[Federal Register Volume 60, Number 126 (Friday, June 30, 1995)]
[Rules and Regulations]
[Pages 34412-34417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16196]
[[Page 34411]]
_______________________________________________________________________
Part V
Pension Benefit Guaranty Corporation
_______________________________________________________________________
29 CFR Part 2627
Disclosure to Participants; Final Rule
Federal Register / Vol. 60, No. 126 / Friday, June 30, 1995 / Rules
and Regulations
[[Page 34412]]
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 2627
RIN 1212-AA77
Disclosure to Participants
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Pension Benefit Guaranty Corporation is amending its
regulations to implement a new notice requirement under section 4011 of
the Employee Retirement Income Security Act of 1974, as amended by the
Retirement Protection Act of 1994. Section 4011 requires plan
administrators of certain underfunded plans to provide notice to plan
participants and beneficiaries of the plan's funding status and the
limits on the PBGC's guarantee.
EFFECTIVE DATE: July 31, 1995.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, or Catherine B. Klion, Attorney, Office of the General
Counsel, PBGC, 1200 K Street NW., Washington, DC 20005-4026, 202-326-
4024 (202-326-4179 for TTY and TDD).
SUPPLEMENTARY INFORMATION: On March 28, 1995, the PBGC published in the
Federal Register (60 FR 16026) a proposed rule implementing a new
notice requirement under section 4011 of ERISA, which was added by
section 775 of the Retirement Protection Act of 1994 (subtitle F of
title VII of the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108
Stat. 4809 (1994)). Under section 4011, plan administrators of certain
underfunded plans must provide notice to plan participants and
beneficiaries of the plan's funding status and the limits on the PBGC's
guarantee.
The proposed rule prescribes which plans are subject to the notice
requirement, who is entitled to receive the notice, and the time, form,
and manner of issuance of the notice. The proposed rule includes a
model notice plan administrators could use.
The PBGC received 14 comments from plan sponsors, organizations
representing participants and plan sponsors, and pension practitioners.
PBGC has made changes in the final regulation pursuant to these
comments.
Form of Notice
Some commenters questioned the rule limiting the items that could
be in the Participant Notice. Some objected to the rule that additional
information be in a document separate from the Participant Notice, and
others suggested specific information they thought should be permitted
to be part of the Participant Notice. The regulation (Sec. 2627.10(d))
allows a plan administrator to provide additional information with the
Participant Notice. To allow the additional information to be in the
same document as the Participant Notice would run counter to the
Congressional purpose of making the Participant Notice clear, concise,
and focused. The final rule does include in the Participant Notice some
of the specific information suggested by commenters.
Commenters thought that certain information required in the
Participant Notice might generate undue concerns about benefit
availability and suggested ways to revise the notice. Congress mandated
plan administrators to provide participants with information on
underfunding and PBGC guarantees. To see that this information is
provided without raising undue concerns, the PBGC has revised the model
notice and certain requirements of the rule.
Three commenters objected to the requirement that the Participant
Notice include information on funding waivers and missed contributions,
noting that the information is not specified in section 4011 and is
subject to other disclosure requirements. Information on funding
waivers and missed contributions is relevant to participants'
understanding of a plan's funding status.
One of these commenters suggested that these Participant Notice
disclosure requirements be coordinated with the other disclosure
requirements. The final rule clarifies and limits the Participant
Notice disclosure requirements relating to funding waivers and missed
contributions.
The final rule makes clear that minimum funding waivers that have
been fully repaid as of the end of the prior plan year are not required
to be included. A waiver will be treated as fully repaid before the end
of the statutory amortization period only where the employer has made
contributions in excess of the minimum funding requirements and the
resulting credit balance is precluded from being used to satisfy future
minimum funding requirements by a waiver condition or contractual
obligation.
The final rule limits the circumstances in which participants must
be informed of missed contributions to the type of circumstances in
which notice to participants is required under section 101(d) of ERISA.
For the Participant Notice, plan administrators must disclose missed
contributions if (1) the plan had a funding deficiency at the end of
any prior plan year (taking into account contributions made before the
Participant Notice is issued and within the eight-and-one-half month
grace period after the plan year), or (2) a quarterly contribution or
other payment was overdue for more than 60 days. The plan administrator
must inform participants if the missed payment has or has not been made
and (if made) the date of the payment. Missed contributions for prior
plan years that have previously been disclosed to participants must be
included only if the contributions still have not been paid.
