The PBGC is proposing in a renewal request that all reportable events filings include controlled group information, company financial statements, and the plan’s actuarial valuation report.
A table on the PBGC’s website shows that the flat-rate premium for single-employer plans has grown from $31 in 2007 to $80 in 2019, and the variable-rate premium has grown from $9 to $43.
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.
Peggy McDonald, the senior vice president who led negotiations for Prudential, says the firm is committed to providing vested participants, retirees and benefices seamless transition.
They are seeking reductions as high as 50%.
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.
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.
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.
Regarding guidance to assist multiemployer pension plans that request PBGC review of alternative plan rules for satisfying employer withdrawal liability, the agency said for example, some proposals include incentives for employers to remain in the plan by providing discounted withdrawal liability that is conditioned on continued employer participation for a specified period of years.
The proposed rule would amend PBGC’s benefit payment regulation by replacing the guarantee limitations applicable to substantial owners with a new limitation applicable to majority owners.
The agency is required to adjust these amounts annually for inflation, but the agency says its goal is to encourage compliance, not to penalize plans that inadvertently forget to file information.