[Federal Register: May 7, 2004 (Volume 69, Number 89)]
[Notices]
[Page 25791-25796]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07my04-121]
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Part V
Pension Benefit Guaranty Corporation
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Participant Notice Voluntary Correction Program
29 CFR Parts 4011 and 4071
Assessment of and Relief From Penalties--Participant Notices; Notice
and Proposed Rule
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PENSION BENEFIT GUARANTY CORPORATION
RIN 1212-AB00
Participant Notice Voluntary Correction Program
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice.
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SUMMARY: The Pension Benefit Guaranty Corporation (``PBGC'') is
announcing a Participant Notice Voluntary Correction Program (``VCP'').
This program, which generally covers Participant Notices for the 2002
or 2003 plan year that were not issued as required, is designed to
encourage plan administrators to correct recent compliance failures
without penalty and to facilitate plan administrators' future
compliance. The PBGC will not pursue any failure to provide a pre-2002
Participant Notice unless there is a 2002 or 2003 Participant Notice
failure that is covered by the VCP but that does not meet the
requirements for penalty relief under the VCP. Elsewhere in today's
Federal Register, the PBGC is proposing a new Participant Notice
penalty policy.
DATES: To meet the requirements for penalty relief under the
Participant Notice Voluntary Correction Program with respect to a
Participant Notice failure for the 2002 or 2003 plan year, the plan
administrator must: (1) Issue a VCP corrective notice by the 2004
Participant Notice due date (for calendar year plans, generally October
4, 2004, November 15, 2004, or December 15, 2004); and (2) notify the
PBGC within 30 days after the 2004 Participant Notice due date.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, or Catherine B. Klion, Attorney, Office of the General
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW.,
Washington, DC 20005-4026; 202-326-4024 (TTY/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:
Overview of Participant Notice Requirements
Section 4011 of the Employee Retirement Income Security Act of 1974
(``ERISA'') requires certain underfunded plans to issue a notice to
participants of the plan's funding status and the limits on the PBGC's
guarantee (``Participant Notice''). The Participant Notice helps to
ensure that participants better understand the financial status of
their plans and the consequences that plan underfunding may have on
their promised benefits. The PBGC's implementing regulations are at 29
CFR part 4011.
In general, a plan administrator must issue a Participant Notice
for a plan year if a variable rate premium (which is tied to plan
underfunding) is payable for that plan year, unless the plan meets the
``DRC Exception Test'' for that plan year or for the prior plan year.
However, the Job Creation and Worker Assistance Act of 2002 (JCWAA)
made a temporary change to the premium interest rate that did not apply
for purposes of determining whether a Participant Notice was required.
Therefore, a plan administrator may be required to provide a
Participant Notice for the 2002 or 2003 plan year even if a variable
rate premium is not payable for that plan year.
The Pension Funding Equity Act of 2004 (PFEA), which was signed
into law by the President on April 10, 2004, changes the rules for
determining the required interest rate for premium payment years
beginning in 2004 or 2005. Under PFEA, plan administrators may use the
premium interest rate for purposes of determining whether a Participant
Notice is required. Thus, a plan administrator may be required to issue
a Participant Notice for the 2004 or 2005 plan year only if a variable
rate premium is payable for that plan year.
A Participant Notice for a plan year is due in that plan year--``
two months after the due date (with extensions) for the plan's Form
5500 for the prior plan year. (The due date for a plan's Participant
Notice for a plan year is keyed to the due date for the plan's Summary
Annual Report for the prior plan year so that the two documents may be
issued together.) For calendar year plans, common due dates for the
2004 Participant Notice are therefore October 4, 2004, November 15,
2004, and December 15, 2004. There are a variety of rules governing who
is entitled to receive the Participant Notice and the form, content,
and manner of issuance of the Participant Notice.
Plan administrators are required to certify on the annual PBGC
premium filing (Form 1 or Form 1-EZ) that, for the prior plan year: (1)
A Participant Notice was not required to be issued; (2) a Participant
Notice was issued as required; or (3) an explanation is attached (e.g.,
because a required Participant Notice was issued late).
