Plan for Regulatory Review

This document sets forth the Pension Benefit Guaranty Corporation’s plan for the review of its 

existing regulations, pursuant to Executive Order 13563 on Improving Regulation and 

Regulatory Review. 

PBGC is implementing Executive Order 13563 by: 

• Reconsidering several regulations PBGC had previously proposed. 

 

• Beginning to make changes to provide for more extensive public participation in 

rulemaking by adding public hearings and other means to its process. 

Background 

The Pension Benefit Guaranty Corporation (PBGC) protects the pensions of about 44 million 

people in about 29,000 private defined benefit plans. PBGC pays benefits when the sponsors of 

those plans cannot. PBGC receives no funds from general tax revenues. All operations are 

financed by insurance premiums, investment income, assets from pension plans trusteed by 

PBGC, and recoveries from the companies formerly responsible for the trusteed plans. 

To carry out these functions, PBGC issues regulations interpreting such matters as the 

termination process for defined benefit plans, establishment of procedures for premium 

payments, reporting and disclosure of actions by plans and their sponsors that may affect plan 

liability, and assessment and collection of employer liability.1

On April 1, 2011, PBGC requested public comments on developing its preliminary plan. PBGC 

received comments from four organizations representing employers or pension professionals and 

a pension consulting firm.

 

2

 After incorporating public comments and further internal feedback, 

PBGC developed a preliminary plan and made it available for public comment, including 

through www.regulations.gov, Facebook, and Twitter.

3

 

1 PBGC’s regulations are in 29 CFR Chapter XL.

 PBGC did not receive further comments 

on the preliminary plan. 

2

 The Request is posted at www.pbgc.gov/Documents/2011-7805.pdf. Comments received are posted on PBGC’s 

Web site at www.pbgc.gov/Documents/reducing-regulatory-burden-comments(5).pdf. Any additional comments 

will be posted as they are received. 

3 The preliminary plan can be found at www.whitehouse.gov/files/documents/2011-regulatory-actionplans/PensionBenefitGuarantyCorporationPreliminaryRegulatoryReformPlan.pdf. 
2 

Principles

Despite the inherent complexity of pensions and of PBGC’s activities, PBGC is committed to 

issuing simple, understandable, flexible, and timely regulations to help employers, practitioners, 

and participants. PBGC seeks to: 

• Minimize administrative burdens on plans and participants. 

• Simplify filing. 

• Provide relief for small businesses and plans, and assist plans to comply with applicable 

requirements (i.e., by making its regulations easier to comply with and providing 

assistance and guidance to the regulated community, including through customer service 

calls, interpretive guidance documents, and meetings with plan administrators and service 

professionals). 

PBGC’s regulatory review plan is designed to ensure that PBGC’s regulations remain consistent 

with these principles and to improve its regulatory program and processes. Many changes have 

occurred in the decades since PBGC was established and began its regulatory program, including 

new legislation, changes in technology, and shifts in the economy or relevant industries. 

PBGC’s review of its regulations will take such changes into account in order to improve its 

regulations, always striving to find better alternatives. Further, to the extent practicable, PBGC 

will seek to rely on information sources, reporting mechanisms and performance standards that 

are already established and accepted by the regulated community, thereby reducing duplication 

and costs, as well as increasing regulatory coordination, simplicity, and flexibility. 

Executive Order 13563 calls not for a single exercise, but for “periodic review of existing 

significant regulations,” with close reference to empirical evidence. It explicitly states that 

“retrospective analyses, including supporting data, should be released online wherever possible.” 

Consistent with the commitment to periodic review and to public participation, PBGC will 

continue to assess its existing regulations in accordance with the requirements of Executive 

Order 13563. PBGC welcomes public suggestions about appropriate reforms. Please send 

comments to regs.comments@pbgc.gov . 

Priorities for Review

Regulations that are not consistent with these principles will be prioritized for review to 

determine whether they should be modified, streamlined, expanded, or repealed as appropriate. 

PBGC will also prioritize regulations for review based on the following criteria:4

• Regulations affected by a fundamental change since originally promulgated, including 

new legislation, changes in technology, and shifts in the economy or relevant industry. 

