<DOC>
[October 31,2005 (Volume 70, Number 209)]
[Unified Agenda]
From the Federal Register Online via GPO Access [frwais.access.gpo.gov]
[DOCID: f:ua051002.wais]
[Page 64274-64275]
The Regulatory Plan
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[[Page 64274]]
PENSION BENEFIT GUARANTY CORPORATION (PBGC)
Statement of Regulatory and Deregulatory Priorities
The Pension Benefit Guaranty Corporation (PBGC) protects the pensions
of over 44 million working men and women in about 31,000 private
defined benefit plans. The PBGC receives no funds from general tax
revenues. Operations are financed by insurance premiums, investment
income, assets from pension plans trusteed by the PBGC, and recoveries
from the companies formerly responsible for the trusteed plans.
To carry out these functions, the PBGC must issue regulations
interpreting such matters as the termination process, establishment of
procedures for the payment of premiums, and assessment and collection
of employer liability. The PBGC regulatory priorities are focused on
improving transparency and increasing the use of electronic filing to
simplify filing.
PBGC Insurance Programs
The PBGC administers two insurance programs for private defined benefit
plans under title IV of the Employee Retirement Income Security Act of
1974 (ERISA): a single-employer plan termination insurance program and
a multiemployer plan insolvency insurance program.
Single-Employer Program. Under the single-employer program, the PBGC
pays guaranteed and certain other pension benefits to participants and
beneficiaries if their plan terminates with insufficient assets
(distress and involuntary terminations). At the end of fiscal year
2004, the program had a record $23 billion deficit, and Congress was
considering proposals by the Administration and others to improve
funding of plans and restore the financial health of the insurance
program.
Multiemployer Program.The smaller multiemployer program covers 1,600
collectively bargained plans involving more than one unrelated
employer. The PBGC provides financial assistance (in the form of a
loan) to the plan if the plan is unable to pay benefits at the
guaranteed level. Guaranteed benefits are less than single-employer
guaranteed benefits. The multiemployer program, which is separately
funded from the single-employer program, went into a deficit position
in FY 2003, which improved slightly in 2004. The Administration will be
examining the multiemployer program to determine what changes, if any,
may be needed to strengthen it.
Regulatory Objectives and Priorities
PBGC regulatory objectives and priorities are developed in the context
of its statutory purposes: (1) encouraging voluntary private pension
plans; (2) providing for the timely and uninterrupted payment of
pension benefits; and (3) keeping premiums at the lowest possible
levels. PBGC also attempts to minimize administrative burdens on plans
and participants.
The PBGC regulatory priorities are focused on changes to improve
transparency and to simplify filing with PBGC by increasing use of
electronic filing. PBGC policymaking gives consideration to the special
needs and concerns of small business.
Improve Transparency of Information
PBGC has been moving forward to improve transparency of information to
plan participants, investors, and PBGC, to better inform them and to
encourage more responsible funding of pension plans. In March 2005,
PBGC issued a final rule requiring the filing of certain additional
items of supporting information for plan actuarial information and
employer financial information that is required of certain employers
with large amounts of pension underfunding. PBGC also is developing
proposed amendments to the regulation that requires notice to PBGC of
certain events that threaten plan funding. In addition, PBGC is
developing proposed amendments to improve the accuracy of plan funding
information that certain underfunded plans are required to provide in
an annual Participant Notice.
Simplify Filing by Increasing Use of Electronic Filing
The PBGC introduced optional electronic filing of premiums in 2004 with
an online filing system that employs PBGC software. In March 2005, PBGC
issued a proposed rule that would require electronic filing of premium
information for plans with 500 or more participants for plan years
beginning after 2005 and for all plans for plan years beginning after
2006. The PBGC would grant case-by-case exemptions for filers that
demonstrated good cause. On-line filers will have a choice of using
private-sector software that meets PBGC's published standards or using
PBGC's software. Electronic premium filing will simplify filers'
paperwork, improve accuracy of PBGC's premium records and database, and
enable more prompt payment of premium refunds.