See appendix A for a detailed explanation of the requirements
governing Participant Notices.
Compliance and Enforcement Background
The Participant Notice requirement went into effect in the 1995
plan year for large plans (generally plans with more than 100
participants) and in the 1996 plan year for small plans (generally
plans with 100 or fewer participants). In the first few years after the
requirement went into effect, plan administrators of only a relatively
small number of defined benefit plans had to provide a Participant
Notice, reflecting the fact that plans were better funded at that time.
The PBGC conducted compliance surveys and found that both large plan
and small plan compliance was high for those plan years. In the last
several years, however, because of low interest rates and poor
investment returns, more plans have become underfunded and, therefore,
many plan administrators have been required to issue a Participant
Notice for the first time.
Recent PBGC audits have found higher rates of noncompliance with
the Participant Notice requirement than in prior years. Much of the
noncompliance appears to have resulted from a lack of awareness or
understanding of the applicable requirements rather than from an
attempt to avoid disclosure. Nonetheless, plan participants deserve to
know if their plans are underfunded. As a result, the PBGC is expanding
its Participant Notice enforcement program with a view toward more
actively auditing compliance and assessing penalties for noncompliance.
Overview of Voluntary Correction Program
As a transition to this expanded enforcement program, the PBGC is
launching a Participant Notice Voluntary Correction Program (``VCP'')
designed to encourage plan administrators to correct past compliance
failures and to facilitate their future compliance with Participant
Notice requirements. The VCP generally covers Participant Notice
failures for the 2002 and 2003 plan years. Under this program, the PBGC
will not assess penalties for failure to provide a 2002 or 2003
Participant Notice as required if the failure is corrected in
accordance with the guidelines in this notice. (The VCP focuses on the
2002 and 2003 plan years in part because the PBGC is concerned that
some plan administrators may have misunderstood the effect of JCWAA on
their Participant Notice obligations for those plan years.)
The PBGC will not pursue failures to provide a pre-2002 Participant
Notice unless there is a 2002 or 2003
[[Page 25793]]
Participant Notice failure that is covered by the VCP but that does not
meet the requirements for penalty relief under the VCP. Focusing the
PBGC's enforcement resources primarily on 2002 and later Participant
Notice failures will concentrate those resources effectively and limit
disclosures to plan years that are most relevant to participants.
The PBGC anticipates that many plan administrators will want to
participate in the VCP as a precaution, even in the absence of a known
Participant Notice failure. Participation in the VCP will not affect
the likelihood that a plan will be selected for audit of compliance
with the requirement to issue a post-VCP Participant Notice (see
``Participant Notices Covered by VCP''), with the PBGC premium
requirement, or with any other PBGC requirement.
Participant Notices Covered by VCP
The VCP covers any Participant Notice for a plan's 2002 or 2003
plan year: (1) That is due before May 7, 2004; and (2) that is not, as
of May 7, 2004, the subject of a PBGC audit proceeding.
For purposes of determining whether the VCP covers a plan's
Participant Notice, the date the Participant Notice is due is
determined without regard to any deadline extension resulting from a
disaster relief notice. For example, if a calendar year plan's 2003
Participant Notice was originally due on December 15, 2003, but as a
result of a disaster relief notice the due date was extended to May 14,
2004, the VCP would cover the plan's 2003 Participant Notice because
the extension to May 14, 2004, would be disregarded.
Requirements for VCP Penalty Relief
For any Participant Notice that is covered by the VCP, the PBGC
will not assess a penalty if the plan administrator, in accordance with
the guidelines in this notice: (1) Issues a VCP corrective notice; and
(2) notifies the PBGC that it is participating in the VCP. (If the only
failure was a late issuance corrected before May 7, 2004, see ``Special
rule for late 2002/2003 notices already corrected.'')
VCP Corrective Notice
The PBGC believes that many of the plans that will participate in
the VCP to correct a Participant Notice failure for 2002 or 2003 will
also be required to issue a Participant Notice for 2004. Accordingly,
the PBGC has structured the VCP corrective notice requirements to
enable such plans to issue a single notice that meets the requirements
for a VCP corrective notice and for the 2004 Participant Notice. This
approach will minimize the confusion for participants that could result
from the issuance of multiple notices at or about the same time.
