[Federal Register Volume 74, Number 233 (Monday, December 7, 2009)]
[Unknown Section]
[Pages 64347-64348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X09-241207]


[[Page 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.
<bullet> 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).
<bullet> 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:
<bullet> To encourage voluntary private pension plans;
<bullet> To provide for the timely and uninterrupted payment of pension 
            benefits; and
<bullet> 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.

[[Page 64348]]

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 single-employer 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