[Federal Register: December 18, 1997 (Volume 62, Number 243)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 4022
PBGC Recoupment and Reimbursement of Benefit Overpayments and Underpayments
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Proposed rule.
SUMMARY: The Pension Benefit Guaranty Corporation proposes to amend its regulation governing recoupment of benefit overpayments in trusteed plans to stop the reduction of monthly benefits under its actuarial recoupment method once the amount of the benefit overpayment is repaid. The amendment also makes other related changes.
DATES: Comments must be received on or before January 20, 1998.
ADDRESSES: Comments may be mailed to the Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-4026, or delivered to Suite 340 at the above address. Comments also may be sent by Internet e-mail to firstname.lastname@example.org. Comments will be available for inspection at the PBGC's Communications and Public Affairs Department in Suite 240 at the above address during normal business hours.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General Counsel, or James L. Beller, Attorney, Pension Benefit Guaranty Corporation, Office of the General Counsel, Suite 340, 1200 K Street, NW., Washington, DC 20005-4026, 202-326-4024. For TTY/TDD users, call the Federal relay service toll free at 1-800-877-8339 and ask to be connected to 202-325-4024.
SUPPLEMENTARY INFORMATION: Some participants and beneficiaries in PBGC- trusteed plans receive benefit payments in excess of their entitlements under Title IV of ERISA after plan termination and before the PBGC determines their benefit entitlements. Under the PBGC's current recoupment regulation, unless a participant or beneficiary elects to repay a benefit overpayment in a single payment, the overpayment is recouped through a permanent actuarial reduction in future benefit payments.
When overpayments are made, recipients are generally unaware that they are receiving amounts in excess of their entitlements. In effect, overpayments are unsolicited loans. Many participants and beneficiaries are unable to afford to repay the overpayment in a single payment and thus cannot avoid permanent actuarial reductions. Participant and beneficiary inquiries reflect their difficulty understanding why the PBGC would continue to reduce their monthly benefit beyond the time the PBGC has fully recouped the amount of the overpayment.
The PBGC proposes to revise the regulation to provide that recoupment will cease when the amount of the overpayment is repaid. This will help to minimize hardship to participants and beneficiaries as well as to cut down the number of participant and beneficiary inquiries about recoupment, thereby reducing burden both on them and the PBGC. The amendment also gives the PBGC flexibility to waive recoupment of de minimis amounts and to accept repayment ahead of the recoupment schedule, and modifies the rules governing calculation of net overpayments and underpayments.
E.O. 12866 and the Regulatory Flexibility Act
The PBGC has determined that this proposed rule is not a ``significant regulatory action'' under the criteria set forth in Executive Order 12866.
This rule affects only individuals. Therefore, the PBGC certifies that, if adopted, the amendment will not have a significant economic effect on a substantial number of small entities. Accordingly, as provided in section 605(b) of the Regulatory Flexibility Act, sections 603 and 604 do not apply.
List of Subjects in 29 CFR Part 4022
Pension insurance, Pensions.
For the reasons set forth above, the PBGC proposes to amend 29 CFR Part 4022, subpart E as follows:
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE EMPLOYER PLANS
1. The authority citation for part 4022 continues to read as follows:
Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D) and 1344.
2. In Sec. 4022.81, paragraph (a) is amended by removing the last two sentences, adding a new phrase, and paragraphs (a)(1) and (a)(2) in their place, and revising paragraphs (c) and (d)(2) to read as follows:
Sec. 4022.81 General rules.
(a) Recoupment of benefit overpayments. * * * Notwithstanding the previous sentence, the PBGC may, in its discretion--
(1) Decide not to recoup net overpayments that it determines to be de minimis; and
(2) Recover overpayments by methods other than recouping in accordance with the rules in this subpart. The PBGC will not normally do so unless net benefits paid after the termination date exceed those to which a participant or beneficiary is entitled under the terms of the plan before any reductions under subpart D.
* * * * *
(c) Payments subject to recoupment or reimbursement. The PBGC shall recoup net overpayments made on or after the latest of the proposed termination date, the termination date, or, if no notice of intent to terminate was issued, the date on which proceedings to terminate the plan are instituted pursuant to section 4042 of ERISA, and shall reimburse net underpayments made on or after the termination date.
(d) Interest. * * *
(2) Receipt of both overpayments and underpayments. If both benefit overpayments and benefit underpayments are made with respect to a participant, the PBGC shall compare the net overpayment or underpayment calculated without interest to the net overpayment or underpayment calculated with interest. (The interest calculation shall be made by charging or crediting interest from the first day of the month after the date of payment to the first day of the month in which recoupment begins.) Of these two net amounts, the PBGC shall use the one more favorable to the participant or
beneficiary in applying either Secs. 4022.81 and 4022.82 or Secs. 4022.81 and 4022.83, as applicable.
3. Section 4022.82 is amended by removing the words, ``lump sum'', in paragraph (a)(3) and adding, in their place, the words, ``single payment'', and by revising paragraph (a) introductory text and the heading of paragraph (b) to read as follows:
Sec. 4022.82 Method of recoupment.
(a) Future benefit reduction. Unless a participant or beneficiary elects otherwise under paragraph (b) of this section, the PBGC shall recoup overpayments of benefits in accordance with this paragraph. The PBGC shall reduce the amount of each future benefit payment to which the participant or any beneficiary is entitled by the fraction determined under paragraphs (a)(1) and (a)(2) of this section, except that benefit reduction will cease when the amount of the net benefit overpayment is recouped. Notwithstanding the preceding sentence, the PBGC may accept repayment ahead of the recoupment schedule. Recoupment under this section constitutes full repayment of the net benefit overpayment.
* * * * *
(b) Single payment. * * *
Issued in Washington, D.C. this 12th day of December, 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-33028 Filed 12-17-97; 8:45 am]
BILLING CODE 7708-01-P