The VCP corrective notice must meet all of the requirements that
apply to the 2004 Participant Notice (or, if the plan is not required
to issue a 2004 Participant Notice, all of the requirements that would
apply if it were required), except as otherwise provided in the
guidelines in this notice.
Normally the 2004 Participant Notice would have to include the
``funded current liability percentage'' for the 2003 plan year or for
the 2004 plan year. Under the VCP, whether the plan administrator is
correcting only a 2002 failure, only a 2003 failure, or both a 2002 and
a 2003 failure, the VCP corrective notice: (1) Must include the funded
current liability percentage for the 2002 plan year and for the 2003
plan year, and (2) may include as well the funded current liability
percentage for the 2004 plan year. In all other respects, the VCP
corrective notice must contain the information required in a 2004
Participant Notice (e.g., current information on funding waivers,
missed contributions, and limitations on the PBGC's guarantee).
Although the plan administrator is not required to inform
participants that it had a Participant Notice failure for the 2002 or
2003 plan year (or for both), or that it is participating in a
``voluntary correction program,'' a plan administrator may choose to
include that information in the VCP corrective notice.
Appendix B contains a model VCP corrective notice that plan
administrators may use to meet VCP requirements. The PBGC will treat a
VCP corrective notice that is issued in accordance with the guidelines
in this notice as meeting the requirements for the 2004 Participant
Notice.
Plan administrators should take special note that because the VCP
corrective notice is tied to the requirements for the 2004 Participant
Notice rather than to the requirements for the 2002 or 2003 Participant
Notice that was not issued as required, the VCP corrective notice is
required to be issued only to those persons entitled to receive the
plan's 2004 Participant Notice (or that would be entitled to receive
the plan's 2004 Participant Notice if it were required). Thus, there is
no need to issue the VCP corrective notice to those persons who were
entitled to receive the 2002 or 2003 Participant Notice that was not
issued as required but who are not entitled to receive the 2004
Participant Notice (e.g., a participant whose entire benefit has been
annuitized or paid out in a lump sum).
Notice to PBGC
The plan administrator must notify the PBGC that it is
participating in the VCP no later than the 30th day after the due date
for issuing the VCP corrective notice. The notification must include a
copy of the VCP corrective notice and the name and telephone number of
a person for the PBGC to contact with any questions. Plan
administrators may notify the PBGC electronically through the PBGC's
Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.pbgc.gov/participantnotice, by fax at 202-336-
4197, or by mail, commercial delivery service, or hand at Contracts and
Control Review Department, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Suite 580, Washington, DC 20005-4026. The PBGC will
promptly issue a written acknowledgment of the notification. Plan
administrators should keep the acknowledgment as proof of meeting the
VCP requirement of notifying the PBGC.
Special Rule for Late 2002/2003 Notices Already Corrected
If a plan administrator's only failure with respect to a 2002 or
2003 Participant Notice was late issuance and the failure has been
corrected before May 7, 2004, the PBGC will treat the plan
administrator as having participated in the VCP and will assess no
penalty for that 2002 or 2003 failure (and will not pursue any pre-2002
Participant Notice failure) without requiring that the plan
administrator issue a VCP corrective notice or notify the PBGC of the
plan's participation in the VCP.
Effect of VCP on Certification Requirements
Ordinarily, a plan administrator that filed an erroneous
certification on the annual PBGC premium filing as to whether a
Participant Notice was required for the prior plan year and, if so,
whether it was issued as required would have to file an amended
certification. However, if the plan administrator notifies the PBGC of
the plan's participation in the VCP, the PBGC will treat the
notification as effectively amending any erroneous certification filed
on or before May 7, 2004, with respect to a 2002 or 2003 Participant
Notice. The PBGC will take no enforcement action based on the erroneous
prior certification if the plan administrator of a plan that meets the
requirements for penalty relief under the VCP amends (or effectively
amends) the erroneous prior certification.
