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Actuarial - PBGC reform


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[Guidance Overview] PBGC Proposes Simplified Methods for Calculating Withdrawal Liability
"The requirement to disregard a benefit suspension in calculating the value of unfunded vested benefits would apply only for withdrawals that occur within the 10 plan years after the end of the plan year that includes the effective date of the benefit suspension.... The proposed regulations provide simplified methods for disregarding certain contribution increases when determining the allocation of unfunded vested benefits attributed to an employer and the annual withdrawal liability payment amount." (Littler)
Retirement Benefits for Millions May Be Slashed Without PBGC Reforms, Says GAO
"The increasing fragile PBGC finances for insuring multiemployer plans in unionized industries such as trucking and baking have long been a concern with a deficit running at $54 billion, but GAO cautions single employer plan insurance could also be at risk as well." (Forbes)
PBGC Pilot Mediation Project Is Now Permanent
"The Mediation Program remains voluntary and available only for certain cases and eligible plan sponsors. Cases are generally ineligible for the program if: [1] the plan sponsor has a minimal ability to pay; [2] there is a pending court proceeding; or [3] there is limited time to act and the plan sponsor has declined to sign a standstill or tolling agreement." (Proskauer's ERISA Practice Center)
Inspector General's Report: PBGC's Data Protection at Contractor-Operated Facilities (PDF)
32 pages. "We found controls relating to data protection at the contractor-operated facilities are, for the most part, suitably designed.... Controls relating to monitoring of the personnel security process and oversight by the Contracting Officer's Representatives (CORs) are not consistently executed in a manner to ensure protection of sensitive data. Vulnerabilities in the employee separation process ... require additional controls." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
PBGC Finalizes Mediation Program and Expands It to Cover Fiduciary Breach Cases
"The PBGC has engaged the Federal Mediation and Conciliation Service to serve as intermediaries in the dispute resolution processes. Under the program, the PBGC and plan sponsors share the cost of the mediation sessions to avoid the appearance that either side is favored." (Thomson Reuters Practical Law)
[Official Guidance] PBGC Pilot Mediation Program Made Permanent and Expanded
"PBGC launched a pilot project in October 2017 that offered mediation with certain termination liability collection and Early Warning Program cases. In January 2019, the pilot project became a permanent program and has expanded to include fiduciary breach cases." (Pension Benefit Guaranty Corporation [PBGC])
PBGC Fiscal Year 2018 Financial Statement Audit Management Letter Report (PDF)
16 pages. "During the FY 2018 audit, [CliftonLarsonAllen LLP (CLA), an independent certified public accounting firm], did not [identify] any new internal control deficiencies of less significant matters to be included in this report.... This year the OIG and CLA will continue working with management to discuss and evaluate the status of four remaining prior years' recommendations." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
PBGC Inspector General Report: Evaluation of the Early Warning Program (PDF)
21 pages. "We made 3 recommendations to management: ... [1] evaluate the effectiveness of current EWP initiation communication procedures and update as necessary to ensure companies are sufficiently informed about the program, [2] implement controls to ensure close out letters are provided, and [3] update their system to accurately report EWP case inventory.... Management agreed with the recommendations and agreed to take corrective action as identified in the report." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
[Opinion] PBGC Advocate's Report Highlights Issues Important to Retirees
"Making omitted participant claims to PBGC ... has historically been a difficult, complicated process for omitted participants and for the organizations that advocate for them.... [O]ver the past five years, the PBGC has made significant progress in streamlining the claims process for omitted participants. The 2018 report describes how all omitted participant claims have now been consolidated in a single PBGC office, which will make the claims process less daunting for retirees trying to obtain their benefits." (Pension Rights Center)
House Ways & Means Committee Chairman Introduces Legislation to Address Multiemployer Pension Crisis
