Pension Benefit Guaranty Corporation 

75-84 

August 21, 1975 

REFERENCE: 

 [*1] 4022(a) Benefits Guaranteed. Type of Benefits Guaranteed

4043(b)(6) Reportable Events. Inability to Pay Benefits

4082(c). Effective Date; Special Rules. Applicability of Title IV to Multiemployer Plan Terminations 

OPINION: 

 This Corporation has carefully studied the request of the * * * that we guarantee benefit payments to certain retirees

upon the Fund's decision temporarily to suspend those payments. We are concerned about the severe cash shortage

facing the Fund and about the hardships retired * * * will suffer if they lose their $30.00 monthly pensions. But the

statute we administer, while giving the Corporation discretion to guarantee some multiemployer plan benefits prior to

January 1, 1978, does impose limits upon us. Under the Act, the Corporation has determined, we cannot lawfully grant

your application in its present form because the benefit suspension you contemplate is not an insurable event. The

Corporation has also determined that the Act does not ordinarily authorize guarantees in a permanent cessation of

benefits to a group of plan participants even though that cessation may appropriately be characterized as a "partial

termination." Finally, we have concluded that, even [*2] if we had the power to do so we would not, as a matter of

discretion, guarantee benefits in that kind of "partial termination" during the § 4082(c)(2), "discretionary," period before

the Act's guarantees become generally applicable to multiemployer plans. In light of these determinations, we have

decided not to approve your application in its present form but to afford you a reasonable opportunity to amend your

request to one for benefits in a full termination. The reasons underlying our substantive determinations follow. 

 As indicated, we do not believe that a temporary benefit suspension is an insurable event. Rather, it is a "reportable

event," see § 4043(b)(6), which authorizes the Corporation to terminate a plan pursuant to § 4042(a). Nor, in our view,

are "partial terminations" generally insurable. 

Literally, of course, the guarantee provisions of Title IV are not applicable to "partial terminations." On the contrary,

where the statute authorizes the payment of benefits, it refers to ". . . a plan which terminates . . . ." Act § § 4022(a);

4082(c)(2). By contrast, in § 4043(b), the statute refers explicitly to both terminations and partial terminations. That

section demonstrates [*3] Congress's understanding of the distinction between partial and full terminations and

Congress's resort to explicit language to make its purpose clear when it wished to cover both in the same operative

section. Furthermore, provisions of the Act other than § § 4022(a) and 4082(c)(2), (the guarantee provisions) describe

and specify the Corporation's response to certain "partial terminations," see § § 4043(b)(3), 4062(e) and 4063. Had

Congress intended that partial terminations would be generally insurable, these provisions would not have been

necessary. 

The statutory purpose generally to limit guarantees to full terminations is not only apparent on the face of the statute;

it is also evidenced by the Act's legislative history. Thus, the House version of the Act provided expressly for the

payment of guaranteed benefits upon "the complete or partial termination" of plans. H.R. 2, 93d Cong., 2nd Sess. § 403

(February 28, 1974). (Emphasis supplied.) The bill reported by the Senate Committee on Labor and Public Welfare,

S. 4, 93d Cong., 1st Sess. § 402(a) (April 18, 1973) provided termina tion insurance for "complete or substantial

terminations." (Emphasis added.) But the [*4] bill adopted by the Senate and sent to Conference provided such insurance

only for "a plan which terminates . . . ." H.R. 2, 93d Cong., 2nd Sess. § 422(a) (March 4, 1974). It appears that the

Conference Committee followed the Senate bill, rather than the House bill, on this point. Thus, we conclude, the

Congress considered and rejected a proposal to make partial terminations generally insurable. 

 We have carefully considered your contention, supported by the view of one authoritative spokesman, * * * that

Congress conferred special power upon us to pay benefits in partial terminations in the period before the guarantee

provisions become generally applicable to multiemployer plans. The statute does not appear to reflect that view. Indeed,

as you are aware, both § § 4022(a) and 4082(c)(2) (which gives PBGC discretion to pay benefits in multiemployer plan

terminations prior to 1978) describe the insurable event in precisely the same terms. Accordingly, we have concluded
that § 4082(c)(2) gives us discretion to pay benefits only in "terminations" which would be insured under other

provisions of the Act but for the delay imposed by § 4082(c)(1). 

Even if we were satisfied that the [*5] broader view of our power under § 4082(c)(2) is correct, as a matter of

discretion, we would not pay benefits in multiemployer plan partial terminations under § 4082(c). We do not believe

that it would be appropriate to insure plans which terminate now in circumstances in which insurance would have to be

denied to plans which terminate after December 31, 1977. In addition, that course might prompt a spate of applications

from plans which, rather than revise their benefit structures or increase contributions, as your fund has, will terminate

a group of retirees, and apply for insurance on their behalf. We do not believe that, in giving us discretion to pay benefits

prior to January 1, 1978, Congress intended thus to enlarge the scope of the multiemployer plan program. Hence, the

Corporation has decided not to grant your application in its present form as a matter of discretion, as well as, because

the Corporation does not believe that such a course would be lawful. 

As we have stated, we will consider an amended application for benefits upon a full termination of the Fund, if you

decide to submit such an application. We understand that in deciding upon your next step, it would [*6] be helpful if

we responded to that portion of your application which requests a general waiver of employer liability. The Corporation

has determined not to grant such blanket waivers. Rather, we will consider each contributing employer's situation

separately and grant a waiver of reduce liability where the facts warrant relief. See § 4004(f)(4). If you so request, we

will make an advance determination concerning each contributing employer within a reasonable time after you supply

the necessary information concerning that employer. 

 The Corporation's Board of Directors has approved the policies underlying the determinations referred to above.

Should you wish to discuss the substance of any or all of these decisions with me and members of my staff in connection

with the formulation of amendments to your pending requests, we will be happy to meet with you at your convenience.

Steven E. Schanes 

Executive Director