 

4

 If PBGC had regulations that were considered economically significant (under Executive Order 12866), these 

would be a priority.

 
3 

• Regulations that have raised concerns with PBGC’s regulated community.

• Regulations identified through internal surveys of PBGC departments.

PBGC will review a regulation as soon as practicable following a fundamental change in 

circumstances that affects the regulation or in response to comments from stakeholders or 

relevant operating Departments. Significant regulations will be reviewed at least every ten years.

PBGC will prioritize regulatory changes resulting from this review in the context of its broader 

regulatory agenda, which includes regulations to implement statutory changes.5 Thus, this 

review will supplement that agenda, rather than displace it. 

Issues in Review

In reviewing a regulation, PBGC will compare the actual consequences of the regulation with the 

pre-promulgation projections and expectations about the regulation’s effectiveness, costs, 

benefits, and burdens. In each case, PBGC will ask:

• Is the regulation effective? 

 

o Does it accomplish its stated goals?

o What has been the actual burden? 

o Are there unintended beneficial or costly side effects?

• Are there better alternatives?

PBGC will consider the full range of distributive impacts, rather than focusing exclusively on 

impacts to a single community, as well as impacts on PBGC’s broader regulatory program. 

 

5

 In particular, a proposed regulation to implement Pension Protection Act of 2006’s expansion of PBGC’s Missing 

Participants program (part 4050) is far along in development and expected to be issued in 2011.
4 

Selection of Rules for Review

The Appendix lists regulations that PBGC is in the process of reviewing or intends to review in 

the near future. The list will be posted on PBGC’s Web site (www.pbgc.gov) and updated from 

time to time as progress is made on review items and new items are selected for review. The 

initial list takes into account public comments on PBGC’s April 1, 2011, Request and internal 

feedback. Where practicable, the list of rules for review will provide timeframes for completing 

review items.

Structure and Staffing

Review of PBGC regulations will be conducted by an inter-departmental working group 

consisting of representatives from relevant operational, legal, and policy departments. The 

review project will be led by PBGC’s Deputy Director for Policy.

Coordination 

Executive Order 13563 calls for greater harmonization and coordination within and across 

agencies. Accordingly, PBGC will review selected rules to analyze their impact on the pension 

termination insurance program and broader federal agency regulation of pensions. PBGC will 

coordinate its review with the other ERISA agencies (Department of Labor, Department of 

Treasury, Internal Revenue Service), its Board agencies (in addition to Labor and Treasury, the 

Department of Commerce), and the Office of Management and Budget. 

Consultation and Public Participation

Executive Order 13563 calls for an “open exchange” of information among government officials, 

experts, stakeholders, and the public. 

One commenter (an association of major employers that provide defined benefit plans) 

recommended that PBGC create a stakeholder advisory group that would meet regularly to 

review regulations and discuss other issues related to PBGC’s impact on plan sponsors. PBGC 

already has a statutory Advisory Committee, which includes persons from various 

constituencies, including employers, employees, and the public. PBGC has begun consulting 

with the Advisory Committee to develop a useful role in regulatory activities, which PBGC 

anticipates will include review of both existing and prospective rules. 

In addition, PBGC is changing its traditional practices for review of its regulations and wants to 

involve the public more often in that process. Accordingly PBGC will: 

• Hold public hearings on major regulations, rather than relying solely on written 

comments. PBGC also plans to provide additional means for public involvement, 

including on-line town hall meetings, social media, and continuing opportunity for public 

comment on PBGC’s Web site. 
5 

• Post this Plan for Regulatory Review on PBGC’s Web site for public comment (including 

through www.regulations.gov, Facebook, and Twitter) and post comments. 

• Include information on review of specific regulations in PBGC’s semi-annual Regulatory 

Agenda and annual Statement of Regulatory and Deregulatory Priorities (both are 

available on www. reginfo.gov). PBGC plans to include an explanation of its review 

conclusions in information accompanying any such regulatory changes. 

PBGC will review its regulatory review plan periodically or in response to public comment and 

make appropriate modifications as required to ensure its effectiveness.

