The administrative hassle and expense of paying mandatory insurance premiums to the Pension Benefit Guaranty Corp. will be reduced for large pension plan sponsors under a final PBGC rule.

In many cases, employers with at least 500 participants in their pension plans now make three filings and payments a year to the PBGC. Under the final rule, to be published in Friday's Federal Register, they will have to make just one filing and payment a year, which will be by Oct. 15 for calendar year plans. The rule goes into effect for the 2014 plan year.

Under prior rules, pension plans with at least 500 participants had to pay PBGC premiums twice a year.

The first payment was due two months after the start of a plan year, which was Feb. 28 for calendar year plans. What is known as the flat-rate premium is based on an employer's estimate on the number of plan participants as of the end of the prior year. The current flat-rate premium is $49 per plan participant. In addition, 9½ months after the start of a plan year, or by Oct. 15 for calendar-year plans, a plan sponsor paid its second flat-rate premium based on actual plan enrollment at the end of the prior year. If its plan was underfunded, the employer then also paid a variable-rate premium, which in 2014 is $14 per $1,000 of plan underfunding.

At the same time, an employer calculated the exact flat-rate premium based on the actual participant count at the end of the prior year. If its February estimate was too low, the employer would make an additional payment covering interest charges on the flat-rate premium. That payment would be due after the employer received a bill from the PBGC.

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By contrast, under the final PBGC rule, large plan sponsors will pay the flat-rate and variable-rate premium just once a year, 9½ months after the start of a plan year, which would be Oct. 15 for calendar year plans.

Since employers would know by Oct. 15 their actual plan enrollment on the last day of the prior year, the risk they faced of paying interest because they underestimated enrollment in their Feb. 28 filing is eliminated.

“As promised earlier this year, we want to lessen the hassle so companies will be encouraged to keep their plans going. And judging from the feedback, we're on the right track,” PBGC Director Joshua Gotbaum said in a statement.

“There is no downside. Employers will welcome one filing. This will simplify things a bit. Economically, it is a small benefit, but a benefit nonetheless,” said Alan Glickstein, a senior retirement consultant with Towers Watson & Co. in Dallas.

Other parts of the earlier proposal will be dealt with in a separate final rule at a later date, the PBGC said.

Under the earlier proposal, employers with 100 to 499 participants would not be affected. Those plan sponsors already have until 9½ months after the start of a plan year to pay the PBGC premiums.

However, for small pension plan sponsors, those with less than 100 participants, the proposal would accelerate their premium payments.

Currently, such sponsors have 16 months from the start of a plan year to pay the premiums. Under the PBGC proposal, small pension plan sponsors also would have to pay the premiums within 9½ months after the start of a plan year.

For small plans that owe a variable-rate premium, though, the amount would be based on their funded status during the prior year. That special treatment for small plans is because some value benefits at the end of a plan year and, as a result, they cannot calculate variable-rate premiums during the current year, the PBGC said earlier.

“PBGC's proposed solution to this timing problem is for small plans to determine the variable-rate premium using data from the year before the premium payment year,” the PBGC said earlier.