PBGC proposed regs would streamline certain multiemployer plan reporting rules

The Pension Benefit Guaranty Corporation (PBGC) has proposed amendments to its multiemployer plan regulations designed to make the disclosure of information to the PBGC and to plan participants more efficient and effective and to reduce the administrative burden on plan sponsors.

The proposed regulations would reduce the number of actuarial valuations required for certain small terminated but not insolvent plans, shorten the advance notice filing requirements for mergers in situations that do not involve a compliance determination, and remove certain insolvency notice and update requirements. Comments on the proposed rules must be submitted on or before March 31, 2014.

Annual valuations

When a multiemployer plan terminates, the plan must perform an annual valuation of the plan’s assets and benefits. The proposed regulations would allow valuations for plans that were terminated by mass withdrawal but are not insolvent and where the value of nonforfeitable benefits is $25 million or less to be performed every three years instead of annually as required under the current rules.

Plans could move in and out of the three-year or annual valuation cycle, as applicable, as the value of nonforfeitable benefits changes. Thus, a plan that had been performing new valuations every three years would be required to perform valuations annually if the next valuation indicates that the value of nonforfeitable benefits exceeds $25 million. Similarly, a plan that has been performing the valuation annually would only have to do the next valuation in three years if the most recent valuation shows the value of nonforfeitable benefits to be $25 million or less. According to the PBGC, this change would target the plans that expose the agency to larger liability, while reducing burden on plans that present smaller exposure.

Mergers

Under the current rules, a merger or a transfer of assets and liabilities between multiemployer plans must satisfy certain requirements, including a requirement that plan sponsors of all plans involved in a merger or transfer must jointly file a notice with the PBGC 120 days before the transaction. The proposed regulations would shorten the notice period to 45 days where no compliance determination is requested.

Many merger requests are received by the PBGC with less than 120 days notice and ask for a waiver of the notice requirement so that the merger can proceed as of the end of the plan year. The change to 45 days would avoid the need for a waiver and still allow the PBGC enough time to review these later filed requests.

Insolvency notices

Currently, terminated multiemployer plans that determine that they will be insolvent for a plan year must provide a series of notices and updates to notices to the PBGC and participants and beneficiaries, including a notice of insolvency. The proposed regulations would eliminate the requirement to provide annual updates to the notice of insolvency.

Source: 79 FR 4642, January 29, 2014.

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