What's New for Practitioners Archive

Study on Orphan and Inactive Participants in Multiemployer Plans: The study analyzes data reported by multiemployer pension plans regarding orphan participants who formerly worked for employers that have withdrawn and other inactive participants. The study notes that plans with the most underfunding report a high concentration of orphans and other inactive participants.

Solicitation of Nominations for Appointment to PBGC’s Advisory Committee: On August 1, 2019, PBGC published a solicitation for nominations for the agency’s Advisory Committee, which gives advice on investment issues and other matters related to PBGC’s mission. Under ERISA, the Advisory Committee members are appointed to serve term appointments. Therefore, PBGC is currently seeking nominations for three seats, two representing employee organizations and one representing the general public, which will be vacant in February 2020. 

The Committee meets six times a year with at least one joint session with PBGC’s Board of Directors. The Committee consists of seven members: two representatives of employee organizations, two representatives of employers who maintain pension plans, and three representatives of the general public. Nominees must have experience with defined benefit plans.

Proposed Changes to Premium Filing Instructions for 2020 Plan Years: PBGC is proposing to make changes to the premium filing requirements first effective for the 2020 plan year. These changes relate only to the risk-transfer and final filing questions. Accordingly, on August 1, 2019, PBGC published a notice announcing that PBGC intends to request OMB approval of these changes and is soliciting public comment on the proposed changes. A document showing what those questions and related instructions would look like if approved is available on PBGC’s website. Please note that PBGC also expects to make routine changes, e.g., 2020 premium rates, to the filing instructions.

Clarification to Guidance on Mergers and Transfers Between Multiemployer Plans: On September 14, 2018, PBGC published a final rule to implement its authority to facilitate mergers of multiemployer pension plans. PBGC has posted a clarification to the preamble in the second example of how a plan can demonstrate that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan’s ability to remain solvent. This example in the preamble states that, “while not a threshold, a possible demonstration may be based on stochastic modeling showing that the merged plan’s probability of insolvency within 30 years of the merger exceeds 65% without the requested financial assistance.” (See 83 FR 46642, at 46647 column 3). The percentage in this example should be 35% (not 65%).

Coverage Determinations: PBGC’s new form and instructions for requesting a determination about whether a plan is covered under title IV of ERISA has been approved by OMB and is now available for use. This form was created to streamline and simplify the coverage determination process. The instructions explain that in limited circumstances, under a one-year pilot program, employers may also use the form to request an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC. PBGC’s Coverage webpage has been updated accordingly.

e-Filing Portal: PBGC published a final rule in May that simplifies certain reporting and disclosures of plan information by terminated and/or insolvent multiemployer plans to PBGC, participants and beneficiaries. The final rule is effective July 1, 2019. PBGC has updated its e-Filing Portal to reflect the changes and simplifications to the notices and information that terminated and/or insolvent multiemployer pension plans are required to file with PBGC. These changes include a new combined notice of insolvency and notice of insolvency benefit level as well as requirements to file actuarial valuation information and withdrawal liability information with PBGC. These new filing requirements are applicable for plan years ending after July 1, 2019.

Miscellaneous Corrections, Clarifications, and Improvements Proposed Rule: PBGC is proposing to make clarifications, corrections and improvements to four of its regulations. The proposed rule would amend:

• Reportable Events – eliminate possible duplicative reporting of active participant reductions, clarify when a liquidation occurs, and provide additional examples for certain events;
• Financial and Actuarial Information Reporting – eliminate a requirement to submit individual financial information for each controlled group member and add a new reporting waiver;
• Standard Terminations – provide more time to file a post-distribution certification; and
• Premium Rates – emphasize that a plan does not qualify for the variable rate premium exemption for the year in which it completes a standard termination if it engages in a non-de minimis spinoff in the same year.

This proposed rule is based on PBGC’s ongoing efforts to review the effectiveness and clarity of its rules and input from stakeholders. The proposed rule will be published in the Federal Register on June 27, 2019, with a 60-day public comment period.

Proposed 4062(e) Form Series: PBGC is proposing to clarify and simplify the process for providing PBGC the required notifications following a substantial cessation of operations and election to make additional annual contributions to satisfy resulting liability. On May 15, 2019, PBGC is publishing a notice that PBGC intends to request OMB approval of a form series and instructions to be used when fulfilling these notification requirements. The proposed form series and instructions list the information and documents required to notify PBGC of: (1) a substantial cessation of operations (Form 4062(e)-01); (2) election to make additional annual contributions (Form 4062(e)-02); (3) payment of an additional contribution, termination of obligation for future contributions, or receipt of funding waiver from the IRS (Form 4062(e)-03); and (4) failure to pay an additional contribution (Form 4062(e)-04). PBGC is soliciting public comments on the proposed form series and instructions.

New Single-Employer Guarantee Study and Data Tables Update: PBGC released a new Single-Employer Guarantee Study. This comprehensive study examines how well the single-employer guarantee protects pensions of participants in PBGC-trusteed plans. The analysis shows that 84 percent of participants receive their full pension benefit while 16 percent see reductions. The average cutback is 24 percent for those who do receive a reduced pension. Findings of the new study are broadly comparable and support those of the 2008 study, while broadening the original study’s scope and methodology.

Additionally, PBGC updated the 2016 Data Tables that provides detailed statistics for PBGC-insured single-employer and multiemployer plans. The tables include data that quantifies the number of people and plans that PBGC protects, the people receiving or eligible to receive benefits from PBGC and the benefits paid to them, the funded status of PBGC-protected plans, and other vital statistics.

