Statement of Regulatory and Deregulatory PrioritiesFederal Register Documents

OCTOBER 1997 REGULATORY PLAN

STATEMENT OF REGULATORY AND DEREGULATORY PRIORITIES

PENSION BENEFIT GUARANTY CORPORATION

PBGC Insurance Programs

The Pension Benefit Guaranty Corporation administers two insurance programs 

under title IV of the Employee Retirement Income Security Act of 1974: a 

single-employer plan termination insurance program and a multiemployer plan 

insolvency insurance program. PBGC protects the pensions of nearly 42 million 

working men and women in about 50,000 private defined benefit plans, including 

about 2,000 multiemployer plans.

Under the single-employer program, 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 1996, PBGC was trustee of about 2,300 plans, and paid $792 million 

in benefits to nearly 200,000 people during 1996. Another 240,000 people will 

receive benefits when they retire in the future.

Most terminating defined benefit plans terminate with sufficient assets to pay 

all benefits. PBGC has administrative responsibility for these terminations 

(standard terminations), but its role is limited to seeing that proper 

procedures are followed and participants and beneficiaries receive their plan 

benefits.

The multiemployer program (which covers about 8.6 million workers and retirees 

in about 2,000 insured plans) is funded and administered separately from the 

single-employer program and differs in several significant ways. The 

multiemployer program covers only collectively bargained plans involving more 

than one unrelated employer. PBGC provides financial assistance (in the form of 

a repayable loan) to the plan if the plan is unable to pay benefits at the 

guaranteed level. Guaranteed benefits are generally less than a participant's 

full benefit under the plan (and less than the single-employer guaranteed 

benefit). PBGC financial assistance occurs infrequently.

PBGC receives no funds from general tax revenues. Operations are financed by 

insurance premiums, investment income, assets from pension plans trusteed by 

PBGC, and recoveries from the companies formerly responsible for the trusteed 

plans.

To carry out these functions, 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.

Objectives and Priorities

PBGC regulatory objectives and priorities are developed in the context of the 

statutory purposes of title IV: (1) to encourage voluntary private pension 

plans, (2) to provide for the timely and uninterrupted payment of pension 

benefits to participants and beneficiaries, and (3) to maintain the premiums 

that support the insurance programs at the lowest possible levels consistent 

with carrying out PBGC's statutory obligations (ERISA section 4002(a)).

PBGC implements its statutory purposes by developing regulations designed (1) to 

assure the security of the pension benefits of workers, retirees, and 

beneficiaries, (2) to improve services to participants, (3) to ensure that the 

statutory provisions designed to minimize losses for participants in the event 

of plan termination are effectively implemented, (4) to facilitate the 

collection of monies owed to plans and to PBGC, while keeping the related costs 

as low as possible, and (5) to simplify the termination process.

Legislative Initiatives

On December 8, 1994, the Retirement Protection Act of 1994 was enacted. The 

Retirement Protection Act (1) accelerates the funding of underfunded 

single-employer pension plans, (2) phases out the cap on the variable rate 

portion of the premium paid to PBGC by underfunded single-employer plans, (3) 

provides PBGC with better tools to prevent employers from escaping their plan 

funding obligations through corporate transactions, (4) requires better 

information to participants in underfunded plans on plan funding status and PBGC 

guarantees, and (5) helps assure that workers do not lose pensions because they 

have lost contact with a terminating pension plan covered by PBGC.

In May 1996, the President submitted the Retirement Savings and Security Act to 

Congress. The RSSA would have expanded coverage, increased portability and 

worker protection, and simplified pension law. The proposal included a doubling 

of the guarantees in the multiemployer insurance program to address inflation 

since 1980, and expansion of PBGC's missing participant program to include 

terminating defined contribution plans and non-PBGC covered defined benefit 

plans. The Small Business Job Creation Act of 1996, signed by the President on 

August 20, 1996, included many of these provisions. It did not include the 

doubling of the multiemployer guarantee or the expansion of the missing 

participant program. These changes remain legislative objectives.

Regulatory and Deregulatory Initiatives

To implement the new requirements of the Retirement Protection Act, PBGC issued 

regulations:

Requiring plan administrators of underfunded plans to annually notify 

participants and beneficiaries about the plan's funding status and the limits on 

PBGC's guarantee of benefits (final rule, June 30, 1995).

Creating a clearinghouse in PBGC to locate and pay benefits to missing 

participants in terminating fully funded pension plans (final rule, December 1, 

1995).

Requiring certain corporate groups with large underfunded pension plans to 

provide annually to PBGC financial and actuarial information (final rule, 

December 20, 1995).

Requiring plans administrators and sponsors to report to PBGC certain 

"reportable events" that may jeopardize workers' pensions and the pension 

insurance system (final rule, December 2, 1996). This rule was developed using a 

negotiated rulemaking process for the first time.

The RPA regulations seek to facilitate compliance. Regulations on participant 

notice and corporate reporting allow use of information prepared for other 

purposes. The reportable events regulation waives reporting in many cases to 

minimize the number of plans affected and uses existing information for 

reporting thresholds. Both the reportable events and participant notice 

regulations include optional notice forms. The missing participants regulation 

ties reporting to forms and deadlines already provided for under the termination 

regulations.

PBGC also took additional actions to reduce regulatory burden, encourage 

compliance and simplify existing regulations by:

Proposing to extend the time limits for various actions required to terminate a 

fully funded single-employer plan ("standard termination") (proposed rule, March 

14, 1997).

Reducing penalties for late premiums that are paid before PBGC notifies the plan 

of the delinquency (Federal Register Notice, December 2, 1996).

Reorganizing, renumbering, and "reinventing" its regulations to key them to the 

numbering system of the statutory sections they implement, and to reduce the 

volume of regulations by 20% (final rule, July 1, 1996).

PBGC is continuing to review its regulations to look for further simplification 

opportunities.

PBGC's Regulatory Plan for October 1, 1997, to September 30, 1998, consists of 

one significant regulatory action.