PBGC Proposes Rule to Facilitate Mergers of Multiemployer Pension Plans
FOR IMMEDIATE RELEASE
June 02, 2016
WASHINGTON - The Pension Benefit Guaranty Corporation (PBGC) is proposing a rule to facilitate mergers of multiemployer pension plans. Mergers are a way some plans can preserve and protect the benefits earned by workers and retirees.
The proposed rule will be published in the Federal Register on Monday. It implements changes under the Multiemployer Pension Reform Act of 2014 (MPRA). PBGC has authority to facilitate plan mergers by providing technical assistance, or financial assistance if necessary to avoid plan insolvency.
"Plan mergers can make multiemployer pensions more stable and secure," said PBGC Director Tom Reeder. "PBGC can help save troubled multiemployer plans before they fail. That helps plan participants and reduces the long-term costs of the pension insurance program." Mergers can stabilize or increase the base of contributing employers, combine plan assets for more efficient investing, and reduce plan administrative costs.
Most multiemployer plans are not in danger of running out of money. But more than 10% of all participants in multiemployer plans -- over a million people -- are covered by troubled plans that are projected to run out of money.
PBGC's ability to provide financial assistance is constrained by its limited financial resources. PBGC will need additional resources to help all the plans that need assistance. Before assisting a merger, PBGC must determine that the merger is necessary to avoid plan insolvency, the assistance will reduce PBGC's expected long-term loss, and the assistance will not harm PBGC's ability to meet existing obligations.
Pension plan mergers are complex transactions. We encourage plan trustees and other stakeholders to reach out to PBGC for guidance before filing a formal request. In addition to financial assistance, PBGC can help plans with technical assistance and support in working with other government agencies.
PBGC protects the pension benefits of more than 40 million Americans in private-sector pension plans. The agency is directly responsible for paying the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums, investment income, and with assets and recoveries from failed single-employer plans. For more information, visit PBGC.gov.
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PBGC No. 16-07