WASHINGTON, D.C. – The Pension Benefit Guaranty Corporation (PBGC) today announced it intends to provide new flexibility for variable-rate premium filers, a continuation of the Administration’s efforts to help support economic recovery and mitigate the effects of the coronavirus pandemic (COVID-19).
On March 27, 2020, President Donald J. Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides that certain pension contributions that would otherwise be due during 2020 are due on January 1, 2021. However, the CARES Act did not provide any special rules related to PBGC premiums. Because of the relief announced today, a premium refund will be available to account for employer contributions received by the plan during the extended period provided by the CARES Act.
“As COVID-19 continues to affect workers, families, and job creators across the country, PBGC continues to look for opportunities to provide the relief they need,” PBGC Director Gordon Hartogensis said. “This relief will support the Administration’s efforts to continue driving economic recovery and helping those in need.”
Under the guidance and relief announced today, for premium filings due on or after March 1, 2020, and before January 1, 2021, the date by which “prior year” contributions must be received by the plan to be included in plan assets will be extended to January 1, 2021. That means the discounted value of these contributions received by the plan after the premium is filed but on or before January 1, 2021, will be included in the asset value used to determine the variable-rate premium. Because of this relief, plans will be able to amend the premium filing to revise the originally reported asset value once all prior year contributions have been made and receive the corresponding refund of variable-rate premiums.
This relief will advance the objective of Executive Order 13924, which President Trump issued in May 2020. The Executive Order directs agencies to use available authority to support economic recovery.
PBGC will continue to monitor circumstances in coordination with other Employee Retirement Income Security Act (ERISA) agencies. Information on PBGC’s COVID-19-related efforts are available at https://www.pbgc.gov/coronavirus.
This press release (PBGC PR 20-4) revises guidance issued July 20, 2020, “COVID-19-Related Single-Employer Plan Sponsors and Administrators Questions and Answers” (PBGC Web 016).
PBGC’s premium rates regulation (29 CFR part 4006) provides rules for determining a plan’s unfunded vested benefits for purposes of calculating the variable-rate premium.
Section 4002(i) of ERISA gives PBGC the authority where there is a Presidentially declared disaster (as defined in section 1033(h)(3) of the Internal Revenue Code) to prescribe relief for up to 1 year for any PBGC required or permitted actions. On March 13, 2020, President Donald J. Trump issued an emergency proclamation declaring that the Novel Coronavirus Disease (COVID-19) outbreak in the United States constitutes a national emergency, beginning March 1, 2020.