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Plan administrators of all plans that meet the requirements for VCP
penalty relief will be required to check a box on the 2005 PBGC premium
filing notifying the PBGC of the plan's participation in the VCP. This
requirement is in addition to the Notice to PBGC requirement described
above that must be met to qualify for VCP penalty relief, except under
``Special rule for late 2002/2003 notices already corrected.''
Compliance Assistance
The PBGC has developed written guidance on the requirements of the
VCP, including a Fact Sheet and Frequently Asked Questions. All
information related to the VCP and to Participant Notice requirements
generally is available on the PBGC's Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.pbgc.gov/participantnotice.
In addition, plan administrators seeking guidance on
Participant Notice compliance questions, including questions about the
VCP, may submit questions electronically through that Web site or call
the toll-free telephone number at the PBGC's Practitioner Customer
Service Center (1-800-736-2444).
Plan administrators may also contact the PBGC to request
appropriate modifications to the VCP requirements on a case-by-case
basis. For example, in the case of a 2002 or 2003 ``partial'' failure
such as a failure to provide the notice to some of the participants or
a failure to include in the notice some required information, the PBGC
will work with the plan administrator to determine what type of
correction, if any, would be needed to address the partial failure in
order to qualify for penalty relief under the VCP.
Future Participant Notice Penalties
Elsewhere in today's Federal Register, the PBGC is proposing a new
Participant Notice penalty policy. The PBGC intends to publish its
final Participant Notice penalty policy as soon as practicable after
considering public comments.
Compliance With Rulemaking Guidelines
The PBGC has determined, in consultation with the Office of
Management and Budget, that this Notice is a ``significant regulatory
action'' under Executive Order. The Office of Management and Budget has
therefore reviewed this notice under Executive Order 12866.
The collection of information requirements under the VCP have been
approved by the Office of Management and Budget under control numbers
1212-0009 (expires December 31, 2006) and 1212-0050 (expires November
30, 2004). An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number.
Because this action deals only with a general statement of PBGC
enforcement policy, it is not subject to the notice and comment
rulemaking requirements or delayed effective date requirements under
section 553 of the Administrative Procedure Act. Because no general
notice of proposed rulemaking is required, the Regulatory Flexibility
Act does not apply. See 5 U.S.C. 601(2), 603, 604.
Issued in Washington, DC, this 3rd day of May, 2004.
Bradley D. Belt,
Executive Director, Pension Benefit Guaranty Corporation.
Appendix A
Summary of Participant Notice Requirements
Statutory and Regulatory Framework
Section 4011 of ERISA and 29 CFR part 4011 require certain
underfunded plans to issue an annual notice to participants (a
``Participant Notice'') that discloses the plan's funding status and
the limits of the PBGC's guarantee.
When Requirement Applies
In general, a plan administrator is required to provide a
Participant Notice for a plan year if a variable rate premium (which
is tied to plan underfunding) is payable for that plan year, unless
the plan meets a funding-related test tied to the ``deficit
reduction contribution'' rules--the ``Deficit Reduction Contribution
(``DRC'') Exception Test''--for that plan year or for the prior plan
year. See Sec. 4011.3. However, as discussed below under Effect of
JCWAA on Requirements, a plan administrator may be required to
provide a Participant Notice for the 2002 or 2003 plan year even if
a variable rate premium is not payable for that plan year.
In general, the DRC Exception Test requires a plan to be at
least 90 percent funded, although a plan that is at least 80 percent
funded meets the test if it was at least 90 percent funded for two
consecutive plan years out of the last three. There are special
rules under the DRC Exception Test that allow small plans to avoid
doing additional calculations by using numbers they already reported
on the Schedule B to their Form 5500. See Sec. 4011.4. Most new and
newly-covered plans are exempt from the Participant Notice
requirement. See Sec. 4011.5.
Due Dates
A participant notice for a plan year is due in that plan year.
The due date for issuing a Participant Notice for a plan year is two
months after the plan's due date, with extensions, if any, for
filing the Form 5500 for the prior plan year. (The due date for a
plan's Participant Notice for a plan year is keyed to the due date
for the plan's Summary Annual Report for the prior plan year so that
the two documents may be issued together.) The plan administrator
may change the date of issuance from one plan year to the next,
provided that the effect of any change is not to avoid disclosing a
minimum funding waiver or a missed contribution. See Sec. 4011.8.
