The nation’s private-sector pension insurer said in the announcement that the APFT was included in a final regulation implementing provisions of the Pension Protection Act of 2006 that changed the way VRPs are determined.
The APFT allows plans to calculate the VRP using a method that is simpler and less burdensome than the statutorily prescribed method. If a plan chooses to use this method, it must make an election to do so and agree to use the APFT for at least five years.
PBGC regulation and premium filing instructions prescribe the manner and deadline for electing to use the APFT. In the vast majority of situations, plans followed these instructions and checked the appropriate box to indicate their election to use the APFT.
However, in about 5% of the cases where the APFT was used to compute the VRP, the PBGC said, the election box was not checked. Under a strict enforcement policy, plans in the latter situation would be required to amend their filings to re-calculate the VRP using the standard method.
The agency said some plans that used the APFT but did not check the election box said they intended to elect to use the APFT and requested that PBGC treat them as having done so.
As part of the relief, a plan that intended to elect to use the APFT will be deemed to have made a valid election if certain conditions are met. A Technical Update setting forth the scope of the relief and the process for obtaining it will be issued shortly.
A PBGC letter explaining the relief is available here.