ERIC urges PBGC to withdraw proposed regs on reportable events

 

The ERISA Industry Committee (ERIC) has submitted comments to the Pension Benefit Guaranty Corporation (PBGC) urging the agency not to finalize proposed regulations on reportable events requirements, but instead to maintain the existing regulations in their current state. The proposed regulations, issued in April 2013, would change the circumstances under which plan administrators must notify the PBGC of the occurrence of certain “reportable events.”

ERIC’s letter argues, among other things, that the PBGC already has the appropriate tools to identify at-risk plans with the existing reportable events rules, and that the Pension Protection Act of 2006 (PPA) is working as intended in protecting the interests of the PBGC and benefits earned by participants.

“The vast amount of information already available to the PBGC should enable it to identify plans for which it will need to negotiate funding improvements, intervene as a creditor, minimize funding shortfalls via involuntary plan termination, and take other protective action,” ERIC’s letter states.

The letter explains that, since the PPA, plan sponsors have been making required minimum contributions to improve their plans’ ERISA funding levels and some have been contributing more than the required minimum amount. ERIC contends that the proposed regulations would instead require plan sponsors to divert a portion of those contributions to pay service providers to help comply with burdensome regulatory requirements without materially enhancing the financial position of the PBGC.

The letter also expresses concern that the safe harbors for plans and for companies in the proposed regulations are either unworkable or are not useful in their current form. The proposed regulations include safe harbors for plans that are either fully funded on a termination basis or that are 120% funded on a premium basis. The ERIC letter explains that most companies do not regularly calculate their plans’ unfunded benefit liabilities on a plan termination basis. Additionally, ERIC notes that the overwhelming majority of plans will not qualify for the premium safe harbor.

Source: ERIC news release, June 4, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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