Reportable Event and Large Unpaid Contribution Forms and Instructions: OMB has approved minor revisions to the ERISA 4043 forms and instructions (i.e., Forms 10, 10-Advance and 200). The most notable change is that controlled group and financial information must now be submitted (as an attachment) with all Form 10 filings. In the past, that requirement applied to most, but not all, filings. The new forms and instructions can be found on PBGC’s Reportable Events & Large Unpaid Contributions webpage. PBGC’s e-filing portal has been updated accordingly.

Coverage Determinations: On May 8, 2019, PBGC is submitting to OMB for review under the Paperwork Reduction Act draft forms and instructions to be used for coverage determinations. Included in the OMB Submission is a supporting statement addressing public comments on the proposed forms and instructions. Of note was a comment requesting that employers be allowed to request coverage determinations before creating and sponsoring pension plans. Although PBGC cannot provide coverage determinations for plans that do not exist, the supporting statement explains that, in limited situations, employers will be able to use the soon-to-be issued coverage forms to request an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC.

Comments are due to OMB by June 7, 2019. Information on how to comment is included in the related Federal Register notice.

Pre-filing Consultation Service: PBGC now offers a pre-filing consultation for ERISA 4010 filers, especially first-time filers, looking for guidance on filing requirements. PBGC staff will provide an overview of the process, share helpful tips on how to use the e-filing software, and provide insights on how to avoid common filing errors. To schedule a pre-filing consultation, send an email to ERISA.4010@pbgc.gov or call (202)-326-4000 ext. 3075. You can also visit PBGC’s website for more information: ERISA 4010 Reporting.

Simplified Methods for Computing Withdrawal Liability: On February 6, 2019, PBGC published a proposed rule that would implement statutory changes under the Multiemployer Pension Reform Act of 2014 affecting the determination of a withdrawing employer’s liability under a multiemployer plan and annual withdrawal liability payment amount. The proposed rule would provide simplified methods for determining withdrawal liability and annual payment amounts that a plan sponsor would be able to adopt to satisfy the statutory requirements that certain amounts associated with funding improvement/rehabilitation plans and benefit suspensions be disregarded. PBGC is soliciting comments on the proposed rule.

Update to Staff Guidance Questions and Answers: PBGC has updated its Staff Responses to Practitioner Questions webpage to include additional information about guaranteed benefits, reportable events and standard terminations. PBGC will update this webpage periodically as additional questions arise. The updated Q&As can also be accessed on the Other Guidance webpage under the “Employers and Practitioner” menu on PBGC.gov.

Pilot Mediation Program Made Permanent and Expanded: PBGC’s Pilot Mediation Program is now permanent and PBGC has added fiduciary breach cases to the categories of disputes covered by the program. This gives plan administrators the opportunity to resolve these cases with a neutral, professional, independent mediator in a timely and cost-effective manner.

Fiduciary breach cases involve situations where plan fiduciaries, such as sponsors, administrators and certain advisors, take actions that violate their duties of loyalty and prudence to participants. In 2017, PBGC started the Mediation Program as a pilot project with certain termination liability collection and Early Warning Program cases.

2019 Premium Filings: My PAA is now ready to accept electronic premium filings for plan years beginning in 2019. In addition, we’ve made several enhancements to My PAA to simplify/streamline the premium payment process. Of particular note:

• My PAA Demos are now available directly from every page header within My PAA; 
• All “team members” will be notified be email when new PBGC premium-related correspondence is sent (copies of such correspondence can be viewed via the Plan Correspondence Quick Link); 
• Filing Coordinators can now add or remove “team members” for multiple plans at once; and
• With the exception of “uploaded” filings, filers now have the ability to attach a document when submitting premium filings online using My PAA in the event they would like to include additional explanations for any premium filing data.

Annual Update of Maximum Civil Monetary Penalty: Federal law requires that PBGC amend its civil penalty regulations annually to incorporate an inflation adjustment on the maximum penalty that may be assessed when plans fail to provide certain required information (e.g., reportable event filings, 4010 filings, certain multiemployer plan notices). Accordingly, PBGC published a final rule amending two regulations (29 CFR parts 4071 and 4302).

Although the maximum penalty is increasing, it is uncommon for PBGC to assess this amount. The agency's goal is to encourage compliance. In most cases, when PBGC assesses an information penalty, it is for an amount significantly less than the maximum permitted.

2019 Premium Filing Instructions: The Comprehensive Premium Filing Instructions for 2019 Plan Years (including the illustrative form) have been approved by OMB and are now available on PBGC's website. Besides updating the instructions to reflect the 2019 premium rates, minor changes have been made to reflect PBGC’s streamlined disaster relief policy. In addition, the instructions now provide information, previously available only in the My PAA user’s manual, about the options plan administrators may use to certify premium filings (i.e., manually instead of electronically). My PAA will be ready to accept 2019 filings in the very near future.

Expected Retirement Age Annual Update: On December 12, 2018, PBGC published a final rule amending its valuation regulation by substituting a new table for selecting a retirement rate category. The new table applies to any plan being terminated either in a distress termination or involuntarily by the PBGC with a valuation date falling in 2019. A copy of the table is available on PBGC’s ERISA Section 4044 Retirement Assumptions web page.

2019 Mortality Tables: On December 3, 2018, PBGC posted the mortality table to be used for determining the present value of annuities in involuntary terminations and distress terminations of single-employer plans with 2019 valuation dates (per 29 CFR 4044). A unisex version of that table, used in specified situations to determine the benefit transfer amount under the Missing Participants Program (per 29 CFR 4050) was also posted. HTML and Excel versions of the 2019 mortality tables are available on PBGC’s ERISA section 4044/4050 mortality table webpage.