PBGC To Provide Additional Relief From Premium Penalties
FOR IMMEDIATE RELEASE
April 26, 1999
To encourage self-correction of premium underpayments, the Pension Benefit Guaranty Corporation (PBGC) is proposing changes to expand relief from premium payment penalties.
"We want to be responsive to the needs of our premium payers by making it easier for them to qualify for "safe-harbor" relief from the late payment penalty charges that may apply to estimated premium payments," said PBGC Executive Director David M. Strauss.
Under the proposal PBGC would, for example, allow plan administrators to rely on the participant count reported on the previous year's premium payment form even if they or PBGC subsequently find the count is incorrect. Currently, if the estimated premium payment relies on an incorrect participant count for the prior year's payment, PBGC may impose a penalty for late payment. The relief applies only to penalty charges because, by law, PBGC cannot waive interest on underpayments.
In addition to making it easier to qualify for safe-harbor penalty relief, the amendments codify PBGC's current penalty policy, which lowers penalties from 5% per month to 1% per month if a premium payer corrects an underpayment before they receive notice from PBGC about a possible premium underpayment.
The deadline for comments on the proposed changes, which are in the April 27, 1999 Federal Register, is June 28, 1999.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by about 42 million American workers and retirees participating in more than 44,000 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 investment returns.
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PBGC No. 99-22