Federal Register / Vol. 74, No. 233 / Monday, December 7, 2009 / The Regulatory Plan 64347 

PENSION BENEFIT GUARANTY 

CORPORATION (PBGC) 

Statement of Regulatory and 

Deregulatory Priorities 

The Pension Benefit Guaranty 

Corporation (PBGC) protects the 

pensions of about 44 million people in 

about 28,500 private defined benefit 

plans. PBGC receives no funds from 

general tax revenues. 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, 

establishment of procedures for the 

payment of premiums, reporting and 

disclosure, and assessment and 

collection of employer liability. The 

Corporation is committed to issuing 

simple, understandable, and timely 

regulations to help affected parties. 

PBGC’s intent is to issue regulations 

that implement the law in ways that do 

not impede the maintenance of existing 

defined benefit plans or the 

establishment of new plans. Thus, the 

focus is to avoid placing burdens on 

plans, employers, and participants, 

wherever possible. PBGC also seeks to 

ease and simplify employer compliance 

whenever possible. 

PBGC Insurance Programs 

PBGC administers two insurance 

programs for private defined benefit 

plans under title IV of the Employee 

Retirement Income Security Act of 1974 

(ERISA): a single-employer plan 

termination insurance program and a 

multiemployer plan insolvency 

insurance program. 

• Single-Employer Program. Under the 

single-employer program, PBGC pays 

guaranteed and certain other pension 

benefits to participants and 

beneficiaries if their plan terminates 

with insufficient assets (distress and 

involuntary terminations). 

• Multiemployer Program. The smaller 

multiemployer program covers about 

1500 collectively bargained plans 

involving more than one unrelated 

employer. PBGC provides financial 

assistance (in the form of a loan) to 

the plan if the plan is unable to pay 

benefits at the guaranteed level. 

Guaranteed benefits are less than 

single-employer guaranteed benefits. 

At the end of fiscal year 2009, PBGC 

had a $22 billion deficit in its insurance 

programs. 

Regulatory Objectives and Priorities 

As described below, PBGC’s current 

regulatory objectives and priorities are 

to complete implementation of the 

Pension Protection Act of 2006 (PPA 

2006) by issuing simple, 

understandable, and timely regulations 

that do not impose undue burdens that 

could impede maintenance or 

establishment of defined benefit plans. 

PBGC is also working on several 

regulatory projects not related to PPA 

2006. These regulatory objectives and 

priorities are developed in the context 

of the Corporation’s statutory purposes: 

• To encourage voluntary private 

pension plans; 

• To provide for the timely and 

uninterrupted payment of pension 

benefits; and 

• To keep premiums at the lowest 

possible levels. 

PBGC also attempts to minimize 

administrative burdens on plans and 

participants, improve transparency, 

simplify filing, provide relief for small 

businesses, and assist plans to comply 

with applicable requirements. 

Transparency 

The Corporation seeks to improve 

transparency of information to plan 

participants, investors, and PBGC, in 

order to better inform them and to 

encourage more responsible funding of 

pension plans. PPA 2006 requires 

disclosure of certain information to 

participants regarding the termination of 

their underfunded plan. PBGC 

published a final regulation on this 

disclosure of termination information in 

November 2008. 

PPA 2006 makes changes to the plan 

actuarial and employer financial 

information required under section 4010 

of ERISA to be reported to PBGC by 

employers with large amounts of 

pension underfunding. PBGC published 

a final regulation implementing those 

changes in March 2009. 

Electronic filing 

PBGC has simplified filing by 

increasing use of electronic filing 

methods. Electronic filing of premium 

information has been mandatory for all 

plans for plan years beginning on or 

after January 1, 2007. Filers have a 

choice of using private-sector software 

that meets PBGC’s published standards 

or using PBGC’s software. Electronic 

premium filing simplifies filers’ 

paperwork, improves accuracy of 

PBGC’s premium records and database, 

and enables more prompt payment of 

premium refunds. Most of the premium 

changes under PPA 2006 have now been 

incorporated into software so that it will 

be easy to comply with the premium 

changes under the new law. 