"The bill establishes the Pension Rehabilitation Administration (PRA), a new agency within the Department of the Treasury, authorized to issue bonds in order to finance loans to 'critical and declining' status multiemployer pension plans, plans that have suspended benefits, and some recently insolvent plans currently receiving financial assistance from the [PBGC]." (Committee on Ways and Means, U.S. House of Representatives)
Text of 2018 Annual Report of the PBGC Participant and Plan Sponsor Advocate (PDF)
45 pages. "[Participants and plan sponsors] have observed and still often note long delays ... confusing and contradictory exchanges ... and difficulties when an issue transcends multiple departments within the agency.... [Given] rising premiums and the dwindling premium payer base as sponsors de-risk their defined benefit plans, the agency must be mindful of the resources it uses when pursuing plan sponsors for prolonged periods of time, such as during protracted negotiations in the distress termination process." (Participant and Plan Sponsor Advocate, Pension Benefit Guaranty Corporation [PBGC])
OIG Audit Report: PBGC's Fiscal Year 2018 Compliance with the Federal Information Security Modernization Act of 2014 (PDF)
33 pages. "PBGC's security program, as in the prior year, fell below the specified threshold of effectiveness ... We did note areas of improvement in FY 2018. One functional area, Respond, was found to meet the Managed and Measurable (Level 4) requirements. Prior year weaknesses in Contingency Planning were also remediated during FY 2018.... PBGC did not implement an effective information security program for many of the selected security controls for selected information systems." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] Some PBGC Coverage Determinations May Be Streamlined by Proposed Form
"[The proposed form] ... may signal a more streamlined process for coverage determinations with respect to church plans, which have been the subject of substantial litigation over the past several years. Unfortunately, the proposed form does not address governmental plans, for which PBGC has generally ceased making coverage determinations pending further development of a 2011 IRS advance notice of proposed rulemaking ... Public comments on the proposed form must be submitted by February 4, 2019." (Groom Law Group)
PBGC's 2018 Annual Report Heralds Improved Financial Position
"On November 16, 2018, the [PBGC] released its Fiscal Year 2018 Annual Report, showing an $11.2 billion improvement in the multiemployer program and a $13.4 billion improvement in the single employer program. The single employer program, no longer in deficit, now has a $2.4 billion surplus.... [The authors] discuss what PBGC's FY2018 Annual Report tells us about the financial condition of and prospects for the single employer program and briefly discuss the financial condition of the multiemployer program." (October Three Consulting)
[Opinion] New PBGC Director Approved
"Gordon Hartogensis will need more than 'successful entrepreneurial experiences' to lead the PBGC through these minefields: [1] Mutiemployer plans slashing benefits with no bailout in sight; [2] Single Employer plans terminating apace due to extortionate premiums; and [3] Small plans going through routine standard terminations subjected to full-cavity-search audits that coalesce the most intrusive practices of the DOL, IRS, and TSA.... [P]ossibly a pension outsider could bring common sense solutions to the disaster that pension insiders have allowed to fester." (Burypensions)
PBGC OIG Semiannual Report to Congress, for the Period April 1, 2018 to September 30, 2018 (PDF)
45 pages. "[In this report, OIG has] provided the most important management and performance challenges facing PBGC.... [1] Information security ... [2] Modernization of PBGC's key benefits-related information technology systems ... [3] Transparency and accountability of professional services contracting." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
Struggling Multiemployer Plans See Help Ahead at Expense of Healthy Funds
"The draft proposal ... offers several measures to help struggling plans protect retiree benefits, including increasing the PBGC minimum guarantee level ... It even undoes benefit cuts already authorized by the Treasury Department under [MPRA], but plans within five years of insolvency would cut to the minimum benefit level and then be terminated.... [H]ealthy plans would also be squeezed by a requirement to use a more conservative discount rate when measuring liabilities." (Pensions & Investments)
Text of OIG Report: Audit of the PBGC's Fiscal Year 2018 and 2017 Financial Statements (PDF)
