Large pension plan sponsors would have to pay federal pension insurance premiums only once a year starting in 2014 under a proposal unveiled Tuesday by the Pension Benefit Guaranty Corp.

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

The first installment is due two months after the start of a plan year, which is 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. The current flat-rate premium is $42 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 pays its second flat-rate premium based on actual plan enrollment. If its plan is underfunded, the employer then also pays a variable-rate premium, which currently is $9 per $1,000 of plan underfunding.

Under the PBGC proposal, large plan sponsors would pay the flat-rate and variable-rate premium just once a year, 9½ months after the start of a plan year.

“If we can't cut the premiums, we can at least cut the hassle,” PBGC Director Josh Gotbaum said in a statement.

Benefit experts said the proposal is a welcome change that would cut administrative costs for employers and the PBGC.

“This is very good news and welcome simplification,” said Heidi Rackley, a partner with Mercer L.L.C. in Seattle.

“This will simplify plan administration without increasing risk to the PBGC,” added Sandy Wheeler, a director with PricewaterhouseCoopers L.L.P. in Washington.

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“It is a proverbial win-win situation,” said Alan Glickstein, a senior consultant with Towers Watson & Co. in Dallas.

For employers with 100 to 499 participants, the proposal would have no impact. Those plan sponsors already have until 9½ months after the start of a plan year to pay the PBGC premiums.

In the case of small pension plan sponsors — those with less than 100 participants — the proposal would accelerate when they would have to pay premiums.

Currently, such sponsors have 16 months from the start of a plan year to pay the premiums. Under the PBGC proposal, however, 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 plans value benefits at the end of a plan year and, as a result, cannot calculate variable-rate premiums during the current year, the PBGC said in its proposal.

“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.

Under another change, a plan sponsor no longer would have to pay a variable-rate premium for the first year it started a plan or the year it ended a plan through a standard termination. In a standard termination, all benefits must be funded by an employer before the plan can be closed.

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“There is no risk to the PBGC,” PwC's Ms. Wheeler said of the proposal.

The PBGC also is formalizing a 2011 proposal in which it automatically waives penalties on required pension termination insurance premiums if the required payment is no more than seven days late.