunding in their plans must file
actuarial and financial information under section 4010 of ERISA
electronically. Electronic filing reduces the filing burden, improves
accuracy, and better enables PBGC to monitor and manage risks posed by
these plans. PBGC incorporated the PPA 2006 changes to this reporting
into software so that it will be easy to comply with the reporting
changes under the new law.
Small businesses
PBGC gives consideration to the special needs and concerns of small
businesses in making policy. A large percentage of the plans insured by
PBGC are small or maintained by small employers. The first proposed
regulation PBGC published under PPA 2006 implemented the cap on the
variable-rate premium for plans of small employers. In early 2010, the
Corporation expects to issue a proposed regulation implementing the
expanded missing participants program under PPA 2006, which will also
benefit small businesses.
Other PPA 2006 changes
Under PPA 2006, if a plan terminates while its sponsor is in
bankruptcy, and the bankruptcy was initiated on or after September 16,
2006, the bankruptcy filing date is treated as the plan termination
date for purposes of determining the amount of benefits PBGC guarantees
and the amount of assets allocated to participants who retired or have
been retirement-eligible for three years. In 2008, PBGC published a
proposed regulation to implement this statutory change; PBGC expects to
finalize the regulation in late 2009.
PPA 2006 changes the rules for determining benefits upon the
termination of a statutory hybrid plan, such as a cash balance plan.
PBGC plans to publish a proposed regulation in late 2009 to implement
those rules in both PBGC-trusteed plans and in plans that close out in
the private sector.
Under PPA 2006, the phase-in period for the guarantee of a benefit
payable solely by reason of an ``unpredictable contingent event,'' such
as a plant shutdown, starts no earlier than the date of the shutdown or
other unpredictable contingent event. PBGC plans to publish a proposed
regulation implementing this statutory change in late 2009.
[[Page 64348]]
PPA 2006 provides for changes in the allocation of unfunded vested
benefits to withdrawing employers from a multiemployer pension plan and
requires adjustments in determining an employer's withdrawal liability
when a multiemployer plan is in critical status. In December 2008, PBGC
published a final regulation to implement these provisions and to
provide other improvements to the withdrawal liability rules.
Compliance assistance
PBGC has initiated a regulatory project to assist plans to comply with
requirements applicable to certain substantial cessations of
operations. ERISA section 4062(e) provides for reporting of and
liability for certain substantial cessations of operations by employers
that maintain single-employer plans. In early 2010, PBGC expects to
publish a proposed regulation that would provide guidance as to what
constitutes a section 4062(e) event, on the reporting of such an event
to PBGC, and on the determination and satisfaction of liability arising
from such an event.
Reemployed service members' pension benefits
In 2009, PBGC published a proposed regulation that would implement
provisions of the Uniformed Services Employment and Reemployment Rights
Act of 1994 (USERRA). USERRA provides that an individual who leaves a
job to serve in the uniformed services is generally entitled to
reemployment by the previous employer and, upon reemployment, to
receive credit for benefits, including employee pension plan benefits,
that would have accrued but for the employee's absence due to the
military service. The proposed regulation would provide that so long as
a service member is reemployed within the time limits set by USERRA,
even if the reemployment occurs after the plan's termination date, PBGC
would treat the participant as having satisfied the reemployment
condition as of the termination date. This would ensure that the
pension benefits of reemployed service members, like those of other
employees, would generally be guaranteed for periods up to the plan's
termination date.
PBGC will continue to look for ways to further improve its regulations.
BILLING CODE 7709-01-S