77 pages. "The financial statements present fairly, in all material respects, the financial position of the Single-Employer and Multiemployer Program Funds administered by the PBGC as of September 30, 2018 and 2017, and the results of their operations and cash flows for the years then ended ... PBGC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2018 ... PBGC may not have been in compliance with law and regulation due to a potential violation of the Antideficiency Act determined after guidance from GAO relative to the recording of obligations for multi-year leases." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] PBGC Annual Report 2018: Single-Employer Program Healthy, Multiemployer Program Ailing
"The sound financial condition of our insurance programs, Single-Employer and Multiemployer, is vital for us to meet our mission. This year's report shows that the financial condition of these two programs remains in stark contrast. The financial status of the Single-Employer Program shows continuous improvement and reached a positive net position this year. However, the Multiemployer Program remains in deep deficit and we project that under current law it will run out of funds within the next several years." (Pension Benefit Guaranty Corporation [PBGC])
PBGC Makes Scheduled Premium Increase for 2019, Raises Guarantee Limits 3.5% for New Year
"The [PBGC] on October 19 announced that its premiums for single-employer defined benefit (DB) retirement plans will increase to $80 in 2019, from $74 in 2018. This is the last of the scheduled annual flat per-participant increases in single-employer DB plan premiums brought about by the Bipartisan Budget Act (BBA) of 2015. In subsequent years, all PBGC premium rates are subject to indexing.... Variable-rate premiums for single-employer plans will increase for 2019 by $5 per $1,000 of unfunded vested benefits to $43. The BBA delivered $4 of that increase and $1 comes from annual indexing." (HR Daily Advisor)
[Guidance Overview] PBGC Potpourri: New Rules, Guidance, and Leadership
"[1] PBGC updated the 2018 comprehensive premium filing instructions, apparently intending to further limit the exemptions for the variable-rate premium.... [2] The new premium filing and reverse spinoff guidance is useful to plan sponsors weighing the risks of a reverse spinoff or other restructuring transactions.... [3] The agency is now proposing that all reportable event filings include controlled group information, financial statements, and the plan's actuarial valuation report.... [4] PBGC's final rule updates the methods by which sponsors must estimate guaranteed benefits for owner-participants to reflect the changes made by PPA 2006, described above. However, PBGC did not change the method for estimating asset-funded benefits[.]" (Groom Law Group)
[Official Guidance] PBGC Reportable Events: Reference Sheet for Small Plans
"This is a quick checklist to help identify possible reportable events for small plans (plans with 100 or fewer participants)." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] PBGC Guarantee Limit for Single-Employer Plans Increases for 2019
"[PBGC] announced today the guarantee limits for single-employer plans that fail in 2019. The table [in this announcement] shows those limits for sample ages and forms of payment.... The guarantee limit for 2019 is about 3.5% higher than 2018's limit.... [T]he multiemployer guarantee is not indexed (i.e., it remains the same from year to year) and does not vary based on the retiree's age or payment form." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of HHS Regulatory Agenda, Fall 2018
CMS Proposed Rules include: [1] CY 2020 Notice of Benefit and Payment Parameters; [2] Rescinding the adoption of the standard unique health plan identifier and other entity identifier; [3] Grandfathered health plans in the individual and small group markets; [4] Miscellaneous Medicare Secondary Payer clarifications and updates; [5] Civil money penalties and Medicare Secondary Payer reporting requirements; and [6] Health Reimbursement Arrangements and other account-based group health plans.

CMS Final Rules include: [1] Moral exemptions and accommodations for coverage of certain preventive services under the ACA; [2] Religious exemptions and accommodations for coverage of certain preventive services under the ACA; and [3] Adoption of the methodology for the HHS-operated Permanent Risk Adjustment Program for the 2018 Benefit Year Proposed Rule. (U.S. Department of Health and Human Services [HHS])

[Official Guidance] Text of PBGC Regulatory Agenda, Fall 2018
Proposed Rules include: [1] Benefit payments; [2] Methods for computing withdrawal liability; [3] Multiemployer plan guaranteed benefits; [4] PBGC-approved arbitration procedures -- multiemployer plans; [5] Release of official information and testimony by PBGC employees; and [6] Examination and copying of PBGC records.