The public is encouraged to submit comments on PBGC’s review plan on an on-going basis 

as PBGC engages in its regulatory review or nominate rules to review. Please send 

comments to regs.comments@pbgc.gov. 
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APPENDIX

LIST OF RULES FOR REVIEW

Below is a list of rules PBGC selected for review consideration through 2012, with more specific 

timeframes indicated below where feasible.

Reportable Events. ERISA section 4043 requires that plan administrators and sponsors notify 

PBGC of the occurrence of certain events that may signal problems with a pension plan or 

business. In response to Executive Order 13563 and comments on its November 2009 proposed 

rule on Reportable Events,6

 PBGC was already planning to re-propose this rule with an emphasis 

toward reducing the unnecessary burdens on employers and plans. PBGC is considering: 

• Whether and to what extent it can take advantage of other existing reporting requirements 

and methods to avoid burdening companies and plans. 

• How to implement industry’s suggestion that different reporting requirements should 

apply in circumstances where the risk to PBGC is low or compliance is especially 

burdensome. 

For fiscal year 2010, PBGC received 1,096 reportable event filings and estimates that the total

burden for all respondents was 6,582 hours and $ 2,303,700. PBGC expects that the new 

proposal would more effectively target troubled plans while reducing burden for healthy plans 

and sponsors. In addition to reporting burden, PBGC also is looking at ways to reduce the need 

to monitor events at all. PBGC plans to publish a new proposed rule in the fall of 2011. 

ERISA section 4062(e). The statutory provision provides for reporting of and liability for 

certain substantial cessations of operations by employers that maintain single-employer plans. In 

light of industry comments, PBGC will also reconsider its 2010 proposed rule7 that would 

provide guidance on the applicability and enforcement of ERISA section 4062(e). In addition, 

PBGC will consider reducing the reporting burden and tying 4062(e) to risk through the same 

approaches being considered for reportable events. 

Premiums. In recent years, the option of electing to use the alternative method to calculate the 

variable rate premium and related procedures have complicated some aspects of making 

premium filings. In some instances, plans and companies that failed to make necessary filings 

and payments in a timely and consistent way have asked PBGC to provide relief. In response to 

comments, PBGC has begun to review parts 4006 (Premium Rates) and 4007 (Payment of 

Premiums) to determine whether changes could be made, including: 

• Premium penalty relief. PBGC has decided to automatically waive premium payment 

penalties that are assessed solely because a premium payment is late by seven calendar 

days. PBGC estimates that providing a waiver for such late premium penalties could 

 

6 74 Fed. Reg. 61247 (Nov. 23, 2009), http://www.pbgc.gov/Documents/E9-28056.pdf . 

7 75 Fed. Reg. 48283 (Aug. 10, 2010), http://www.pbgc.gov/Documents/2010-19627.pdf . 
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save plans and employers in the aggregate as much as $400,000 annually. In the spirit of 

Executive Order 13563, PBGC is also considering revising its premium penalty policy to 

be more flexible in the case of clerical or administrative errors generally and is already 

taking steps in this direction. Such changes could remove undue penalty burdens on plan 

sponsors where there is minimal risk to the pension insurance system or intent to evade 

regulatory requirements. 

• Alternative premium funding target election relief. In order to reduce the burden and 

actuarial fees associated with calculating the variable rate premium (VRP), PBGC’s 

premium regulations allow a plan to elect to use the alternative premium funding target 

(APFT) to calculate its VRP and requires that such elections be filed with PBGC before 

the VRP due date. PBGC is aware that this regulatory provision has caused some 

difficulties for some filers. For example, some plans that used the APFT without having 

filed a valid election to do so asked PBGC to treat them as having made a valid election. 

PBGC provided limited relief for this type of situation in Technical Update 10-2.8

 In 

response to comments, PBGC has been providing further relief as a matter of 

enforcement discretion. 

• Small plan due date. The premium due date for plans with fewer than 100 participants is 

four months after year-end (April 30 for calendar year plans). One commenter said that 

some small plans with year-end valuation dates have difficulty meeting the filing 

deadline because such plans traditionally do not complete their actuarial valuation for 

funding purposes until after the premium due date. In light of this concern, PBGC will 

review part 4007 to determine whether changes could be made that would enable small 

plans to streamline their premium valuation procedures and thereby reduce actuarial fees. 