For example, assume that the last three quarterly payments for the
1995 calendar plan year (due July 15, 1995, October 15, 1995, and
January 15, 1996) were missed, but paid on September 15, 1996, along
with any remaining 1995 contributions needed to satisfy the minimum
funding standard. The Participant Notice for the 1995 plan year, issued
on November 15, 1995, would disclose the July 15 delinquency, but not
the October 15 or January 15 delinquencies (because neither would then
be overdue by more than 60 days). The Participant Notice for the 1996
plan year, issued on November 15, 1996, would not need to redisclose
the July 15 delinquency (since it has been paid), but would need to
disclose the October 15 and January 15 delinquencies unless they had
previously been disclosed to participants under Title I of ERISA.
The Department of Labor has advised PBGC that, in the absence of
final regulations implementing section 101(d) of ERISA (requiring
notice of failure to meet minimum funding standards), it will treat a
plan administrator that provides a Participant Notice as having
satisfied section 101(d) with respect to any missed contributions
identified in the Participant Notice.
The final regulation requires the Participant Notice to specify the
date as of which the Notice Funding Percentage is determined
(Sec. 2627.10(b)(2)). The PBGC expects many plans to determine the
Notice Funding Percentage using data from the prior plan year because
that will be the most current data available at the time the
Participant Notice is issued.
One commenter objected to the requirement that the Participant
Notice include, in addition to the name, address, and telephone number
of the plan administrator, the name, address and telephone number of an
individual who can answer questions about the plan's funding, pointing
out that communicating information on plan funding orally would be
burdensome and could lead to misunderstanding.
[[Page 34413]]
The final regulation eliminates the requirement that the plan
administrator be identified in all cases, and allows the Participant
Notice to identify any person(s) (including the plan administrator) who
will provide further information about the plan's funding. The
information need not be provided orally, and need not go beyond that
required to be given under Title I of ERISA.
One commenter suggested a minimum type size. Rather than specifying
a type size, the final regulation (Sec. 2627.10(a)) makes clear that
the Participant Notice not only has to be understandable, but also
readable (e.g., in a sufficiently large type size). The final
regulation (Sec. 2627.10(e)) also revises the foreign language
requirements to make clear that in lieu of providing a notice of
assistance in the applicable foreign language, plan administrators may
provide the Participant Notice itself in that language.
Model Notice
One commenter suggested that the PBGC subject the model notice to a
readability test. The model notice was subjected to readability tests
and focus group review by workers and retirees. Based on the results of
these reviews, the PBGC made changes to further simplify the model
notice.
Some commenters read the model notice as requiring information that
may not apply to particular plans and as limiting information on the
maximum guaranteed benefit to ages 55 and 65. The final regulation
revises the model notice so that plan administrators who wish to use it
may tailor it to fit particular plans. With respect to the maximum
guaranteed benefit, the final rule requires all plans to provide
information for age 65 (the age on which PBGC guarantees are based). A
plan that allows early retirement benefits must specify the maximum
guaranteed benefit for at least one early retirement age. A plan that
provides for normal retirement before age 65 must include the normal
retirement age.
Manner of Issuance
Commenters both supported and opposed the requirement that the
Participant Notice be in a separate document from the summary annual
report. Supporters expressed concern that the information in the
Participant Notice would be lost if combined with the summary annual
report, while those opposing the requirement suggested that combining
the two documents would be convenient or would reduce administrative
costs. The regulation (Sec. 2627.9) allows plans to issue the
Participant Notice with the summary annual report to minimize cost.
However, combining the two documents could obscure the information in
the Participant Notice. In making the disclosure provisions part of
Title IV of ERISA, Congress clearly signalled that information on
underfunding and PBGC guarantees not be entangled with other
information.
One commenter addressed the requirement that the Participant Notice
be issued by using measures reasonably calculated to ensure actual
receipt. The commenter suggested incorporating the Department of Labor
regulation on furnishing the summary annual report (29 CFR 2520.104b-
1(b)(1)) verbatim in the final Participant Notice regulation. The
examples specified in the DOL regulation, as well as any other methods
that DOL determines are acceptable under its regulation, are acceptable
for issuance of the Participant Notice. (Posting a notice of
availability of the Participant Notice at worksite locations is not an
acceptable method of issuance.) However, other methods of issuance may
be acceptable for the Participant Notice.
