llnitcd ~tgtcs ~cngtc WASHINGTON, DC 20510 

May 20. 20 10 

Vincent K. Snowbargcr 

Acting Director 

Pension Bene fit Guaranly Corporation 

1200 K Streel. NW 

I t h Floor 

Washington. DC 20005·4026 

Dear Mr. Snowbargcr: 

We arc writing to yo u to express our concern with recenl decisions made by the Pension 

Benefi t Guaranty Corporation (" PI3GC') regarding premium filin gs. 

As you know. defin ed benefi t plan administrators may calculate PBGC variable faiC 

premiums using either the "Standard Method" or the "Alternat ive Method:' For 2009. the 

Ahcrnmivc Method genera ll y nllowed plan sponsors to pay lower premiul11 s than the Standard 

Method. 

WI,: have been IO ld Ihal many plans made their premium lilings for 2009 thi nking they 

had clcl:lcd to lise the AltcrIlmivc r-vlcthod and arc now bei ng told by PI3GC thatthcy are not 

entitled 10 use the Alt ern ative Method because oran inadve rtent error. Speci fi cally. many 

sponsors ncglccted to check box 5 indic<lt ing that they were elec ting to LIse thc Alte rnati ve 

Method. Alt hough box 5 was not checked. th ose sponsors did. in ~le , indicate their election by 

(i) checki ng the Alte rnative Method box on line 7, and (ii) timely paying their premiulll as 

calculmcd under the Alt ernat ive j\'lcthod. Notnbly. the on-line premium filing rorm failed to 

prompt these plans 10 indicate the need to check both boxes. Thus, it appears to us that thcse 

plans clected to usc the Alte rnative Method. 

Ilowcvc r. we arc told that the PBGC is taking the position thm this inadvertent error 

should disqualify the plans from using the Alt ernative Method. As a re sult, plans are racing 

mill ions or dollars in additional premiums. as \V~ II as interest and penalties. 

There is no policy reason for PBGe to take sllch a position. This is not an instance where 

plans arc ntlcmpting 10 ""game the system" by making decisions with the bene ri t of hind sigh I. 

Thcse plans made the d..:cision to use the Alternati ve Method when lhey timely made their 

premium lil ings. 
• 

,I 

Tom I-larki n 

Chairman 

Committee on Health. Education. 

Labor and Pensions 

l 

Chainnan 

Committee on Finance 

Charles Grassley 

Ranking Member 

Committee on Finance 

We strongly urge the PBGC 10 reconsider its dec ision on this issue. We also ask the 

PI3GC to conside r usi ng its aut hority in a fair and reasonable manner wilh respec t to plans that 

clec lCd th e Ahernative Method late. Accordi ng to infonll ation presented to us, some late filers 

paid on time, but inadvertentl y failed to cl ick 0 11 "submit" to fi le a compl eted form. Other plans 

were late because IRS guidance critical to maki ng an Alternative Method elec tion was not issued 

unti l shortly before the Oc tober 15, 2009 premium due date. PBGC should take these 

circumstances under conside ration in de termining how to treat these plans. 

We thank you fo r your consideration of the views expressed in this letter . 

~,a~ Ranking Membe r 

Committee on llca lth, Education, 

Labor and Pensions 

ce: The Honorable Hilcb L. Solis, Secretary of Labor, Chair of the Board of the Pension 

Benefi t Guaranty Corporation 

The Honora ble Ti mothy F. Ge ithner. Secretary of the Treasury, Member of the Board of 

the Pension l3enefit Guaranty Corporation 

The Honorable Ga ry Locke. Secretary of Commerce, Membe r of the Board of the 

Pension Bene fi t Guara nty Corporation