The following table shows the common due dates for calendar year
plans for the 2004 Participant Notice:
------------------------------------------------------------------------
2004 Participant notice due
2003 Form 5500 due date date
------------------------------------------------------------------------
Monday, August 2, 2004.................... Monday, October 4, 2004.
Wednesday, September 15, 2004............. Monday, November 15, 2004.
Friday, October 15, 2004.................. Wednesday, December 15,
2004.
------------------------------------------------------------------------
Persons Entitled To Receive Notice
A plan administrator must provide a Participant Notice to
participants, beneficiaries of deceased participants, alternate
payees, and unions. To determine who is a person entitled to receive
a Participant Notice, the plan administrator may select any date
during the period beginning with the last day of the prior plan year
and ending with the date on which the Participant Notice is due,
provided that a change in the date from one plan year to another
does not exclude a substantial number of participants and
beneficiaries. See Sec. 4011.7.
Manner of Issuance
The plan administrator must issue a Participant Notice using
measures reasonably calculated to ensure actual receipt by the
persons entitled to receive it. A Participant Notice may be issued
together with another document, such as the Summary Annual Report
(which is due at the same time as the Participant Notice), as long
as it is in a separate document. See Sec. 4011.9, as amended by the
PBGC's final rule published October 28, 2003 (68 FR 61344, 61353).
Form of Notice
A Participant Notice must contain the plan's ``Notice Funding
Percentage''--the plan's ``funded current liability percentage'' as
defined in section 302(d)(9)(C) of ERISA--for the current plan year
or the prior plan year, along with the date as of which that
percentage is determined. The Participant Notice also must contain
information on minimum funding waivers and missed contributions, a
summary of plan benefits guaranteed by the PBGC with an explanation
of the limitations on the guarantee, and other information specified
in the regulation. See Sec. 4011.10(b) and (c). Additional
information must be in a separate document. See Sec. 4011.10(d).
A Participant Notice must be readable and written in a manner
calculated to be understood by the average plan participant and not
to mislead recipients. See Sec. 4011.10(a). Plan administrators of
plans with specified numbers or percentages of participants literate
only in the same non-English language must provide either an
English-language Participant Notice with a
[[Page 25795]]
prominent legend in the common non-English language offering
assistance in that language or a Participant Notice in the common
non-English language. See Sec. 4011.10(e).
The Participant Notice regulation contains a Model Participant
Notice as an example of a Participant Notice that meets the
requirements of Sec. 4011.10. Each year the PBGC issues a Technical
Update that provides specific information relating to that year's
Participant Notice and updates the Model Notice.
Effect of JCWAA on Requirements
Section 405 of the Job Creation and Worker Assistance Act of
2002 (``JCWAA'') increased the required interest rate for
calculating vested benefits for the PBGC variable rate premium under
section 4006(a)(3)(E)(iii) of ERISA from 85 percent to 100 percent
of the yield on 30-year Treasury securities. The statutory change
applies only to plan years beginning in 2002 or 2003. However, JCWAA
does not allow use of 100 percent of the Treasury yield to determine
whether a PBGC variable rate premium is payable for purposes of
determining whether a Participant Notice is required. Thus, plan
administrators must continue to use 85 percent of the Treasury yield
for this purpose.
Section 405 of JCWAA also increased, for plan years beginning in
2002 or 2003, the maximum interest rate (from 105 percent to 120
percent of the four-year weighted average of the yield on 30-year
Treasury securities) that may be used to calculate current liability
for purposes of the DRC funding requirement. The change in the
maximum interest rate used to calculate current liability for DRC
funding purposes can affect, for the 2002, 2003, and certain future
plan years: (1) Whether a plan administrator is required to issue a
Participant Notice; and (2) the plan funding information required to
be disclosed in a Participant Notice.
The effect of JWCAA on Participant Notice requirements is fully
discussed in PBGC Technical Updates 02-2 and 03-17, both available
on the PBGC's Web site, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.pbgc.gov/participantnotice.