Final Rules: [1] Terminated and insolvent multiemployer plans and duties of plan sponsors; and [2] Adjustment of civil penalties. (Pension Benefit Guaranty Corporation [PBGC])

[Official Guidance] Text of PBGC Statement on Sears Bankruptcy Filing
"PBGC has been working with Sears for several years to improve the funding of the company's two defined benefit pension plans. PBGC expects that its guarantees would cover the vast majority of benefits earned under those Sears plans. If circumstances require, we are prepared to step in and provide PBGC-guaranteed benefits. The plans, which cover about 90,000 workers and retirees, are underfunded by about $1.5 billion." (Pension Benefit Guaranty Corporation [PBGC])
A Sears Bankruptcy Could Cause One of the Biggest Pension Defaults Ever
"Sears entered into a five-year pension protection plan with the [PBGC] in 2016, agreeing to set aside certain assets for pension funding. In November, Sears amended the agreement to sell up to 138 properties to finance a $407 million contribution to its pension plans. Last year, [PBGC] paid $5.7 billion to nearly 840,000 retirees from 4,845 failed single-employer plans ... Taking over the Sears pension plans would be one of the largest defaults in its 44-year history." (Chicago Tribune; subscription may be required)
[Guidance Overview] PBGC Provides Enhanced ERISA Section 4062(e) Web Page
PBGC has expanded and modified the information related to liability that may arise when an employer ceases operations at a facility under ERISA section 4062(e). The revised web page provides basic information about 4062(e), answers to frequently asked questions, and information on reporting to PBGC. (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] How to Help a Plan in Need: PBGC Issues Final Regs on Multiemployer Plan Mergers
"The final regulations provide guidance on permissible multiemployer pension plan mergers, and the PBGC's role in such mergers, including [1] general requirements for multiemployer pension plan mergers and transfers (including applicable definitions); [2] rules and requirements (including procedural requirements) for facilitated plan mergers ... and [3] language clarifying that the PBGC may waive the requirement that a plan preserve accrued benefits following a merger in the event of a simultaneous benefit suspension and merger." (Morgan Lewis)
Notes from Meeting of Actuaries 'Intersector Group' with PBGC, April 4, 2018 (PDF)
6 pages. Topics include: [1]  Distress terminations; [2] Update of PBGC assumptions; [3] De-risking activity; [4] Premium filings; [5] Multiemployer plan alternative withdrawal liability payment arrangements; [6] Multiemployer plan sponsors freezing legacy plans and starting new, separate plans. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
[Opinion] American Academy of Actuaries Letter to Joint Select Committee on Solvency of Multiemployer Pension Plans (PDF)
"[A] loan program could protect participant benefits by helping distressed multiemployer plans return to sound financial footing.... The most direct way for Congress to improve the financial strength of the PBGC would be to increase the current premium level.... Another way to increase funding to PBGC's multiemployer program is to deduct premium payments from benefit payments made to participants in all plans covered by the program.... The Committee could also consider whether the PBGC should have broader authority to proactively restructure distressed plans to enable them to remain solvent.... [T]he Committee might consider whether accrued plan benefits should become adjustable after restructuring." (American Academy of Actuaries)
PBGC Finalizes Facilitated Merger Rules for Multiemployer Plans (PDF)
"PBGC's final regulation omits proposed changes to plan solvency provisions ... Commenters were concerned that the revised tests would 'make mergers and transfers more difficult or prohibit them, would substantially expand burden for plan sponsors, and would restrict options for plans.' ... In addition to updates and reorganization of the existing regulations, the final regulation outlines the process to be followed for multiemployer plan mergers[.]" (Buck)
PBGC Director's Confirmation Hearing Set for September 27
"Mr. Hartogensis is an investor and technology sector leader in software development, with experience managing financial equities, bonds and private placements. He currently serves as director of a family trust. He co-founded Auric Technology LLC, a company that develops customer relationship management software. He is also Senate Majority Leader Mitch McConnell, R-Ky., and Secretary of Transportation Elaine Chao's brother-in-law." (Pensions & Investments)
PBGC Staff Express Concern Over Premium Reduction Strategy (PDF)
"Successful implementation of the two-step strategy could result in significant savings in PBGC premiums ... Plan sponsors essentially receive a full year of PBGC coverage, but only pay a partial year of premiums.... [T]he only purpose of the transaction appears to be avoiding PBGC premiums. While there is nothing inherently wrong with wanting to reduce PBGC premiums, it's not surprising to hear the PBGC push back on strategies which serve no other purpose." (Lockton)
