PBGC Proposes Payment Changes

December 22, 2000 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) has announced a number of changes that affect how it pays benefits to participants.

The changes would apply to participants in terminated defined benefit pension plans the agency takes over from bankrupt employers.

The proposal would:

Allow participants – with spousal consent – to choose among several alternative annuity benefit forms and to designate non-spouse beneficiaries

  • introduce the Earliest PBGC Retirement Date, which will distinguish for PBGC purposes between separations from service and retirements
  • Provide rules on who should receive benefits owed at the time of the participant?s death
  • Recognize an entitlement to benefits where plan conditions relating to age, length of service, disability, or death are met on or before the plan’s termination date, rather than just before
  • Simplify application of the maximum guaranteed benefit rules when an individual is entitled to a benefit both as a participant and as a survivor of another participant.

The proposal was published in the December 26, 2000, Federal Register . Comments on the proposal must be received by February 26, 2001 – and may be sent by email to reg.comments@pbgc.gov.

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits.

Its operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.

– Nevin Adams                                  editors@plansponosor.com