Pension Benefit Guaranty Corporation (PBGC) Director Joshua Gotbaum told attendees of the American Society of Pension Professionals & Actuaries (ASPPA) Annual Conference that his agency needs its customers, so it listens to their needs. The agency spends a lot of time trying to preserve plans that exist, and it is not just a safety net for plans that fail. Gotbaum said he realized in his position that small employers are different and therefore have different needs. He is concerned that small businesses are stuck in a rut and many are choosing to forego offering retirement plans – at a time when workers need them most.
Gotbaum said if he is still PBGC director after the election, there will be a small-plan exemption for the reportable events requirements for pensions in the Employee Retirement Income Security Act (ERISA). He also stated that the agency will soon issue a statement that it will not enforce its ERISA Section 4062 shutdown authority on small businesses. That provision allows the PBGC to require certain pension plan actions of companies that shut down or have a division shutdown that results in the termination of a certain number of employees.
Separately, Gotbaum told PLANSPONSOR that before any potential administration change, he hopes the U.S. Treasury issues more guidance to clarify regulations for cash balance plans to make it easier for employers to decide to adopt these plans. “It’s hard to offer a pension; we want to reduce the hassle,” Gotbaum said.
He also noted that the Department of Labor (DOL) and Internal Revenue Service (IRS) are working piece-by-piece on guidance to expand the use of lifetime income options in retirement plans. He said regulations should be pushed through to show plan sponsors the importance of using lifetime income options. “Because the point is, we have enough complexity; employers need more flexibility and options,” Gotbaum concluded.