PBGC Proposes Valuation and Notice Requirements for Insolvent Multiemployer Plans
"Insolvent plans receiving financial assistance (whether terminated or not) and plans terminated by plan amendment that are expected to become insolvent could generally perform actuarial valuations less frequently than currently required. Additionally, the proposal would eliminate some notice requirements for insolvent plans." (Conduent)
Retired UPS Workers File Lawsuit Challenging Treasury Department Approval of Pension Cuts under MPRA (PDF)
"Three retired UPS workers filed a lawsuit today against the federal government on behalf of themselves and a proposed class of approximately 22,000 other retirees. The suit alleges that the government acted to protect its own financial interests when it enabled a pension plan to cut each Plaintiffs' pension by 29%, reducing the likelihood that the government-run [PBGC] would go insolvent. The suit revolves around the Department of Treasury's controversial decision from September 2017 to permit a New York pension fund to reduce each Plaintiff 's monthly pension payment -- an amount that had fully vested and for which the PBGC was the insurer if the fund defaulted." [King v. U.S. (Fed. Cl., complaint filed July 31, 2018)] (Messing & Spector LLP)
[Guidance Overview] PBGC Proposes to Amend Valuation, Reporting, and Disclosure Regs for Terminated and Insolvent Multiemployer Plans
"The proposed regulations would reduce the number of plans that are required to prepare an annual actuarial valuation by increasing the monetary threshold from $25 million to $50 million.... The proposed regulations would add the annual actuarial valuation requirement for: [1] Insolvent plans (active and terminated) receiving financial assistance from the PBGC. [2] Plans terminated by plan amendment that are expected to become insolvent." (Thomson Reuters Practical Law)
[Official Guidance] Text of PBGC Announcement: Future Disaster Relief Will Be Keyed to IRS Announcements
"PBGC is changing its practice to simplify how it announces disaster relief by referring PBGC filers directly to IRS' disaster relief news releases.... Instead of multiple disaster relief announcements, all explaining disaster relief in the same repetitive language, [this announcement] explains how PBGC disaster relief is keyed to IRS relief, what circumstances generally lead to relief, and the nature of relief generally granted. The qualifications for disaster relief and relief granted will be simpler and easier to apply.... With this Announcement, unless a filing is on the 'Exceptions List' ..., filers can be assured that PBGC grants disaster relief when, where, and for the same relief period that IRS grants relief for taxpayers affected by a disaster.... PBGC also may grant case-by-case relief for filings and actions on the Exceptions List." [FR Doc. 2018-14125, filed June 29, 2018; published July 2, 2018] (Pension Benefit Guaranty Corporation [PBGC])
PBGC Inspector General Report SR-2018-14: Summary and Analysis of IT Audit Recommendations and PBGC FISMA Performance (PDF)
13 pages, June 20, 2018. "How does PBGC measure up in the area of IT security? This information-only report provides a summary and analysis of the [PBGC's] progress in remediating IT audit recommendations, as well as its [Federal Information Security Modernization Act (FISMA)] performance in general and its FISMA performance in comparison to other federal agencies. Bottom line: PBGC has made progress in IT security in the past five years. In FISMA performance, PBGC ranks as average among small agencies in one comparison and above average in another." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Proposal for Survey of Multiemployer Pension Plan Withdrawal Liability Information
"The [PBGC] intends to request that OMB approve, under the Paperwork Reduction Act, a survey of terminated and insolvent multiemployer pension plans to obtain withdrawal liability information. PBGC needs the withdrawal liability information to estimate its multiemployer program liabilities for purposes of its financial statements. This notice informs the public of PBGC's intent and solicits public comment on the collection of information." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC FY 2017 Projections Report (PDF)
54 pages. "This year's projections for PBGC's Multiemployer Program show a very high likelihood of insolvency during FY 2025 and near certainty of insolvency by the end of FY 2026. Compared to last year's projections, the risk of insolvency decreases slightly prior to fiscal year 2024 but increases significantly starting in fiscal year 2025. These changes are primarily the result of the largest troubled plan transitioning to a 100% fixed-income portfolio, which eliminates most of the uncertainty of the timing of its projected insolvency date and thus eliminates most of the uncertainty about when the plan will require PBGC financial assistance....

