PBGC requests information on MPRA provisions concerning plan partitions and facilitated mergers

 

The Pension Benefit Guaranty Corporation (PBGC) is requesting information from interested stakeholders on issues concerning partitions and facilitated mergers of multiemployer defined benefit plans under ERISA §§4233 and 4231, as amended by the Multiemployer Pension Reform Act of 2014 (MPRA), Division O of the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235). The MPRA replaced the multiemployer partition rules under ERISA §4233 with new rules and added a new provision to the multiemployer merger rules under ERISA §4231.

ERISA §4233(a)(1), as amended by MPRA, provides that upon the application by the plan sponsor of an “eligible multiemployer plan,” the PBGC may order a partition, if certain requirements are met. The PBGC must make a determination on an application for partition in accordance with regulations to be promulgated by the PBGC, and the plan sponsor is required provide notice of the application for partition to participants and beneficiaries in the form and manner prescribed by regulation. Because regulations are required to implement ERISA §4233, including the procedures for the plan sponsor to submit an application for partition, the PBGC has determined that a plan sponsor may submit an application for partition only on or after a date to be specified in regulations.

In addition, under ERISA §4233, as amended, special withdrawal liability rules apply for ten years following the date of the partition order, a continuing benefit payment obligation applies to the plan that was partitioned (the original plan), a special premium rule applies to the plan that was partitioned (the original plan), and notice requirements apply to the PBGC (not plan sponsors).

MPRA amends, but does not replace, the existing multiemployer merger rules under ERISA §4231. Specifically, it adds ERISA §4231(e), which gives the PBGC new statutory authority to facilitate the merger of two or more multiemployer plans if certain requirements are met. Although a regulation is not required to implement ERISA §4231(e), the PBGC is considering issuing guidance under that section so that applicants have advance notice of the expected showing they must make to demonstrate satisfaction of the new statutory criteria.

The PBGC is requesting information from all interested stakeholders on a range of issues regarding the application process for partitions and facilitated mergers. Recognizing the possibility that a plan sponsor may apply to the PBGC for a partition (or facilitated merger) concurrently with an application for benefit suspension to the Department of the Treasury, comments relating to the interaction between these provisions are especially welcome. The PBGC is interested in comments on issues affecting both partitions and facilitated mergers, including issues concerning the application process, the PBGC determinations, small multiemployer plans, and participants and beneficiaries. On issues affecting partitions only, the PBGC has questions about the notice requirements, the PBGC determinations, concurrent applications to the PBGC and the Treasury Department, the timing and effective dates of the applications, plan solvency, and transferred liabilities. On issues affecting facilitated mergers only, the PBGC seeks comments on the technical assistance that the PBGC may provide in the context of a facilitated merger and on the PBGC determinations. The PBGC also invites comments on any other issue relating to the application process for partitions and facilitated mergers.

Comments must be received by April 6, 2015 and should be submitted electronically via the Federal eRulemaking Portal at http://www.regulations.gov, by email to reg.comments@pbgc.gov, by fax to 202-326-4224, or by mail to Regulatory Affairs Group, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.

Source: 80 FR 8712.

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