PBGC to Offer Relief to Certain Premium Filers
FOR IMMEDIATE RELEASE
June 08, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced that it will provide relief to certain premium filers who used the alternative premium funding target (APFT) to determine the variable-rate premium (VRP), but did not check the appropriate box on the comprehensive premium filing.
The APFT was included in a final regulation implementing provisions of the Pension Protection Act of 2006 that changed the way VRPs are determined. The APFT allows plans to calculate the VRP using a method that is simpler and less burdensome than the statutorily prescribed (i.e. "standard") method. If a plan chooses to use this method, it must make an election to do so and agree to use the APFT for at least five years.
PBGC regulation and premium filing instructions prescribe the manner and deadline for electing to use the APFT. In the vast majority of situations, plans followed these instructions and checked the appropriate box to indicate their election to use the APFT. However, in about 5% of the cases where the APFT was used to compute the VRP, the election box was not checked. Under a strict enforcement policy, plans in the latter situation would be required to amend their filings to re-calculate the VRP using the standard method.
Some plans that used the APFT but did not check the election box have told PBGC that they intended to elect to use the APFT and requested that PBGC treat them as having done so. After carefully reviewing the matter, PBGC is making relief available. Specifically, a plan that intended to elect to use the APFT will be deemed to have made a valid election if certain conditions are met. A Technical Update setting forth the scope of the relief and the process for obtaining it will be issued shortly.
The PBGC explained the relief in a June 7 letter to the leadership of the Committees on Health, Education, Labor and Pensions and on Finance (the PBGC's two U.S. Senate committees of jurisdiction); see also the May 20 letter from the Senate committees on this matter.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
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PBGC No. 10-37