WASHINGTON — The Pension Benefit Guaranty Corporation continues to ease regulatory burdens so plans can save both time and money as they deliver benefits.
The agency has given plans that cover 100 or fewer people additional time to calculate their variable-rate premium. These changes are part of a larger regulatory proposal published in July 2013. The final rule is published in the Federal Register today.
"We want to help employers keep their pensions, and that means giving them more flexibility and less regulatory hassle," said PBGC Director Josh Gotbaum.
Additional Flexibility for Small Plans
In January, PBGC ended the twice-a-year requirement for plans that cover more than 500 people to calculate and pay premiums. Under that rule, large plans make one payment.
Next year, small plans will have the same premium filing date as all other plans. 2015 premiums for calendar year plans will be due Oct. 15, 2015. PBGC is giving small plans time to adjust to the new schedule. For example, calendar year small plans' 2014 premiums will be due Feb. 15, 2015 instead of Oct. 15, 2014.
Under the new rule, small plans will get flexibility for the calculation of variable-rate premiums. (For 2014, all single-employer plans pay a variable-rate premium of $14 per $1,000 of unfunded vested benefits.) Some small plans determine funding levels too late in the year to use current-year figures in time for the new due dates. To accommodate this, small plans generally will base their variable-rate premium on the prior year's data.
The American Society of Pension Professionals & Actuaries (ASPPA) praised the agency for the rule's "focus on simplification and ease of administration. Once implemented, the uniform due date and look back rule for small plans will be a significant improvement over the current rule."
The new rule is the agency's latest response to an Obama Administration directive to reduce burdens placed on the business community. The rule also expanded premium penalty relief, simplified premium due dates for terminating plans, provided guidance on calculating the variable-rate premium, and codified recent changes to premium rates.
PBGC protects the pension benefits of more than 42 million Americans in private-sector pension plans. The agency is directly responsible for paying the benefits of more than 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 plans. For more information, visit PBGC.gov.