"New results for PBGC's Single-Employer Program are generally consistent with findings of the prior year's report but the financial status of the program is likely to improve faster and reach a higher net surplus position compared to the projections from last year. Recent increases in asset returns and decreases in expected future claims increase the likelihood that the program will reach net surplus a few years earlier than previously projected." (Pension Benefit Guaranty Corporation [PBGC])

PBGC Projections: Multiemployer Program Insolvent in FY 2025
"The [PBGC's] Multiemployer Insurance Program continues to face insolvency by the end of fiscal year 2025, according to findings in the FY 2017 Projections Report.... The likelihood that the Multiemployer Program will run out of money before the end of FY 2025 has grown to over 90 percent, and there remains a significant chance the program will run out of money during FY 2024. The likelihood the program will remain solvent after FY 2026 is now less than 1 percent.... PBGC's Single-Employer Program, which covers about 28 million participants, continues to improve and is likely to emerge from deficit sooner than previously anticipated." (Pension Benefit Guaranty Corporation [PBGC])
PBGC Director Says Failed Multiemployer Plan Members May Receive Only Fraction of PBGC Minimum
"When asked if the PBGC would be able provide the minimum guaranteed benefit to failed plan members without congressional action, [PBGC Director Thomas Reeder] said 'no,' adding that the PBGC would have to cut it to about one-eighth the minimum benefit, or less.... Reeder said that without help from Congress, propping up the PBGC could cost taxpayers $16 billion over 10 years, and that would only keep the organization going for another 20 years." (Chief Investment Officer [CIO])
[Opinion] The Politics of Pensions in America
"To give the committee a chance to work out of the political glare, it will not report until after the midterm elections. Furthermore, any proposal supported by a majority both of Republicans and Democrats will get an automatic up or down vote in the Senate. Nonetheless, getting any compromise will be very difficult because in every case, the proposals made by one constituency are political poison to another.... [T]he collapse of these pension funds could end up doing as much or more damage than Hurricane Harvey." (Former PBGC Director Joshua Gotbaum, via The Brookings Institution)
Democrat Senators Question Trump's Nomination for PBGC Director in Midst of Multiemployer Plan Crisis
"The president has nominated Gordon Hartogensis -- who, the senators say, seems to have little to no prior experience relevant to the pension system and the work of the PBGC -- to replace Reeder. Meanwhile Reeder, who is in the middle of his five-year term, has been advocating for changes to help the PBGC's programs, especially the program for multiemployer defined benefit (DB) plans." (planadviser)
Joint Select Committee on Multiemployer Pensions Meets Again in Educational Session on the PBGC (PDF)
"[PBGC Director Thomas Reeder] noted that if Congress does nothing and the PBGC's multiemployer insurance system becomes insolvent, it would be able to provide only about one-eighth or 12.5% of the already low benefit that it guarantees to pay.... Co-Chair Brown announced that the Select Committee would hold two more hearing in June and two more in July and hopes that serious negotiating on a legislative solution would begin this coming July." (United Actuarial Services, Inc.)