Employers with large amounts of 

underfunding in their plans must file 

actuarial and financial information 

under section 4010 of ERISA 

electronically. Electronic filing reduces 

the filing burden, improves accuracy, 

and better enables PBGC to monitor and 

manage risks posed by these plans. 

PBGC incorporated the PPA 2006 

changes to this reporting into software 

so that it will be easy to comply with 

the reporting changes under the new 

law. 

Small businesses 

PBGC gives consideration to the 

special needs and concerns of small 

businesses in making policy. A large 

percentage of the plans insured by 

PBGC are small or maintained by small 

employers. The first proposed 

regulation PBGC published under PPA 

2006 implemented the cap on the 

variable-rate premium for plans of small 

employers. In early 2010, the 

Corporation expects to issue a proposed 

regulation implementing the expanded 

missing participants program under 

PPA 2006, which will also benefit small 

businesses. 

Other PPA 2006 changes 

Under PPA 2006, if a plan terminates 

while its sponsor is in bankruptcy, and 

the bankruptcy was initiated on or after 

September 16, 2006, the bankruptcy 

filing date is treated as the plan 

termination date for purposes of 

determining the amount of benefits 

PBGC guarantees and the amount of 

assets allocated to participants who 

retired or have been retirement-eligible 

for three years. In 2008, PBGC published 

a proposed regulation to implement this 

statutory change; PBGC expects to 

finalize the regulation in late 2009. 

PPA 2006 changes the rules for 

determining benefits upon the 

termination of a statutory hybrid plan, 

such as a cash balance plan. PBGC plans 

to publish a proposed regulation in late 

2009 to implement those rules in both 

PBGC-trusteed plans and in plans that 

close out in the private sector. 

Under PPA 2006, the phase-in period 

for the guarantee of a benefit payable 

solely by reason of an ‘‘unpredictable 

contingent event,’’ such as a plant 

shutdown, starts no earlier than the date 

of the shutdown or other unpredictable 

contingent event. PBGC plans to publish 

a proposed regulation implementing 

this statutory change in late 2009. 


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64348 Federal Register / Vol. 74, No. 233 / Monday, December 7, 2009 / The Regulatory Plan 

PPA 2006 provides for changes in the 

allocation of unfunded vested benefits 

to withdrawing employers from a 

multiemployer pension plan and 

requires adjustments in determining an 

employer’s withdrawal liability when a 

multiemployer plan is in critical status. 

In December 2008, PBGC published a 

final regulation to implement these 

provisions and to provide other 

improvements to the withdrawal 

liability rules. 

Compliance assistance 

PBGC has initiated a regulatory 

project to assist plans to comply with 

requirements applicable to certain 

substantial cessations of operations. 

ERISA section 4062(e) provides for 

reporting of and liability for certain 

substantial cessations of operations by 

employers that maintain singleemployer plans. In early 2010, PBGC 

expects to publish a proposed regulation 

that would provide guidance as to what 

constitutes a section 4062(e) event, on 

the reporting of such an event to PBGC, 

and on the determination and 

satisfaction of liability arising from such 

an event. 

Reemployed service members’ pension 

benefits 

In 2009, PBGC published a proposed 

regulation that would implement 

provisions of the Uniformed Services 

Employment and Reemployment Rights 

Act of 1994 (USERRA). USERRA 

provides that an individual who leaves 

a job to serve in the uniformed services 

is generally entitled to reemployment by 

the previous employer and, upon 

reemployment, to receive credit for 

benefits, including employee pension 

plan benefits, that would have accrued 

but for the employee’s absence due to 

the military service. The proposed 

regulation would provide that so long as 

a service member is reemployed within 

the time limits set by USERRA, even if 

the reemployment occurs after the 

plan’s termination date, PBGC would 

treat the participant as having satisfied 

the reemployment condition as of the 

termination date. This would ensure 

that the pension benefits of reemployed 

service members, like those of other 

employees, would generally be 

guaranteed for periods up to the plan’s 

termination date. 

PBGC will continue to look for ways 

to further improve its regulations. 

BILLING CODE 7709–01–S 


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