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CCH® PENSION AND BENEFITS — 05/27/09

PBGC semiannual regulatory agenda addresses USERRA benefits

The Pension Benefit Guaranty Corporation (PBGC) has released its semiannual regulatory agenda for Spring 2009, which outlines regulations that have been selected for amendment during the next year, as well as any regulations that have been recently finalized.

Proposed rule stage

Among the items in the PBGC’s proposed rule stage are:

• Amendment of the PBGC’s benefit payments regulation to deem that a participant who is in military service on a pension plan’s termination date satisfies the reemployment condition for entitlement to Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) benefits as of the plan’s termination date, so long as the participant is reemployed after the termination date in accordance with USERRA requirements;
• Amendment of the current regulation on reportable events and certain other notification requirements to conform to changes under the Pension Protection Act of 2006 (PPA; P.L. 109-280) and the PBGC’s regulations on premium rates;
• Implementation of section 410 of the PPA, which allows certain terminating plans (i.e., multiemployer plans, small professional service employer plans, and individual account plans) not covered by the existing Missing Participants program to participate in that program;
• Amendment to regulations that prescribe rules on valuing benefits in terminating cash balance and other hybrid plans, and rules concerning how the PBGC determines benefits payable in terminating cash balance and other hybrid plans it trustees; and
• Proposed rule to amend the PBGC’s regulation under ERISA §4022 concerning the phase-in of the PBGC’s guarantee of pension benefits to implement section 403 of the PPA, which provides the start date for the phase-in period of the benefit guarantee that is payable solely because of an “unpredictable contingent event,” such as a plant shutdown.

Final rule stage

Among the items in the PBGC’s fi nal rule stage are:

• Replacement of policy statements about penalties with an updated and expanded set of information penalty policies codified in its regulations; and
• Implementation of section 404 of PPA, which amended Title IV of ERISA. Section 404 provides that, for purposes of applying ERISA §4022 and ERISA §4044(a)(3) , the date that a contributing sponsor of an underfunded, PBGC-covered, single-employer pension plan files a bankruptcy petition will be treated as the plan’s termination date when the plan terminates while the sponsor is in bankruptcy.

Long-term actions

Among the items in the PBGC’s long-term actions are:

• Amendment of PBGC’s regulation on payment of premiums to implement section 406 of the PPA, which authorizes the PBGC to pay interest on premium overpayments refunded to designated payors; and
• Proposal to amend PBGC’s benefit valuation and asset allocation regulations to improve its valuation assumptions and methods.

Completed actions

Among the items in the PBGC’s completed actions are:

• Implementation of provisions of the PPA that allow for changes in the methods for computing withdrawal liability and address adjustments in withdrawal liability if a plan is in critical status;
• Amendment of PBGC’s regulation on annual financial and actuarial information reporting to implement PPA changes and to make clarifying changes; and
• Clarification of procedures, rights, and responsibilities for obtaining and providing affected parties information, such as actuarial data or agency determinations, related to the process of terminating pension plans.

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