PBGC will consider several options (e.g., extending the due date, permitting the use of 

prior-year data). PBGC expects any change with respect to the due date for small plans 

would require a regulatory change and therefore could first be effective for the 2013 plan 

year.

• Voluntary correction program for new filers. Periodically PBGC comes across situations 

where the plan administrator was not aware that the plan was covered by PBGC and 

therefore never paid premiums. PBGC will consider implementing a program addressing 

such situations under which premium payment penalties would be reduced or eliminated 

if such plans come forward and pay past premiums (and interest) within a specified 

timeframe. Such a program could encourage earlier compliance, thereby producing 

premium revenue more quickly, and reduce penalty costs for plan sponsors. PBGC 

expects to be able to implement this program by December 31, 2011.

Information Penalty Policy. PBGC is considering amending its regulation on Rules for 

Administrative Review of Agency Decisions (part 4003) to cover information penalties under 

ERISA section 4071 and part 4071 (as PBGC proposed to do in 2001). This would make the 

process for assessing and reviewing information penalties more transparent and consistent with 

other agency determinations. In addition, pending a more comprehensive review of its current 

 

8 www.pbgc.gov/res/other-guidance/tu/tu10-2.html . 
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information penalty policy,9 PBGC is considering updating its current policy to include 

mitigating factors. PBGC will consider other changes to the policy to improve its compliance 

program, taking into account the circumstances of small businesses. These changes could 

potentially encourage compliance and reduce compliance costs. PBGC expects to complete this 

review by December 31, 2011. 

ERISA section 4010. In response to several comments, PBGC has begun reviewing part 4010 

(Annual Financial and Actuarial Information Reporting) and the related e-filing application to 

see how it can reduce burden while preserving its ability to receive critical information. PBGC 

is considering waiving reporting for plans that must file 4010 information solely on the basis of 

either a statutory lien resulting from missed required contributions of over one million dollars or 

outstanding funding waivers exceeding the same amount. In 2009 and 2010, less than eight 

percent of 4010 filers were required to report based on these two filing tests. For 2010, there 

were 18 such filers; that number is expected to increase slightly in 2011. Further, PBGC can 

obtain some information similar to that reported under section 4010 from other sources, such as 

reportable events filings. Waiving reporting based on these two tests would reduce the 

compliance and cost burden on plan sponsors. For example, a plan sponsor relieved of 4010 

reporting might save between six and 24 hours annually from the need to identify controlled 

group members and preparing financial information submissions. Further, such plan sponsors 

might save approximately $17,000 in actuarial costs (depending in part on whether they were 

first time filers). Based on 2010 data, the aggregate actuarial cost savings for all plans could be 

over $310,000. In addition, as discussed below, some of the changes under consideration to part 

4044 would also reduce burden for 4010 filers. Finally, PBGC is also considering other changes 

to section 4010 reporting that would further reduce burden for financially sound companies, by 

taking into account company financial health and targeting reporting more closely to the risk of 

plan termination; such changes might require legislative action. 

Changes in other regulations to improve plan and PBGC administration. PBGC will review 

selected aspects of parts 4022 (Benefits payable in terminated single-employer plans), 4044 

(Allocation of assets in single-employer plans), Subchapter I (Withdrawal Liability for 

Multiemployer Plans) and Subchapter J (Insolvency, Reorganization, Termination, and Other 

Rules Applicable to Multiemployer Plans) to eliminate obsolete provisions, simplify language, 

and fill in gaps where guidance would be helpful to the public and the relevant operating 

departments, including: 

• Streamlining benefit valuation process. PBGC will review selected aspects of subpart B 

of CFR part 4044 (Valuation of benefits and assets) to streamline the process of valuing 

benefits. In particular, PBGC will consider changing the methodology for determining 

the age at which participants start receiving benefits, with the goal of simplifying the 

process and reflecting actuarial best practices in light of technological advancements. 

This would reduce the burden of complying with ERISA section 4010 and the Internal 

Revenue Code section 414(l) safe harbor rules related to plan spin-offs. 

