PBGC puts reportable changes program on holdReprints
The Pension Benefit Guaranty Corp. declared a six-month moratorium Tuesday on a program that required employers to guarantee more pension assets in the event of major operational changes.
The program, known as Section 4062(e) for its place in the Employee Retirement Income Security Act, allows the agency to step in if 20% or more of employees covered by a defined benefit plan will lose their jobs in the event of an operational shutdown.
While companies must still report any changes, the enforcement moratorium through Dec. 31 will apply to both open cases and new cases. “This latest action will give PBGC time to be more thoughtful and more effective,” PBGC Director Joshua Gotbaum said in a statement, which recognized concerns among plan sponsors abut how the program was being enforced. Companies will continue to report new 4062(e) events, but the PBGC will take no action on those events during the moratorium.
“This is a very positive development. Hopefully, this will lead to a more effective approach that works for all stakeholders,” said Harold Ashner, former PBGC assistant general counsel for legislation and regulations whose law firm, Keightley & Ashner L.L.P., represents corporations in 4062(e) cases.
“We welcome the temporary relief. We're glad that he's taking the pension community's concerns to heart,” said Deborah Forbes, executive director of the Committee on Investment of Employee Benefit Assets, which represents more than 100 of the largest U.S. corporate pension funds with more than $1.7 trillion in retirement plan assets.
Hazel Bradford writes for Pensions & Investments, a sister publication of Business Insurance.