One commenter urged that the final regulation specify that posting
the Participant Notice on an electronic computer network does not
satisfy the notice requirement because few retirees, and even fewer
lower-income participants, have access to electronic mail. In certain
limited circumstances, issuance by electronic mail to employees may be
reasonably calculated to ensure actual receipt. However, issuance by
electronic mail to recipients who may not have access to or familiarity
with electronic mail or the ability to print out the notice easily
would not be acceptable.
Mergers, Consolidations, and Spin-offs
In the proposed rule, the PBGC invited comments on how the
Participant Notice requirement should apply where a plan has been
involved in a merger, consolidation, or spinoff transaction since the
prior plan year. No comments on this issue were received.
The final rule (Sec. 2627.6) requires plan administrators of plans
involved in those transactions to apply the requirements of section
4011 and of this regulation in a reasonable manner to accomplish the
statutory purpose of the Participant Notice. The PBGC may address what
is a reasonable means to accomplish the statutory purpose in future
guidance.
Miscellaneous Issues
Two commenters proposed that plans otherwise subject to the
Participant Notice requirement should be exempt if they represent a
minimal portion of the current liability of all of the contributing
sponsor's defined benefit plans. Another commenter suggested that all
small plans be exempt from the Participant Notice requirement.
Participants in these underfunded plans have the same need for the
information contained in the Participant Notice as do participants in
other underfunded plans.
The PBGC received several comments supporting or opposing the
requirement that the Participant Notice be issued to alternate payees
not in pay status and employee organizations representing participants
for purposes of collective bargaining. To ensure that the Participant
Notice serves its intended purpose of providing timely and useful
information to interested parties, the final rule retains the
requirement that the Participant Notice be issued to alternate payees
and unions. The regulation has been modified to make clear that an
alternate payee is entitled to receive the Participant Notice only if
an applicable qualified domestic relations order (as defined in section
206(d)(3) of ERISA) is on file with the plan.
One commenter wrote that the deadline for issuing the Participant
Notice should be no later than seven months after the end of the
preceding plan year so that participants will not have to wait as long
for the information. The rules seek to strike a balance between meeting
participants' need for timely information and minimizing burden on plan
administrators. To that end, the PBGC is retaining its proposed time
limit of two months after the deadline for filing the annual report for
the prior plan year to enable plans to distribute the Participant
Notice with the summary annual report. (The final rule specifies that
the plan administrator may change the date of issuance from one plan
year to the next, provided that the effect of any change is not to
avoid disclosing a minimum funding waiver under Sec. 2627.10(b)(5) or a
missed contribution under Sec. 2627.10(b)(6).)
That same commenter requested that the Department of Labor not
treat a plan administrator as having complied with the requirement to
disclose a plan's funding percentage in the summary annual report if
the plan administrator provides the Participant Notice under section
4011 (see 60 FR 16027). The Department of Labor advises PBGC that it
continues to believe that the duplicative reporting would impose an
unnecessary burden on plan administrators.
[[Page 34414]]
The PBGC expects most plan administrators to provide the
Participant Notice in compliance with this regulation. Any plan
administrator who does not comply with this regulation may be assessed
penalties under section 4071 of ERISA. If a plan administrator issues a
Participant Notice for the 1995 plan year that meets the requirements
of the proposed rule, the PBGC will not assess section 4071 penalties
based on a failure to comply with any different requirements in the
final rule.
E.O. 12866, the Regulatory Flexibility Act, and the Paperwork
Reduction Act
The PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866 because the rule will not have an annual effect on the economy of
$100 million or more or adversely affect in a material way the economy,
a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency; materially
alter the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or raise
novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866.
Under section 605(b) of the Regulatory Flexibility Act, the PBGC
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. Accordingly, as provided in
section 605 of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.),
sections 603 and 604 do not apply.
Small plans are exempt from the Participant Notice requirement for
the 1995 plan year. For subsequent plan years, neither the cost of
determining whether a plan is subject to the Participant Notice
requirement nor the cost of preparing and issuing the Participant
Notice is expected to be significant for a substantial number of small
entities. The regulation contains special rules designed to simplify
the Participant Notice requirement for small plans.
