"v(\ PBGC Pension Benefit Guaranty Corporation 

Protecting America's Pensions 1200 K Street, N,W., Washington, D.C. 20005-4026 

Office of the Director 

The Honorable Tom Harkin 

Chairman 

Committee on Health, Education, 

Labor and Pensions 

United States Senate 

The Honorable Michael Enzi 

Ranking Member 

Committee on Health, Education, 

Labor and Pensions 

United States Senate 

Dear Senators: 

June 7, 2010 

The Honorable Max Baucus 

Chairman 

Committee on Finance 

United States Senate 

The Honorable Charles Grassley 

Ranking Member 

Committee on Finance 

United States Senate 

Thank you for your May 20, 2010 letter regarding your concern over PBGC's enforcement effort 

with respect to certain premium filings. 

After carefully reviewing this matter, PBGC has decided to offer relief, outlined below, in the 

specific situation where a plan calculated its variable-rate premium ("VRP") using the alternative 

premium funding target ("APFT") but did not indicate in its premium filing that it was electing 

to do so (i.e., by checking Box 5'). 

Background 

The APFT was included in a final rule issued by PBGC on March 21 , 2008. This regulation 

implemented provisions of the Pension Protection Act of 2006 that changed the way VRPs are 

computed. The APFT allows plans to calculate the VRP using a method that is simpler and less 

burdensome than the statutorily prescribed method (i.e., the "standard" method). If a plan 

chooses to use this method, it must do so for at least five years. In some cases, the APFT may 

incidentally result in a lower VRP. This incidental effect was especially present after the 

Treasury Department issued "funding relief' guidance in fall 2009 which resulted in some plans 

paying much lower premiums under the APFT than they would have under the standard method. 

PBGC's regulation and premium filing instructions prescribe the manner and deadline for 

electing to use the APFT. In the vast majority of situations, plans followed these instructions and 

Although premium information must be submitted electronically (29 CFR § 4007.3), PSGC provides on its 

Web site, www.pbgc. gov, filing instructions including an illustrative form with a line number for each data 

element. For convenience, this letter refers to those line numbers. 
Page 2 

checked Box 5 to indicate that they were electing to use the APFT. However, in approximately 

5% of the cases where the APFT was used to compute the VRP, Box 5 was not checked. 

Because these practitioners were using the new election procedures for the first time, we 

recognize that mistakes, including clerical errors, could have been made. PBGC has therefore 

decided to offer relief as specified below. 

Proposed relief 

Pending OMB approval, PBGC plans to issue a Technical Update announcing that relief will be 

provided to any plan that intended to make the election to use the APFT but did not check Box 5 if-

• The plan filed on time, 

• The plan used the APFT to determine the VRP, and 

• The "Alternative" box was checked in line 7d (1), where the actuary reports the method 

that was used to determine the VRP. 

To take advantage of the relief, the plan administrator will be required to notify PBGC in writing by 

a specified date (e.g., 30 days) to say the plan intended to make the election. No other documentary 

evidence will be required. A plan in this situation will be deemed to have made a valid election, 

which will be locked in for five years. Similarly situated plans that have already amended their 

filings to use the standard method will also be eligible for the relief. 

In accordance with PBGC's administrative review regulation (29 CFR Part 4003), plan 

administrators who made other errors (e.g., late elections, invalid discount rates, etc.) will soon 

be receiving initial determination letters instructing them to amend their filings to correct the 

error. Like all initial determination letters, these letters will inform plan administrators that they 

have the right to submit a request for reconsideration. Such requests will be reviewed based on 

the facts and circumstances presented. 

Thank you again for bringing your concerns to my attention. 

Sinc~~~~ 

Vincent K. Snowbarger 

Acting Director 

cc: The Honorable Hilda L. Solis 

Secretary of Labor 

The Honorable Timothy F. Geithner 

Secretary of the Treasury 

The Honorable Gary Locke 

Secretary of Commerce