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CCH® PENSION AND BENEFITS — 12/01/08

PBGC final regs issued on plan termination disclosure requirements

The Pension Benefit Guaranty Corporation (PBGC) has issued final regulations, implementing Sec. 506 of the Pension Protection Act of 2006 (PPA; P.L. 109–280), setting forth the disclosure requirements for distress and PBGC-initiated plan terminations.

Under the disclosure provisions added to ERISA §4041 and ERISA §4042 by PPA, affected parties— plan participants, beneficiaries, employee organization and the PBGC—may request plan termination information regarding distress terminations and PBGC-initiated terminations. Under the final regulations, all requests to the plan administrator, plan sponsor, or PBGC must be made in writing, and contain information relating to the plan, and the requestor’s status as an affected party.

Distress termination disclosures

Under ERISA §4041(a)(2) , a plan administrator seeking a distress termination must provide a notice of intent to terminate to each affected party. The existing PBGC regulation at PBGC Reg. §4041.43 specifies information which must be included in notices issued to affected parties other than the PBGC, and requires a separate notice, with additional information, which must be provided to the PBGC on Form 600 Distress Termination, Notice of Intent to Terminate.

The new final regulations provide that, upon written request of an affected party, a plan administrator must provide copies of any information submitted to the PBGC not later than 15 business days after receipt of the request. If PBGC Form 600 has not been filed with PBGC at the time of the request, the final regulation requires the plan administrator to provide the information not later than 15 business days after PBGC Form 600 is filed. In addition, the final regulation requires that if the plan administrator has provided information in response to a request and later submits additional information to PBGC in connection with the proposed distress termination, the plan administrator must, not later than 15 business days after the submission, provide copies of that information to any affected party that has made a previous request.

PBGC-initiated termination disclosures

Under ERISA §4042(c)(3) , a sponsor or administrator of a single-employer plan that has received a Notice of Determination from the PBGC that the plan should be terminated must provide to an affected party any information provided to the PBGC in connection with the plan termination. Under the new final regulations, receipt by the plan administrator is assumed three business days after PBGC issues the Notice of Determination. After that point, the information must be provided not later than 15 business days after receipt of the request. As in the case of a distress termination, if new information relating to the request is submitted to the PBGC, copies must be provided, not later than 15 business days after the submission, to any affected party that has made a previous request.

The final regulations use analogous rules to determine disclosure time limits for the requirement that the PBGC, upon the request of an affected party, must provide a copy of the administrative record, including the trusteeship decision record of a termination of a plan, not later than 15 days after receipt of the request.

Confidential information disclosures by sponsors, administrators

Under ERISA §4041 and ERISA §4042 , plan administrators and sponsors involved with distress or PBGC-initiated terminations are prohibited from disclosing information that may directly or indirectly be associated with, or otherwise identify, an individual participant or beneficiary. They may also restrict the disclosure of confidential information that would be exempt from disclosure under the Freedom of Information Act (FOIA), such as trade secrets or information obtained from privileged sources. The final regulations provide that plan administrators and sponsors that have received a request for information in connection with terminations may seek a court order under which confidential information will be disclosed only to authorized representatives that agree to ensure the confidentiality of such information, such as employee organizations representing pension plan participants.

Confidential information disclosures by the PBGC

The PBGC is prohibited by the Privacy Act from disclosing personally identifiable information with regard to a participant or beneficiary, without the individual’s written consent. However, the position of the PBGC is that information it receives under ERISA that becomes part of the administrative record is not exempt from disclosure under ERISA §4042(c)(3) , even if it would otherwise be exempt from disclosure under the FOIA. The final regulations do provide that the PBGC will notify the plan administrator and sponsor within two business days upon receipt of a request for the administrative record from an affected party. The plan administrator and sponsor may then seek a court order under which disclosure of those portions of the administrative record that contain confidential information will be made only to authorized representatives that agree to ensure the confidentiality of such information, and will not be disclosed to other affected parties.

Effective date and applicability

The PBGC states that the final regulations, which have an effective date of December 18, 2008, are applicable to terminations initiated on or after August 17, 2006, but only to requests for information made on or after December 18, 2008.

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