The Paperwork Reduction Act of 1995, which generally becomes
effective on October 1, 1995, will apply to the disclosure requirements
in this final rule. The PBGC intends in the near future to submit to
the Office of Management and Budget a request for approval of these
disclosure requirements and to publish in the Federal Register a notice
advising the public of its request.
List of Subjects in 29 CFR Part 2627
Employee benefit plans, Pension Insurance, Pensions.
For the reasons set forth above, the PBGC is amending subchapter
C, chapter XXVI of 29 CFR by adding a new part 2627 to read as follows:
Part 2627--DISCLOSURE TO PARTICIPANTS
Sec.
2627.1 Purpose and scope.
2627.2 Definitions.
2627.3 Notice requirement.
2627.4 Small plan rules.
2627.5 Exemption for new and newly-covered plans.
2627.6 Mergers, consolidations, and spinoffs.
2627.7 Persons entitled to notice.
2627.8 Time of notice.
2627.9 Manner of issuance of notice.
2627.10 Form of notice.
Appendix A to part 2627--Model participant notice.
Appendix B to part 2627--Table of maximum guaranteed benefits.
Authority: 29 U.S.C. 1302(b)(3), 1311.
Sec. 2627.1 Purpose and scope.
(a) Purpose. This part prescribes rules and procedures for
complying with the requirements of section 4011 of the Act.
(b) Scope. This part applies for any plan year beginning on or
after January 1, 1995, with respect to any single-employer plan that is
covered by section 4021 of the Act.
Sec. 2627.2 Definitions.
For purposes of this part:
Act means the Employee Retirement Income Security Act of 1974, as
amended.
Participant has the meaning in Sec. 2617.2 of this chapter.
Participant Notice means the notice required pursuant to section
4011 of the Act and this part.
Plan administrator means the administrator, as defined in section
4001(a)(1) of the Act.
Sec. 2627.3 Notice requirement.
(a) General. Except as otherwise provided in this part, the plan
administrator of a plan must provide a Participant Notice for a plan
year if--
(1) A variable rate premium is payable for the plan under section
4006(a)(3)(E) of the Act and part 2610 of this chapter for that plan
year; and
(2) The plan does not meet the Deficit Reduction Contribution
(``DRC'') Exception Test in paragraph (b) of this section (which may be
applied using the Small Plan DRC Exception Test rules in
Sec. 2627.4(b), where applicable) for that plan year or for the prior
plan year.
(b) DRC Exception Test--(1) Basic rule. A plan meets the DRC
Exception Test for a plan year if it is exempt from the requirements of
section 302(d) of the Act for that plan year by reason of section
302(d)(9), without regard to the small plan exemption in section
302(d)(6)(A).
(2) 1994 plan year. A plan satisfies the DRC Exception Test for the
1994 plan year if, for any two of the plan years beginning in 1992,
1993, and 1994 (whether or not consecutive), the plan satisfies any
requirement of section 302(d)(9)(D)(i) of the Act.
(c) Penalties for non-compliance. If a plan administrator fails to
provide a Participant Notice within the specified time limit or omits
material information from a Participant Notice, the PBGC may assess a
penalty under section 4071 of the Act of up to $1,000 a day for each
day that the failure continues.
Sec. 2627.4 Small plan rules.
(a) 1995 plan year exemption. A plan that is exempt from the
requirements of section 302(d) of the Act for the 1994 or 1995 plan
year by reason of section 302(d)(6)(A) is exempt from the Participant
Notice requirement for the 1995 plan year.
(b) Small Plan DRC Exception Test. In determining whether the
Participant Notice requirement applies for a plan year beginning after
1995, the plan administrator of a plan that is exempt from the
requirements of section 302(d) of the Act by reason of section
302(d)(6)(A) for the plan year being tested may use any one or more of
the following rules in determining whether the plan meets the DRC
Exception Test for that plan year:
(1) Use of Schedule B data. For any plan year for which the plan is
exempt from the requirements of section 302(d) of the Act by reason of
section 302(d)(6)(A), provided both of the following adjustments are
made--
(i) The market value of the plan's assets as of the beginning of
the plan year (as required to be reported on Form 5500, Schedule B) may
be substituted for the actuarial value of the plan's assets as of the
valuation date; and
(ii) The plan's current liability for all participants' total
benefits as of the beginning of the plan year (as required to be
reported on Form 5500, Schedule B) may be substituted for the plan's
current liability as of the valuation date.