 

9 60 Fed. Reg. 36837 (Jul. 18, 1995), www.pbgc.gov/documents/071895.pdf . 
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• Annual Valuation Requirement for Terminated but not Insolvent Multiemployer Plans. 

When a multiemployer plan terminates, the plan must perform an annual valuation of the 

plan’s assets and benefits under ERISA sections 4041A.24(a) and 4281.11(a). The plan’s 

initial valuation following termination is necessary to determine the plan’s total unfunded 

vested benefits that need to be allocated to withdrawn employers and to determine 

whether the plan needs to eliminate benefits that are not eligible for the PBGC guarantee 

under ERISA section 4022A(b). But if all the benefits are eligible for the PBGC 

guarantee, the cost of such annual valuations does not provide sufficient benefit in terms 

of the improvement in accuracy of data with respect to small plans. Furthermore, under 

ERISA section 4041A.12(e), PBGC has authority to require updated valuations from 

terminated plans. Based on its regulatory review, PBGC has decided that annual 

valuations continue to be necessary for large plans (based on net PBGC liability), but are 

not necessary for smaller plans. For smaller plans, PBGC has decided that valuations are 

necessary at least every five years, but not more frequently than every three years. 

Accordingly, PBGC plans to amend § 4041A.12(e) to specify the timing for updated 

valuations depending on the size of the plan. Based on PBGC’s experience, the cost of 

annual valuations in recent years ranges from $10,000 to $90,000 for terminated plans 

(both large and small plans), with an average cost of between $20,000 and $25,000 per 

year per plan. Thus, PBGC anticipates that a plan that would be eligible for relief would 

incur these costs once every three to five years rather than every year. PBGC is not 

planning to change the current rules for insolvent multiemployer plans. 

• Withdrawal liability rules. PBGC plans to review the withdrawal liability rules under 

ERISA sections 4203 through 4221 to determine whether some provisions may be 

eliminated as obsolete, if language can be simplified, and whether there are gaps where 

guidance would be helpful to the public and the relevant operating departments. 

• Notices of insolvency and of insolvency benefit level. Terminated multiemployer plans 

that determine that they will be insolvent for a plan year must file a series of notices and 

updates to notices under §§ 4281.43 through 4281.46. These notice requirements can be 

detrimental to plan participants because they may use up assets that would be available to 

pay plan benefits. With respect to PBGC, the cost of such notices far exceeds any 

tangible benefits. The overwhelming majority of terminated multiemployer plans that 

become insolvent will remain insolvent. Participants will receive the initial notice of 

insolvency informing them that their benefits will be reduced to the PBGC guarantee. 

Subsequent notices and updates for terminated plans provide little additional value to 

PBGC or the participants and beneficiaries of the plans. Thus, PBGC plans to review 

these notice requirements to determine whether they should be revised or eliminated.

• Filing requirements for mergers of multiemployer plans. Multiemployer plans are 

prohibited from merging unless, among other things, they file certain information with 

PBGC. Such mergers do not pose any increase in the risk of loss to PBGC or to plan 

participants. These filing requirements increase administrative costs to PBGC and plans 

and create an unnecessary burden in completing the merger. Thus, PBGC plans to review 

the filing requirements for multiemployer mergers where a compliance determination is 

not requested to determine whether they should be revised to require only a notice to 
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PBGC of the merger 30 days before the effective date. The current reporting 

requirements would remain in effect where a compliance determination is requested.

These steps could have the effect of reducing the overall burden on plan sponsors in determining 

how to comply with the applicable rules. Eliminating certain provisions may reduce the time and 

cost spent identifying items plan sponsors need to comply with. Simplifying language and 

developing guidance to fill in gaps could reduce the amount of time and cost spent on 

interpreting rule provisions. Improving PBGC administration allows PBGC to better allocate 

resources. 

Elimination of obsolete regulation. PBGC removed part 4011 (Disclosure to Participants) 

from its regulations, since that regulation does not apply to plan years beginning on or after 

January 1, 2007.10

 

10 76 Fed. Reg. 45403 (Jul. 29, 2011), 

 The elimination of this regulation will reduce the amount of time and cost 

spent on identifying items that plan sponsors need to comply with. 

www.pbgc.gov/documents/2011-19182.pdf .