[Federal Register Volume 76, Number 179 (Thursday, September 15, 2011)]
[Notices]
[Pages 57082-57083]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23692]
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PENSION BENEFIT GUARANTY CORPORATION
Premium Penalty Relief; Alternative Premium Funding Target
Election Relief
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice.
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SUMMARY: Executive Order 13563 on Improving Regulation and Regulatory
Review directs agencies to review and improve their regulatory
processes. As a result of this regulatory review, and in response to
comments by premium payers and pension professionals, PBGC is providing
relief from certain premium penalties and in certain situations
involving alternative premium funding target elections.
FOR FURTHER INFORMATION CONTACT: Catherine B. Klion, Manager,
Regulatory and Policy Division, Legislative and Regulatory Department,
1200 K Street, NW., Washington, DC 20005-4026, 202-326-4024 or
klion.catherine@pbgc.gov. (TTY and TDD users may call the Federal relay
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4024).
SUPPLEMENTARY INFORMATION:
As a result of PBGC's regulatory review under Executive Order 13563
and in response to comments by premium payers and pension
professionals, PBGC is granting relief in several situations:
For 2011 and later plan years, PBGC will waive premium
penalties assessed solely because payments are late by not more than
seven calendar days.
For 2010 and later plan years, PBGC is providing relief
similar to, but more expansive, than the relief provided in Technical
Update 10-2 (Variable Rate Premiums; Alternative Premium Funding Target
Elections; Box 5 Relief).\1\
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\1\ http://www.pbgc.gov/res/other-guidance/tu/tu10-2.html .
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For 2008 and 2009 plan years, PBGC will waive premium
penalties for late premiums in connection with certain box 5 errors.
Seven Day Rule
Under ERISA section 4007 and PBGC's regulation on Payment of
Premiums (29 CFR part 4007), late payment charges--interest and late
payment penalties--apply to required annual premium payments that are
not timely made. Penalties (but not interest) may be waived in
accordance with the premium payment regulation. PBGC's premium penalty
policy is set forth in the appendix to the premium payment regulation.
For plan years beginning after 2010, PBGC will automatically waive
premium payment penalties that are assessed solely because premium
payments are late by not more than seven calendar days.\2\ In applying
this policy, PBGC will assume that each premium payment was made seven
calendar days before it was actually made. All other rules will then be
applied as usual. If the result of this procedure is that no penalty
would arise, then any penalty assessed on the basis of the actual
payment dates will be waived. Filers may seek reconsideration of late
payment penalties assessed in circumstances to which the relief under
this Notice does not apply.
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\2\ The premium penalty relief described in this notice does not
apply to late payment interest charges, to penalties for failure to
timely file required premium information, or to penalties for late
payment of termination premiums.
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Alternative Premium Funding Target Elections
For plan years beginning after 2007, PBGC's premium regulations
allow a plan to elect to use the alternative premium funding target to
calculate its variable rate premium (VRP). The regulations require that
such an election be filed with PBGC before the VRP due date. A plan
makes an election by
[[Page 57083]]
checking box 5 in part II (Alternative Premium Funding Target Election)
of the comprehensive premium filing for the first plan year to which
the election applies.\3\ If an election to use the alternative premium
funding target is not in effect, the plan must calculate its VRP using
the standard premium funding target.\4\
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\3\ Premium information must be submitted electronically. PBGC
provides on its Web site, http://www.pbgc.gov, filing instructions
that include an illustrative form with a line number for each data
element. This Notice refers to those line numbers.
\4\ This Notice will refer to use of the alternative premium
funding target as the ``alternative method'' and to use of the
standard premium funding target as the ``standard method.''
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For 2008 and 2009 plan years, over ninety-five percent of the plans
that used the alternative method filed valid elections to do so.
However, some plans that used the alternative method did not make a
valid election to do so and later requested that PBGC treat them as
having made a valid election. In response, on June 16, 2010, PBGC
issued Technical Update 10-2, under which a plan was deemed to have
made a valid election if certain conditions were met.
