A new proposal exempts most companies and plans from many reports, and targets requirements to the minority of companies and plans that are at substantial risk of default. Under the new proposal, reporting would be waived for most events currently covered by funding-based waivers if a plan or its sponsor comes within a financial soundness safe harbor based on widely available measures already used in business. Waivers for small plans would be expanded and some other existing waiver provisions would be retained with modifications; other waivers would be eliminated.
By doing this, PBGC can reduce unnecessary reporting requirements, while at the same time target its resources to plans that are at risk, the agency said. The revised proposal will exempt more than 90% of plans and sponsors from many reporting requirements. Reporting requirements would also be made simpler and more uniform.The rule would simplify the descriptions of several reportable events and make some event descriptions narrower so that compliance is easier and less burdensome. The rule would also make electronic filing of reportable events notices mandatory.
The PBGC seeks comments answering:
- What are the advantages and disadvantages of the proposed safe harbor for financially sound plan sponsors?;
- What are commenters’ experiences with commercial credit reporting companies that might be relevant to developing a reportable events safe harbor?;
- Does the proposal provide an appropriate way to assess financial soundness of plan sponsors?;
- Regarding the number and stringency of the criteria for the financially sound company safe harbor, should there be more or fewer criteria than the five proposed in this rule?;
- Are there standard, commonly used metrics that could be applied to determine financial soundness that do not rely on third party commercial credit reporting companies (e.g., based on balance sheet or cash-flow ratios, such as current assets to current liabilities, debt to equity, or some form of debt-service to cash-flow ratio)?;
- Should PBGC adopt other standards of creditworthiness?;
- For the proposed safe harbor via plans, what alternative funding percentage(s) (on a termination basis or premium basis) should be permitted, and why?;
- Should PBGC provide other alternative waivers? Should such alternatives be in addition to, or in place of, the proposed financial soundness safe harbors for companies and plans?; and
- How can PBGC implement safe harbors, whether based on financial soundness or other factors, in a consistent, transparent, well-defined, and replicable or verifiable way?
Comments must be submitted on or before 60 days after publication in the Federal Register [anticipated publication date is April 3, 2013]. A public hearing will be held on June 18, 2013. Outlines of topics to be discussed at the hearing must be submitted on or before June 4, 2013.
The proposed rule is here.