(2) Pre-1995 plan year 90 percent test. A plan that is exempt from
the requirements of section 302(d) of the Act for a pre-1995 plan year
by reason
[[Page 34415]]
of section 302(d)(6)(A) satisfies the requirements of section
302(d)(9)(D)(i) for that pre-1995 plan year if the ratio of its assets
to its current liability for that plan year is at least 90 percent. For
this purpose, the plan's assets are valued without subtracting any
credit balance under section 302(b) of the Act, and its current
liability is determined using the highest interest rate allowable for
the plan year under section 302(d)(7)(C).
(3) Interest rate adjustment. If the interest rate used to
calculate current liability for a plan year is less than the highest
rate allowable for the plan year under section 302(d)(7)(C) of the Act,
the current liability may be reduced by one percent for each tenth of a
percentage point by which the highest rate exceeds the rate so used.
Sec. 2627.5 Exemption for new and newly-covered plans.
A plan (other than a plan resulting from a consolidation or
spinoff) is exempt from the Participant Notice requirement for the
first plan year for which the plan must pay premiums under part 2610 of
this chapter.
Sec. 2627.6 Mergers, consolidations, and spinoffs.
In the case of a plan involved in a merger, consolidation, or
spinoff transaction that becomes effective during a plan year, the plan
administrator shall apply the requirements of section 4011 of the Act
and of this part for that plan year in a reasonable manner to ensure
that the Participant Notice serves its statutory purpose.
Sec. 2627.7 Persons entitled to receive notice.
The plan administrator must provide the Participant Notice to each
person who is a participant, a beneficiary of a deceased participant,
an alternate payee under an applicable qualified domestic relations
order (as defined in section 206(d)(3) of the Act), or an employee
organization that represents any group of participants for purposes of
collective bargaining. To determine who is a person that must receive
the Participant Notice for a plan year, the plan administrator may
select any date during the period beginning with the last day of the
previous plan year and ending with the day on which the Participant
Notice for the plan year is due, provided that a change in the date
from one plan year to the next does not exclude a substantial number of
participants and beneficiaries.
Sec. 2627.8 Time of notice.
The plan administrator must issue the Participant Notice for a plan
year no later than two months after the deadline for filing the annual
report for the previous plan year (see Sec. 2520.104a-5(a)(2) of this
title). The plan administrator may change the date of issuance from one
plan year to the next, provided that the effect of any change is not to
avoid disclosing a minimum funding waiver under Sec. 2627.10(b)(5) or a
missed contribution under Sec. 2627.10(b)(6). When the President of the
United States declares that, under the Disaster Relief Act of 1974, as
amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists,
the PBGC may extend the due date for providing the Participant Notice
by up to 180 days.
Sec. 2627.9 Manner of issuance of notice.
The Participant Notice shall be issued by using measures reasonably
calculated to ensure actual receipt by the persons entitled to receive
it. It may be issued together with another document, such as the
summary annual report required under section 104(b)(3) of the Act for
the prior plan year, but must be in a separate document.
Sec. 2627.10 Form of notice.
(a) General. The Participant Notice (and any additional information
under paragraph (d) of this section) shall be readable and written in a
manner calculated to be understood by the average plan participant and
not to mislead recipients. The Model Participant Notice in the Appendix
to this part (when properly completed) is an example of a Participant
Notice meeting the requirements of this section.