Most plans with box 5 errors for 2008 or 2009 plan years were
eligible for the Technical Update 10-2 relief or were granted similar
relief upon reconsideration based on the facts and circumstances. PBGC
spent considerable time reviewing requests for reconsideration to
ensure that due process was followed, that plans with similar
situations were treated consistently, and that discretion was exercised
fairly and reasonably. To date, PBGC has denied fewer than 50 requests
for reconsideration with respect to box 5 errors in 2008 or 2009 plan
years.
Premium payers and pension professionals requested further relief
from box 5 errors, including relief for plan years starting after 2009
and relief for plans that did not qualify for the Technical Update 10-2
relief for 2008 and 2009 plan years.
Relief for Plan Years Beginning After 2009
PBGC has taken steps to reduce box 5 errors for 2010 and later plan
years. The agency has modified its online Premium Filing application
(MyPAA) to provide additional ``error check'' or ``alert'' notices.
PBGC assists vendors with their systems and encourages vendors to have
similar error check and alert notices as MyPAA. PBGC urges all filers
to check filings to avoid making errors, pay close attention to the
MyPAA warnings, and print and save receipts showing that filings are
actually submitted.
Despite these efforts, PBGC still occasionally finds box 5 errors.
PBGC is providing relief similar to, but more expansive, than the
relief provided in Technical Update 10-2 for plan years beginning after
2009. Specifically, relief is available where the plan used the
alternative method to determine the VRP for the applicable plan year
without filing a valid election to do so for the applicable plan year
or a prior plan year. Similar relief is available where the plan used
the standard method, but inadvertently made an election to use the
alternative method for the applicable plan year (e.g., box 5 was
checked because of an errant mouse click).
In either case, PBGC bases its determination of which method was
used to determine the VRP for the applicable plan year solely on the
information reported in line 7d(1) of part III (Premium Information).
For example, if ``alternative'' is checked, PBGC determines that the
alternative method was used.
If an election to use the alternative method is invalid solely
because the filing was submitted after the due date, relief is
available only if the filing is not an amendment of a timely filing in
which the plan used the standard method to determine the VRP and the
filing is submitted by the earlier of:
The 90th day after the filing due date.
The 30th day after the date of any PBGC notification that
no filing has been received.\5\
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\5\ PBGC generally notifies plans within 30 days of the filing
due date.
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PBGC is contacting plans entitled to this relief to explain the
options and actions required, if any (e.g., whether the inconsistent
filing must be amended). Plans that do not qualify for this relief may
seek reconsideration based on the facts and circumstances.
Premium Penalty Relief for 2008 and 2009 Plan Years
In situations where a plan with a box 5 error for 2008 or 2009 plan
years was not eligible for the Technical Update 10-2 relief and a
request for reconsideration was denied (or not submitted), the plan was
required to amend the applicable premium filing and recalculate the VRP
using the standard method. In some cases, this resulted in additional
premium being due. Because the additional premium was paid after the
due date, late payment charges (penalties and interest) were assessed
on the additional premium. In many cases, the late payment penalties
were equal to 100 percent of the additional premium. In response to
concerns of premium payers and pension professionals, PBGC will waive
premium penalties in connection with these errors for 2008 and 2009
plan years.
PBGC will also waive premium penalties for plans that used the
standard method but inadvertently checked box 5 and were required to
recalculate the VRP using the alternative method.
PBGC will contact plans entitled to this penalty relief. If a plan
entitled to this relief has already paid the late payment penalty, the
penalty amount will be converted into a credit that can be used to
offset future premiums. If a plan entitled to this relief has not
amended the relevant filing and paid the additional premium due, PBGC
will waive the penalty only if the filing is amended and the additional
premium paid within 30 days of the notification.
Contact information
For questions, contact Robert Callahan of the Financial Operations
Department at 202-326-4067, ext. 3258, or callahan.robert@pbgc.gov or
Bill O'Neill, at 202-346-4067, ext. 6758, or oneill.bill@pbgc.gov.
Issued in Washington, DC this 9th day of September, 2011.
Joshua Gotbaum,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2011-23692 Filed 9-14-11; 8:45 am]
BILLING CODE 7709-01-P