The Pension Benefit Guaranty Corporation says that mergers can protect the benefits earned by workers and retirees and extend the solvency of troubled plans.
The PBGC expanded the examples about how to determine premiums in a year when a plan is involved with a spinoff, merger or consolidation, and it expanded the section about short plan years to provide additional information for plans expecting to distribute assets during the 2018 plan year pursuant to a standard termination.
Among other things, a federal appellate court rejected a district court’s decision that the PBGC standards for establishing successor liability are outlined in the Multiemployer Pension Plan Amendment Act of 1980 (MPPAA) and do not apply to single-employer plans.
If there are missing participants that plan sponsors have not made a genuine effort to find, “the entire plan could be disqualified under the tax code and the plan fiduciaries may be found to have breached their ERISA duties,” says Norma Sharara, a partner with Mercer.
The agency identifies information that would be helpful for plan sponsors to provide to help it evaluate proposed alternative terms and conditions to satisfy withdrawal liability.
One interesting question addressed is whether spinning off a separate plan during the plan year is a way to reduce PBGC premiums.
As noted on the updated PBGC website, effective immediately, the federal pension insurance program has a new set of addresses for plan sponsors sending premium payments and correspondence.
Passionate testimony from a Teamster to the Joint Select Committee on the Solvency of Multiemployer Pension Plans appeared to outshine that from three financial experts.
With some exceptions, PBGC premium payers and data providers can now assume filing relief from the pension insurer in each case that the IRS issues its own disaster-related relief that impacts the filing of Forms 5500.
Experts with cash balance plan design and administration provider Kravitz define the concept of strategic plan termination—what the pros and cons are, and what an employer’s responsibilities entail under IRS and PBGC regulations.
The agency says it needs the information to estimate its multiemployer program liabilities for purposes of its financial statements.
Senator Sherrod Brown calls it imperative "to find a bipartisan solution to the crisis threatening 1.3 million Americans."
The likelihood the program will remain solvent after FY 2026 is now less than 1%.
Reeder recently told the Joint Select Committee on Solvency of Multiemployer Pension Plans that insolvency of the PBGC multiemployer program could result in participants in failed multiemployer plans receiving a very small fraction—an eighth or less, on average—of the current benefit guarantee level.
Tens of thousands of employers in the U.S. contribute to multiemployer pension funds that are in critical and declining status, collectively facing an unfunded liability well above $100 billion; Society of Actuary researchers warn of potential ripple effects should many of their plans fail at once.
Plan sponsors now have the opportunity to contact the agency for a pre-filing consultation to discuss the filing process and ensure the filing of a distress termination is appropriate given the sponsor’s specific circumstances.
This enables corporations to expense their contributions at a higher tax rate, according to Cerulli.
U.S. Senators Orrin Hatch and Sherrod Brown are seeking public and industry input on ways to improve the solvency of multiemployer pension plans and the Pension Benefit Guarantee Corporation.