Plan actuarial and employer financial information required to be
reported to PBGC by employers with large amounts of pension
underfunding is required to be filed electronically under a final
regulation issued in March 2005. Electronic filing will reduce the
filing burden, improve accuracy, and better enable PBGC to monitor and
manage risks posed by these plans.
Relief for Small Businesses
A large percentage of the plans insured by the PBGC are small or
maintained by small employers. The PBGC takes the special needs and
concerns of small entities into account in developing its regulatory
policies. For example, mandatory electronic filing of premiums would
apply a year later to plans with fewer than 500 participants than to
larger plans. Also, the May 2004 proposed revisions to the penalty
structure for failure to comply with the Participant Notice
requirements scale down the penalty rate based on the number of plan
participants.
The PBGC will continue to review its regulations to look for further
simplification opportunities. The PBGC's regulatory plan for October 1,
2005, to September 30, 2006, consists of one significant regulatory
action.
_______________________________________________________________________
PBGC
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FINAL RULE STAGE
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134. ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS; VALUATION OF
BENEFITS AND ASSETS
Priority:
Other Significant
Legal Authority:
29 USC 1302(b)(3); 29 USC 1341; 29 USC 1301(a); 29 USC 1344; 29 USC
1362
CFR Citation:
29 CFR 4044, subpart B
Legal Deadline:
None
Abstract:
The PBGC proposes to amend its benefit valuation and asset allocation
regulations by adopting more current mortality tables and otherwise
simplifying and improving its valuation assumptions and methods.
[[Page 64275]]
Statement of Need:
The PBGC's regulations prescribe rules for valuing a terminating plan's
benefits for several purposes, including (1) determining employer
liability and (2) allocating assets to determine benefit entitlements.
The PBGC's interest assumption for valuing benefits, when combined with
the PBGC's mortality assumption, is intended to reflect the market
price of single-premium, nonparticipating group annuity contracts for
terminating plans. In developing its interest assumptions, the PBGC
uses data from surveys conducted by the American Council of Life
Insurers. The PBGC currently uses a mortality assumption based on the
1983 Group Annuity Mortality Table in its benefit valuation and asset
allocation regulations (29 CFR parts 4044 and 4281).
In May 1995, the Society of Actuaries Group Annuity Valuation Table
Task Force issued a report that recommends new mortality tables for a
new Group Annuity Reserve Valuation Standard and a new Group Annuity
Mortality Valuation Standard. In December 1996, the National
Association of Insurance Commissioners adopted the new tables as models
for determining reserve liabilities for group annuities. The PBGC is
considering incorporating these tables into its regulations and making
other modifications.
Summary of Legal Basis:
The PBGC has the authority to issue rules and regulations necessary to
carry out the purposes of title IV of ERISA.
Alternatives:
Not yet determined.
Anticipated Cost and Benefits:
Cost estimates are not yet available. However, the PBGC expects that
this regulation will not have a material effect on costs.
Risks:
Not applicable.
Timetable:
_______________________________________________________________________
Action Date FR Cite
_______________________________________________________________________
ANPRM 03/19/97 62 FR 12982
ANPRM Comment Period End 05/19/97
NPRM 03/14/05 70 FR 12429
NPRM Comment Period End 05/13/05
Final Action 11/00/05
Final Action Effective 12/00/05
Regulatory Flexibility Analysis Required:
No
Government Levels Affected:
None
URL For More Information:
www.pbgc.gov/regs
URL For Public Comments:
www.pbgc.gov/regs
Agency Contact:
James L. Beller
Attorney
Pension Benefit Guaranty Corporation
Legislative and Regulatory Department
1200 K Street NW
Washington, DC 20005-4026
Phone: 202 326-4024
TDD Phone: 800 877-8339
Fax: 202 326-4112
RIN: 1212-AA55
BILLING CODE 7708-01-S