[Official Guidance] Text of PBGC Request for Comments on Proposed Revisions to Form 715, Power of Attorney, for Participants Receiving Payment from PBGC
"PBGC is proposing to revise one form in this collection, the Power of Attorney Form (Form 715). The proposed revision would include: ... [1] granting a durable power of attorney (DPOA) in addition to a nondurable power of attorney (NDPOA), and allowing a principal to name up to three agents to act on her behalf with PBGC ... [2] heightened requirements for granting authority and for executing the document ... and [3] A 'Notice to the Principal,' to alert the principal about what powers she is granting to a designated agent, and an 'Agent's Acknowledgement' to inform the agent about her duties and liabilities with respect to handling the principal's affairs. PBGC believes these revisions provide greater flexibility and greater protections against fraud for customers using the Form 715." (Pension Benefit Guaranty Corporation [PBGC])
Multiemployer Plan Committee to Examine Financial State of PBGC
"Joint Select Committee on the Solvency of Multiemployer Pension Plans Co-Chairmen Orrin Hatch (R-Utah) and Sherrod Brown (D-Ohio) ... announced they will convene a hearing on Thursday, May 17, 2018, to examine the state of the [PBGC].... The [sole] witness ... will be Thomas Reeder, Executive Director of the PBGC." (Joint Select Committee on Solvency of Multiemployer Pension Plans)
[Official Guidance] Text of PBGC Regulatory Agenda, Spring 2018
Proposed Rules include: [1] Valuation Assumptions and Methods: Interest and Mortality Assumptions for Asset Allocation in Single-Employer Plans and Mass Withdrawal Liability Determination in Multi-Employer Plans; [2] Owner-Participant Benefits; [3] Benefit Payments; [4] Methods for Computing Withdrawal Liability; [5] Terminated and Insolvent Multiemployer Plans and Duties of Plan Sponsors; and [6] PBGC-Approved Arbitration Procedures -- Multiemployer Plans.
Final Rules: [1] Mergers and Transfers Between Multiemployer Plans; and [2] Adjustment of Civil Penalties. (Pension Benefit Guaranty Corporation [PBGC])
PBGC Releases Strategic Plan for 2018-2022
"The PBGC has identified five priorities to effectively manage its insurance programs.... They include: [1] Encouraging continuation and maintenance of voluntary private pension plans for the benefit of their participants; [2] Enhancing production quality and reducing the inventory of unissued benefit determination letters; [3] Completing implementation of enterprise risk management; [4] Addressing workforce challenges to prevent an impact on the PBGC's ability to carry out its mission; and [5] Continuing to improve the internal control environment." (Wolters Kluwer Law & Business)
PBGC Issues Guidance on Reviews of Multiemployer Plans' Proposed Alternative Terms and Conditions to Satisfy Withdrawal Liability
"The Pension Benefit Guaranty Corporation (PBGC) has issued guidance for multiemployer plans that request review of proposed alternative terms and conditions for satisfying employer withdrawal liability under [ERISA]. The guidance sheds light on information the PBGC finds helpful and the factors it considers in its reviews." (Thomson Reuters Practical Law)
The Pension Benefit Guaranty Corporation: A Primer (PDF)
24 pages. "In FY2017, PBGC insured nearly 24,000 DB pension plans covering about 40 million people. It paid or owed benefits to 1.5 million people. PBGC is the trustee of 4,845 single-employer plans. PBGC provided financial assistance to 72 multiemployer pensions. PBGC pays a maximum benefit to plan participants. Most workers in single-employer plans taken over by PBGC and multiemploy er plans that receive financial assistance from PBGC receive the full pension benefit that they earned." [Report 95-118, Mar. 20, 2018] (Congressional Research Service [CRS])
Notes from Meeting of Actuaries 'Intersector Group' with PBGC, October 11, 2017 (PDF)
6 pages. Topics include: [1] Terminated plans; [2] Section 4010 filings under the new rule; [3] Reportable events; [4] Multiemployer plan issues; [5] Plan terminations where an annuity provider cannot be found; [6] Insolvent multiemployer plans with active contributing employers; [7] Treasury Department interpretation of requirement to lift benefit suspensions after a merger between a distressed multiemployer fund and a larger healthy fund; [8] Missing participants; [9] New Code Section 430 mortality regulations. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