(b) Content. The Participant Notice for a plan year shall include--
(1) Identifying information (the name of the plan and the
contributing sponsor, the employer identification number of the
contributing sponsor, the plan number, the date (at least the month and
year) on which the Participant Notice is issued, and the name, title,
address and telephone number of the person(s) who can provide
information about the plan's funding);
(2) A statement to the effect that the Participant Notice is
required by law;
(3) The Notice Funding Percentage for the plan year, determined in
accordance with paragraph (c) of this section, and the date as of which
the Notice Funding Percentage is determined;
(4) A statement to the effect that--
(i) To pay pension benefits, the employer is required to contribute
money to the plan over a period of years;
(ii) A plan's funding percentage does not take into consideration
the financial strength of the employer; and
(iii) The employer, by law, must pay for all pension benefits, but
benefits may be at risk if the employer faces a severe financial crisis
or is in bankruptcy;
(5) If, for any of the five plan years immediately preceding the
plan year, the plan has been granted a minimum funding waiver under
section 303 of the Act that has not (as of the end of the prior plan
year) been fully repaid, a statement identifying each such plan year
and an explanation of a minimum funding waiver;
(6) For any payment subject to the requirements of this paragraph,
a statement identifying the due date for the payment and noting that
the payment has or has not been made and (if made) the date of the
payment. Once participants have been notified (under this part or Title
I of the Act) of a missed contribution that is subject to the
requirements of this paragraph, the delinquency need not be reported in
a Participant Notice for a subsequent plan year if the missed
contribution has been paid in full by the time the subsequent
Participant Notice is issued. The payments subject to the requirements
of this paragraph are--
(i) Any minimum funding payment necessary to satisfy the minimum
funding standard under section 302(a) of the Act for any plan year
beginning on or after January 1, 1994, if not paid by the earlier of
the due date for that payment (the latest date allowed under section
302(c)(10)) or the date of issuance of the Participant Notice; and
(ii) An installment or other payment required by section 302 of the
Act for a plan year beginning on or after January 1, 1995, that was not
paid by the 60th day after the due date for that payment;
(7) A statement to the effect that if a plan terminates before all
pension benefits are fully funded, the PBGC pays most persons all
pension benefits, but some persons may lose certain benefits that are
not guaranteed;
(8) A summary of plan benefits guaranteed by the PBGC, with an
explanation of the limitations on such guarantee; and
(9) A statement that further information about the PBGC's guarantee
may be obtained by requesting the booklet ``Your Guaranteed Pension''
from Box YGP, Pueblo, Colorado 81009, along with the current price of
the booklet. The Participant Notice may include a statement that the
booklet may be obtained through electronic access to the Consumer
Information Center via
[[Page 34416]]
the World Wide Web at http://www.gsa.gov/staff/pa/cic/money.htm.
(c) Notice Funding Percentage--(1) General Rule. The Notice Funding
Percentage that must be included in the Participant Notice for a plan
year is the ``funded current liability percentage'' (as that term is
defined in section 302(d)(9)(C) of the Act) for that plan year or the
prior plan year.
(2) Small plans. A plan that is exempt from the requirements of
section 302(d) of the Act for a plan year by reason of section
302(d)(6)(A) may determine its funded current liability percentage for
that plan year using the Small Plan DRC Exception Test rules in
Sec. 2627.4(b).
(d) Additional information. The plan administrator may include with
the Participant Notice any information not described in paragraph (b)
of this section only if it is in a separate document.
(e) Foreign languages. In the case of a plan that (as of the date
selected under Sec. 2627.7) covers the numbers or percentages specified
in Sec. 2520.104b-10(e) of this title of participants literate only in
the same non-English language, the plan administrator shall provide
those participants either--
(1) An English-language Participant Notice that prominently
displays a legend, in their common non-English language, offering them
assistance in that language, and clearly setting forth any procedures
participants must follow to obtain such assistance, or
(2) A Participant Notice in that language.
Appendix A to Part 2627--Model Participant Notice
The following is an example of a Participant Notice that satisfies
the requirements of Sec. 2627.10 when the required information is
filled in (subject to Secs. 2627.10(d)-(e), where applicable).
Notice to Participants of [Plan Name]
The law requires that you receive information on the funding
level of your defined benefit pension plan and the benefits
guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a
federal insurance agency.
YOUR PLAN'S FUNDING
As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGE]
percent of the money needed to pay benefits promised to employees
and retirees.
To pay pension benefits, your employer is required to contribute
money to the pension plan over a period of years. A plan's funding
percentage does not take into consideration the financial strength
of the employer. Your employer, by law, must pay for all pension
benefits, but your benefits may be at risk if your employer faces a
severe financial crisis or is in bankruptcy.
[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE PREVIOUS
FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT FULLY REPAID
A FUNDING WAIVER.]
Your plan received a funding waiver for [LIST ANY OF THE FIVE
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS
NOT BEEN FULLY REPAID]. If a company is experiencing temporary
financial hardship, the Internal Revenue Service may grant a funding
waiver that permits the company to delay contributions that fund the
pension plan.
[INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE PAYMENT
THAT MUST BE DISCLOSED UNDER 29 CFR 2627.10(b)(6):]
Your plan was required to receive a payment from the employer on
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was
made on [LIST APPLICABLE PAYMENT DATE(S)]].
PBGC GUARANTEES
When a pension plan ends without enough money to pay all
benefits, the PBGC steps in to pay pension benefits. The PBGC pays
most people all pension benefits, but some people may lose certain
benefits that are not guaranteed.
The PBGC pays pension benefits, up to certain maximum limits.
The maximum guaranteed benefit is [INSERT FROM TABLE IN
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year
for a 65-year-old person in a plan that terminates in [INSERT
APPLICABLE YEAR].
The maximum benefit may be reduced for an individual
who is younger than age 65. For example, it is [INSERT FROM TABLE IN
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year
for an individual who starts receiving benefits at age 55. [IN LIEU
OF AGE 55, YOU MAY SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE PLAN. IF
THE PLAN PROVIDES FOR NORMAL RETIREMENT BEFORE AGE 65, YOU MUST
INCLUDE THE NORMAL RETIREMENT AGE. IF THE PLAN DOES NOT PROVIDE FOR
COMMENCEMENT OF BENEFITS BEFORE AGE 65, YOU MAY OMIT THIS
PARAGRAPH.]
The maximum benefit will also be reduced when a benefit
is provided for a survivor.
The PBGC does not guarantee certain types of benefits. [INCLUDE
THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE BENEFITS AVAILABLE
UNDER YOUR PLAN.]
The PBGC does not guarantee benefits for which you do
not have a vested right when a plan ends, usually because you have
not worked enough years for the company.
The PBGC does not guarantee benefits for which you have
not met all age, service, or other requirements at the time the plan
ends.
Benefit increases and new benefits that have been in
place for less than a year are not guaranteed. Those that have been
in place for less than 5 years are only partly guaranteed.
Early retirement payments that are greater than
payments at normal retirement age may not be guaranteed. For
example, a supplemental benefit that stops when you become eligible
for Social Security may not be guaranteed.
Benefits other than pension benefits, such as health
insurance, life insurance, death benefits, vacation pay, or
severance pay are not guaranteed.
The PBGC does not pay lump sums exceeding $3,500.
WHERE TO GET MORE INFORMATION
Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)].
If you would like more information about the funding of your plan,
contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF
INDIVIDUAL OR ENTITY].
For more information about the PBGC and the benefits it
guarantees, you may request a copy of ``Your Guaranteed Pension''
for $1.25 by writing to Box YGP, Pueblo, Colorado 81009.
[THE FOLLOWING SENTENCE MAY BE INCLUDED:]
``Your Guaranteed Pension'' is also available through electronic
access to the Consumer Information Center via the World Wide Web at
http://www.gsa.gov/staff/pa/cic/money.htm.
Issued: [INSERT AT LEAST MONTH AND YEAR]
Appendix B to Part 2627--Table of Maximum Guaranteed Benefits
----------------------------------------------------------------------------------------------------------------
The maximum guaranteed benefit for an individual starting to receive benefits at the age
listed below is the amount (monthly or annual) listed below:
If a plan -----------------------------------------------------------------------------------------------
terminates in-- Age 65 Age 62 Age 60 Age 55
-----------------------------------------------------------------------------------------------
Monthly Annual Monthly Annual Monthly Annual Monthly Annual
----------------------------------------------------------------------------------------------------------------
1995............ $2,573.86 $30,886.32 $2,033.35 $24,400.20 $1,673.01 $20,076.12 $1,158.24 $13,898.88
----------------------------------------------------------------------------------------------------------------
[[Page 34417]]
The maximum guaranteed benefit for an individual starting to
receive benefits at ages other than those listed above can be
determined by applying the PBGC's regulation on computation of
maximum guaranteeable benefits (29 CFR 2621.4).
Issued in Washington, DC, this 27th day of June, 1995.
Robert B. Reich,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
Issued on the date set forth above pursuant to a resolution of
the Board of Directors authorizing its Chairman to issue this final
rule.
James J. Keightley,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. 95-16196 Filed 6-28-95; 8:45 am]
BILLING CODE 7708-01-P
