Premiums

Pension Benefit Guaranty Corporation 87-9 Augus t 24, 1987 RE FERENCE: [*1] 4006 Premium Rat es29 C FR Part 2610 Declaration and Payment of Premiums OP INION: This is in response to the issues raised in your letter of July 27 to * * * concerning PBGC premiums in SocialSecurit y integrated plans. As I understand it, your question is whether premiums are payable for participants in anintegrated excess plan where their service will not result in a unit of credit for accrued benefit purposes because theplan is a "true unit credit plan" and their compensation is below the minimum compensation level. It is the view ofthe PBGC that premiu ms are required in a plan year for employees who are participants in a plan, even though theyare n either accruing benefits nor entitled to service credits for accrual purposes because their compensation is belowthe min imum compensation level in an excess plan. Your le tter recognizes that the instructions for PBGC Form 1 provide that the participant count must includeemployees w ho may not be accruing benefits because their compensation is below the minimum compensation levelin an i ntegrated excess plan. You postulate that such employees are included in the participant count, although theyare not c urrently accruing benefits, as a [*2] protection for the PBGC from large amounts of benefit liability thatcould occur i f such employees moved above the minimum compensation level and became entitled to accruedben efits based on full service. You then ask whether or not, in an integrated unit credit plan, where accrued benefitsare not ba sed on total service but only on each year's credited service, premiums should be payable for thoseemp loyees below the covered compensation level. Implici t in your question is the assumption that the PBGC premium payment obligation reflects the traditional"risk spreading" insurance concept. The PBGC's termination insurance, however, is not comparable