In response to business community comments and concerns, PBGC’s Mediation Program offers plan sponsors the opportunity to facilitate resolution of negotiations in three key PBGC program areas.
- Early Warning Cases: The Early Warning Program identifies corporate transactions that may pose risks that could affect a plan sponsor’s ability to continue to support its pension plan. The degree to which a transaction increases the risk to the pension plan is sometimes disputed.
- Termination Liability Cases: Termination liability refers to PBGC’s claim against the plan sponsor and members of its controlled group for the amount of underfunding when a pension plan is terminated and transferred to the PBGC. Sometimes there is a difference of opinion over the amount that can be collected, and resolution of the sponsor’s liability can take some time.
- Fiduciary Breach Cases: Fiduciary breach cases involve situations where fiduciaries of terminated plans, such as sponsors, administrators and certain advisors, take actions that violate their duties of loyalty and prudence to participants.
It is PBGC’s practice to resolve Early Warning, termination liability claims and fiduciary breach cases on a consensual basis with plan sponsors without the need for litigation. Our team of experienced professionals are committed to achieving settlements that are affordable for each plan sponsor.
PBGC launched a pilot project in October 2017 that offered mediation with certain termination liability collection and Early Warning Program cases.
In January 2019, the pilot project became a permanent program and has expanded to include fiduciary breach cases.
Mediation enables parties to resolve disputes with the assistance of a skilled, neutral and independent dispute resolution professional, while maintaining control of the process and its outcome. The 2016 Report on Significant Developments in Federal Alternative Dispute Resolution shows how federal agencies can incorporate mediation to save time and cost for both the government and private parties, along with improving stakeholder relations.
PBGC’s goals for the Mediation Program are:
- To resolve disputes early
- To promote improved relations with stakeholders
- To reduce the costs of protracted negotiations and other proceedings
- To make alternative dispute resolution an integral part of the agency’s dispute resolution process
Mediation is offered to eligible respondents and is voluntary.
Eligible Mediation Program participants are selected from termination liability collection cases, fiduciary breach cases and cases from the Early Warning Program. Generally, cases will not be eligible where one of the following applies:
- The plan sponsor has a minimal ability to pay;
- There is a court proceeding pending; or
- There is limited time to act and the plan sponsor has declined to sign a standstill or tolling agreement
In eligible termination liability cases, respondents have 120 days to satisfy their disclosure requirements under 29 CFR 4062.6. After that, PBGC will review, verify and analyze the information, and the parties may then engage in good faith negotiations. PBGC will make mediation available within a reasonable time after we complete our review and analysis of the information.
In eligible Early Warning engagements, companies will be advised of the availability of mediation at the outset of negotiation. Mediation shall be available after PBGC receives sufficient responses to its information requests, but the timing of the transaction at issue will determine the window for mediation. Mediation must be completed before the date of the closing, with sufficient time left for the parties to document the mediated resolution or take legal action, if warranted.
In eligible fiduciary breach cases, all demand letters sent in these matters will include an option to mediate.
PBGC has engaged the Federal Mediation and Conciliation Service to serve as intermediaries in the dispute resolution processes. Under the program, PBGC and plan sponsors share the cost of mediation sessions to avoid the appearance that either side is favored.