2017 State-By-State Pension Benefit Payments
"This listing breaks down the benefits we paid to our participants in 2017. It shows the total amount of benefits paid and the number of people receiving payments in each state. The benefits are from single-employer plans that PBGC trusteed over the years. The total benefit amount paid in 2017 was $5.6 billion to about 868,000 retirees." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Proposed Regs: Owner-Participant Changes to Guaranteed Benefits and Asset Allocation
30 pages. "This proposed rule would amend PBGC's benefit payment regulation by replacing the guarantee limitations applicable to substantial owners with a new limitation applicable to majority owners. Additionally, this proposed rule would amend PBGC's asset allocation regulation by prioritizing funding of all other benefits in priority category 4 ahead of those benefits that would be guaranteed but for the new, owner-participant limitation. The proposed rule also clarifies that plan administrators may continue to use the simplified calculation in the existing rule to estimate benefits funded by plan assets. Finally, it provides new examples to aid in implementation." (Pension Benefit Guaranty Corporation [PBGC])
Outlook 2018: PBGC Looking to Congress for Rescue
"The PBGC's program for insuring single-employer pension plans saw its deficit cut nearly in half during the 2017 fiscal year. At the same time, the agency's insurance program for unionized workers' pensions is in a tailspin and the agency is looking for help from Congress in 2018. The agency reported a $65.1 billion program deficit in its latest annual report and projects that the program will likely be insolvent by late 2025 or earlier." (Bloomberg BNA)
PBGC to Expand Missing Participants Program Beyond Single-Employer DB Plans
"PBGC will work with sponsors of terminated 401(k) and other defined contribution plans, including profit-sharing, money purchase, target benefit, employee stock ownership and stock bonus 403(b) plans, to help distribute plan benefits to missing participants. Plans not covered include governmental plans, church plans and plans that cannot pay benefits to PBGC in cash. The agency will charge sponsors $35 per account to transfer plan benefits into the program and fees will not exceed PBGC's costs." (Pensions & Investments)
The Multiemployer Pension Plan Crisis: History, Legislation, and What's Next? (PDF)
52 pages. Topics include: [1] Is MPRA working? [2] What happens if nothing happens? [3] Potential solutions: (a) PBGC takeover of critical and declining status plans; (b) PBGC funding; (c) Partitioning of orphans; (d) Plan mergers; (e) Benefit modifications; (f) Variable defined benefit plans; (e) Composite plans; and (f) Loan program proposals. (U.S. Chamber of Commerce)
Splitting Pension Plans Can Reduce PBGC Variable Rate Premiums
"[This article considers] a strategy for reducing PBGC variable-rate premiums -- the split-up of a plan ... into [one] plan that covers participants subject to the variable-rate premium headcount cap ... and a [second] plan that covers all other participants. Such a strategy may reduce PBGC variable-rate premiums ... [1] it can be used to maximize the effect of the headcount cap ... [2] it may allow the sponsor to make contributions that reduce variable-rate premiums where the headcount cap would otherwise prevent that result." (October Three Consulting)
[Official Guidance] Text of PBGC Statement of Regulatory and Deregulatory Priorities, Along with Fall 2017 Regulatory Agenda
"A major focus of PBGC's current efforts is to finalize rules to simplify and revise the existing missing participants program to help connect more participants with their lost retirement savings. As authorized by the Pension Protection Act of 2006 (PPA), the revised program will cover terminating defined contribution plans, defined benefit plans of small professional-service employers that are not covered by title IV of ERISA, and multiemployer plans, in addition to terminating single-employer defined benefit plans." [Also online: Fall 2017 Proposed and Final Rules List; and Fall 2017 Long-Term Actions] (Pension Benefit Guaranty Corporation [PBGC])
 
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