PBGC Issues Final Rules for Terminated and Insolvent Multiemployer Plans

The Pension Benefit Guaranty Corporation (PBGC) has issued final rules that apply to multiemployer pension plans that were terminated by mass withdrawal and insolvent multiemployer pension plans.  These rules go into effect on July 1, 2019.

For plans terminated by mass withdrawal, the following rules apply:

  • For a terminated plan with no more than $50 million in vested benefit liabilities, an actuarial valuation is required every five years.  Otherwise, an actuarial valuation must be done annually (due date is 150 days following the end of each plan year)
  • Annual plan solvency determinations must be performed
  • If a plan is determined to be insolvent for the current or succeeding plan year, certain notices are required to be sent to the PBGC, plan participants, and beneficiaries:
    • A notice of Insolvency will be due by the later of (A) 90 days before the beginning of the insolvency year or (B) 30 days after the date that plan insolvency has been determined
    • A notice of insolvency benefit level showing the benefits that are payable to plan participants and beneficiaries during insolvency; such notices will no longer be required annually but will be required if there are any changes to a participant’s benefit level
  • An initial application for financial assistance from the PBGC must be filed at the same time that a notice of insolvency benefit level is filed, but no later than 90 days prior to the first day of the month for which plan assets will not be sufficient to cover the plan’s benefit payment obligations

For insolvent plans receiving financial assistance from the PBGC, the following rules apply:

  • For an insolvent plan receiving financial assistance from the PBGC and with no more than $50 million in vested benefit liabilities, an actuarial valuation is required every five years
  • Otherwise, an actuarial valuation must be done annually (due date is 180 days following the end of each plan year)
  • Alternative information, as defined on PBGC’s website, may be submitted by an insolvent plan receiving financial assistance from the PBGC and with no more than $50 million in vested benefit liabilities. This option is not available to insolvent plans with more than $50 million in vested benefit liabilities

Certain withdrawal liability information must be reported annually by both plans terminated by mass withdrawal and insolvent plans, starting with plan years ending after July 1, 2019:

  • Withdrawal liability assessed to employers (in the aggregate and by individual employer)
  • For each employer not yet assessed withdrawal liability, the PBGC must be notified of the employer’s name, contribution owed to the plan in the year before withdrawal, and the reasons that the employer has not been assessed withdrawal liability

The above information is due 180 days after the close of each plan year.

The PBGC’s website will provide instructions for electronic filing and content requirements for the notices and information outlined above.

Navigating a Benefit Suspension Application Under MPRA

Applying for a suspension under the Multiemployer Pension Reform Act (MPRA) is a lengthy and complicated process. This article describes the steps one pension fund went through to apply for benefit suspensions.

Michael Reilly, ASA, published this article in the May 2019 issue of Benefits Magazine.

PBGC Premium Rates for 2014

The Pension Benefit Guarantee Corporation announced the 2014 premium rates. The per-participant flat premium rate for plan years beginning in 2014 is $49 for single-employer plans (up from a 2013 rate of $42) and $12 for multiemployer plans (no change from 2013).

For plan years beginning in 2014, the variable-rate premium for single-employer plans is $14 per $1,000 of unfunded vested benefits (UVBs), up from a 2013 rate of $9. This $5 increase is the result of indexing and a scheduled $4 increase provided in MAP-21. The variable-rate premium is capped at $412 times the number of participants (up from a 2013 cap of $400). Plans sponsored by small employers (generally fewer than 25 employees) may be subject to an even lower cap. Multiemployer plans do not pay a variable-rate premium.

http://www.pbgc.gov/prac/prem/premium-rates.html