2000-1 §4211(b)

§4211(c)

§4214(a)

§4214(b)

§4220(a)

§4220(c)

 29 C.F.R. §4211.11(a)

[PBGC Letterhead]

January 27, 2000

This responds to your request for the opinion of the Pension

Benefit Guaranty Corporation (“PBGC”) concerning the application

of certain provisions of the Employee Retirement Income Security

Act of 1974 (“ERISA”), as amended by the Multiemployer Pension

Plan Amendments Act of 1980 (“MPPAA”), to a proposed change in a

multiemployer pension plan’s withdrawal liability allocation

method where the effect of that change would be to eliminate

withdrawal liability for the remaining employers who contribute

to that plan.

You represent that the Plan currently uses an alternate

allocation method, based on the “atrributable” or “direct

attribution” method as set forth in 29 U.S.C. § 1391(c)(4)(1994

and Supp. III 1997). The PBGC approved the Plan’s current

allocation method on October 18, 1992. The Plan is fully funded

and will continue to be so for the foreseeable future. Since the

effective date of MPPAA, 40 employers have withdrawn from the

Plan, leaving 16 contributing employers. There are currently no

outstanding withdrawal liability assessments. The aggregate

unfunded vested benefits, for withdrawal liability purposes, as

of December 31, 1997, was zero. You expect that the aggregate

unfunded vested benefits for withdrawal liability purposes will

continue to be zero for the foreseeable future.

You further represent that the Plan’s trustees are concerned

that under the Plan’s current alternate allocation method, an

employer with a significant number of retirees or past service

credits may have withdrawal liability even though the Plan as a

whole has zero unfunded vested benefits. As a result, the

Trustees are considering a change of the withdrawal liability
Page 2

allocation method to either the “one pool” or “twenty

pool/presumptive” method. We assume you refer to the “rolling-5"

and “presumptive” methods, respectively. 29 U.S.C. § 1391(b),

(c)(3). For withdrawals in 1999, the withdrawal liability for

all employers under the Plan would be zero using either of these

methods.

As a general rule, an amendment authorized by MPPAA becomes

effective only if the PBGC approves the amendment or fails to

disapprove the amendment within 90 days after it receives notice

and a copy of the amendment from the plan sponsor. 29 U.S.C.

§ 1400(a). The PBGC is to disapprove such an amendment only if

it determines that the amendment creates an unreasonable risk of

loss to plan participants and beneficiaries or to the PBGC. 

29 U.S.C. § 1400(c). The PBGC has determined that multiemployer

pension plans, with the exception of certain pension plans

covering employees in the building and construction industry, may

without the PBGC’s approval adopt by amendment any of the

statutory allocation methods. 29 C.F.R. § 4211.11(a). 

Therefore, if the Plan’s trustees elect to change the current

alternate allocation method to a statutory allocation method

described in 29 U.S.C. § 1391(b) or (c)(2)-(4), and the Plan is

not a construction industry plan, the Plan’s trustees may amend

the Plan to adopt the change without PBGC approval.

You should also note that such a change may not be applied

retroactively without the employer’s consent. 29 U.S.C.

§ 1394(a). Such an amendment must also be applied uniformly with

respect to each affected employer, and notice of the amendment

must be given to each employer who has an obligation to

contribute under the Plan and to all employee organizations

representing employees covered under the Plan. 29 U.S.C.

§ 1394(b). 

You asked whether the PBGC would consider the proposed

change in the Plan’s withdrawal liability allocation method to be

a violation of the trustees’ fiduciary duties. The PBGC’s

regulatory authority is limited to the application of Title IV of

ERISA, whereas fiduciary questions arise under Title I of ERISA. 

We therefore do not express any view whether the proposed change

in the Plan’s withdrawal liability allocation method would

implicate the trustees’ fiduciary duties under Title I. 

The Pension and Welfare Benefit Administration (“PWBA”),

within the United States Department of Labor, is charged with the

interpretation and enforcement of the fiduciary responsibility

provisions of Title I of ERISA. Should you desire PWBA’s opinion

with respect to the trustees’ fiduciary concerns, I suggest you
Page 3

write to Robert J. Doyle, Director of Regulations and

Interpretations, Pension and Welfare Benefit Administration,

United States Department of Labor, 200 Constitution Avenue, N.W.,

Room N-5669, Washington, D.C. 20210.

I trust this response has been informative. If you have any

questions, please feel free to call Ralph L. Landy of my staff at

(202) 326-4020, extension 3090.

Sincerely,

/ s /

James J. Keightley

General Counsel