Certification
The plan administrator is required to certify on the annual PBGC
premium filing (Form 1 or Form 1-EZ) that, for the prior plan year:
(1) A Participant Notice was not required to be issued; (2) a
Participant Notice was issued as required; or (3) an explanation is
attached (e.g., because a required Participant Notice was issued
late).
Penalties
If a Participant Notice is not issued as required, the PBGC may
assess penalties under section 4071 of ERISA and 29 CFR part 4071.
For more information on Participant Notice penalties, see the PBGC's
proposal on such penalties published elsewhere in today's Federal
Register.
Appendix B
Model VCP Corrective Notice
The following is an example of a corrective notice that
satisfies the requirements of the Participant Notice Voluntary
Correction Program when the required information is filled in
(subject to Sec. 4011.10(d)-(e), as applicable). It also satisfies
the requirements of Sec. 4011.10 for the 2004 Participant Notice.
Notice to Participants of [Plan Name]
The law requires that you receive information on the funding
level of your defined benefit pension plan and the benefits
guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a
federal insurance agency. [YOU MAY INCLUDE A STATEMENT TO THE EFFECT
THAT THE PLAN HAD A PARTICIPANT NOTICE FAILURE FOR THE 2002 PLAN
YEAR OR FOR THE 2003 PLAN YEAR (OR FOR BOTH). YOU MAY ALSO INCLUDE A
STATEMENT TO THE EFFECT THAT THE PLAN IS PARTICIPATING THE PBGC'S
PARTICIPANT NOTICE VOLUNTARY CORRECTION PROGRAM.]
Your Plan's Funding
As of [APPLICABLE DATE], your plan had [INSERT PLAN'S FUNDED
CURRENT LIABILITY PERCENTAGE (AS DEFINED IN SECTION 302(d)(9)(C) of
ERISA) FOR THE 2002 PLAN YEAR] percent of the money needed to pay
benefits promised to employees and retirees.
As of [APPLICABLE DATE], your plan had [INSERT PLAN'S FUNDED
CURRENT LIABILITY PERCENTAGE (AS DEFINED IN SECTION 302(d)(9)(C) of
ERISA) FOR THE 2003 PLAN YEAR] percent of the money needed to pay
benefits promised to employees and retirees.
[YOU MAY ALSO INCLUDE THE FOLLOWING STATEMENT:
As of [APPLICABLE DATE], your plan had [INSERT PLAN'S FUNDED
CURRENT LIABILITY PERCENTAGE (AS DEFINED IN SECTION 302(d)(9)(C) of
ERISA) FOR THE 2004 PLAN YEAR] percent of the money needed to pay
benefits promised to employees and retirees.]
[SEE Sec. 4011.10(c)(2) FOR SPECIAL RULES SMALL PLANS MAY USE
TO DETERMINE THE PLAN'S FUNDED CURRENT LIABILITY PERCENTAGE.]
To pay pension benefits, your employer is required to contribute
money to the pension plan over a period of years. A plan's funding
percentage does not take into consideration the financial strength
of the employer. Your employer, by law, must pay for all pension
benefits, but your benefits may be at risk if your employer faces a
severe financial crisis or is in bankruptcy.
[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE
PREVIOUS FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT
FULLY REPAID A FUNDING WAIVER.]
Your plan received a funding waiver for [LIST ANY OF THE FIVE
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS
NOT BEEN FULLY REPAID]. If a company is experiencing temporary
financial hardship, the Internal Revenue Service may grant a funding
waiver that permits the company to delay contributions that fund the
pension plan.
[INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE
PAYMENT THAT MUST BE DISCLOSED UNDER SECTION 4011.10(b)(6):]
Your plan was required to receive a payment from the employer on
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was
made on [LIST APPLICABLE PAYMENT DATE(S)]].
PBGC Guarantees
When a pension plan terminates without enough money to pay all
benefits, the PBGC steps in to pay pension benefits. The PBGC pays
most people all pension benefits, but some people may lose certain
benefits that are not guaranteed.
The PBGC pays pension benefits up to certain maximum limits.
