PBGC creates new pilot program for mediation of certain Termination Liability Collection and Early Warning Program cases

The Pension Benefit Guaranty Corporation (PBGC) has announced the creation of a new pilot program to offer mediation in certain Termination Liability Collection and Early Warning Program cases. PBGC’s Pilot Mediation Project will allow parties to resolve cases with the assistance of a skilled, neutral, and independent dispute resolution professional in a timely and cost-effective manner.
The PBGC states that the mediation project is part of the Agency’s ongoing efforts to make it easier for sponsors to maintain their pension plans. “We want our customers to know we’re listening to them and we want to improve their experience in working with us,” said PBGC Director Tom Reeder. “By providing an alternative dispute resolution option for employers who sponsor ongoing and terminated plans, we expect to save time and money for both the government and our stakeholders.”


The PBGC will offer mediation to ongoing plan sponsors as part of its Early Warning and Risk Mitigation Program and to former plan sponsors as part of the resolution of their pension liabilities following termination of underfunded pension plans. Mediation will be offered to eligible respondents and proceed only on a voluntary basis. According to the PBGC, cases will generally not be eligible where the plan sponsor has a minimal ability to pay, there is a pending court proceeding, 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 will have 120 days to satisfy their disclosure requirements under ERISA Reg. Sec. 4062.6. After that, the PBGC will review, verify, and analyze the information, and the parties may then engage in good faith negotiations. The PBGC will make mediation available within a reasonable time after it completes its 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 will be available after the 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 enough time left for the parties to document the mediated resolution or take legal action, if warranted.

Evaluation of new program

The PBGC chose Termination Liability Collections cases and Early Warning Program matters for the pilot project because they might benefit most from mediation. The PBGC expects this pilot to last for one year. After that, the PBGC will evaluate the Mediation Pilot’s success on multiple metrics, including: the percent of eligible cases opting for mediation, the resolution rate and time to resolution, and the cost savings.

SOURCE: PBGC News Release No. 17-7.
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