WASHINGTON — The Pension Benefit Guaranty Corporation announced regulatory changes that will reduce administrative costs and preserve assets for multiemployer plans.
PBGC insures more than 1,400 multiemployer plans covering more than 10 million people in industries such as construction, mining, supermarkets, transportation, manufacturing, and hotels and restaurants.
The agency is reducing regulatory burdens on multiemployer plans and sponsors as part of its continuing efforts to make plan administration easier. One of the changes streamlines the process for plan mergers, which save money and make plans more secure by enabling plans to combine monetary assets and administrative resources.
The final rule, published Wednesday in the Federal Register, also affects annual valuations, insolvency notices, and updates.
"We applaud the PBGC for this proposal," said the U.S. Chamber of Commerce, a trade group that represents American businesses.
PBGC's changes address the Chamber's concerns that many reporting requirements are too costly and lack merit. "This proposed rule acknowledges this reality and eliminates requirements where the administrative burdens and costs outweigh the usefulness of the information provided," the Chamber said.
Major Changes to Reporting Requirements for Multiemployer Plans
- Plans involved in a merger are required to jointly file a notice with PBGC before the transaction. The final rule shortens the notice period to 45 days from 120 days in cases where a compliance determination isn't requested.
- Before the agency's rule changes, terminated multiemployer plans had to conduct a yearly valuation of plan assets and benefits. Under the change, certain plans — those that aren't insolvent, that terminated because employers left the plan, and that have nonforfeitable benefits of $25 million or less — will need to do the valuation only every three years. (Generally, nonforfeitable benefits cannot be taken away from participants.)
- Under current regulations, multiemployer plans are required to provide a series of notices and updates to notices to PBGC, participants, and beneficiaries if they will be insolvent. The final rule ends the requirement for annual updates to the insolvency notice.
The new rule is the agency's latest response to an Obama Administration directive to reduce burdens placed on the business community.
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.