The maximum guaranteed benefit is $3,698.86 per month
or $44,386.32 per year for a 65-year-old person in a plan that
terminates in 2004. [IF YOU ISSUE THIS NOTICE AFTER THE MAXIMUM
GUARANTEED BENEFIT INFORMATION FOR PLANS THAT TERMINATE IN 2005 IS
ANNOUNCED, YOU MAY ADD OR SUBSTITUTE THAT INFORMATION IN ORDER TO
PROVIDE PARTICIPANTS WITH MORE CURRENT INFORMATION. THE PBGC EXPECTS
TO MAKE THAT INFORMATION AVAILABLE ON ITS WEB SITE AT http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://WWW.PBGC.GOV
IN EARLY NOVEMBER 2004.]
The maximum benefit may be reduced for an individual
who is younger than age 65. For example, it is $1,664.49 per month
or $19,973.88 per year for an individual who starts receiving
benefits at age 55. [IN LIEU OF AGE 55, YOU MAY ADD OR SUBSTITUTE
ANY AGE(S) RELEVANT UNDER THE PLAN. FOR EXAMPLE, YOU MAY ADD OR
SUBSTITUTE THE MAXIMUM BENEFIT FOR AGES 62 OR 60. THE MAXIMUM
BENEFIT IS $2,922.10 PER MONTH OR $35,065.20 PER YEAR AT AGE 62; IT
IS $2,404.26 PER MONTH OR $28,851.12 PER YEAR AT AGE 60. IF THE PLAN
PROVIDES FOR NORMAL RETIREMENT BEFORE AGE 65, YOU MUST INCLUDE THE
NORMAL RETIREMENT AGE.] [IF YOU ISSUE THIS NOTICE AFTER THE MAXIMUM
GUARANTEED BENEFIT INFORMATION FOR PLANS THAT TERMINATE IN 2005 IS
ANNOUNCED, YOU MAY ADD OR SUBSTITUTE THAT INFORMATION IN ORDER TO
PROVIDE PARTICIPANTS WITH MORE CURRENT INFORMATION. THE PBGC EXPECTS
TO MAKE THAT INFORMATION AVAILABLE ON ITS WEB SITE AT http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://WWW.PBGC.GOV
IN EARLY NOVEMBER 2004.] [IF THE PLAN DOES NOT PROVIDE FOR
COMMENCEMENT OF BENEFITS BEFORE AGE 65, YOU MAY OMIT THIS
PARAGRAPH.]
The maximum benefit will also be reduced when a benefit
is provided for a survivor.
The PBGC does not guarantee certain types of benefits. [INCLUDE
THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE BENEFITS AVAILABLE
UNDER YOUR PLAN.]
The PBGC does not guarantee benefits for which you do
not have a vested right when a plan terminates, usually because you
have not worked enough years for the company.
[[Page 25796]]
The PBGC does not guarantee benefits for which you have
not met all age, service, or other requirements at the time the plan
terminates.
Benefit increases and new benefits that have been in
place for less than a year are not guaranteed. Those that have been
in place for less than 5 years are only partly guaranteed.
Early retirement payments that are greater than
payments at normal retirement age may not be guaranteed. For
example, a supplemental benefit that stops when you become eligible
for Social Security may not be guaranteed.
Benefits other than pension benefits, such as health
insurance, life insurance, death benefits, vacation pay, or
severance pay, are not guaranteed.
The PBGC generally does not pay lump sums exceeding
$5,000.
Where To Get More Information
Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)].
If you would like more information about the funding of your plan,
contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF
INDIVIDUAL OR ENTITY].
For more information about the PBGC and the benefits it
guarantees, you may request a free copy of Your Guaranteed Pension
by writing to Consumer Information Center, Dept. YGP, Pueblo,
Colorado 81009. [THE FOLLOWING SENTENCE MAY BE INCLUDED:] ``Your
Guaranteed Pension'' is also available on the PBGC's Web site at
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.pbgc.gov.
Issued: [INSERT AT LEAST MONTH AND YEAR]
[FR Doc. 04-10406 Filed 5-6-04; 8:45 am]
BILLING CODE 7708-01-P