PBGC to give smaller employers some reporting relief

OXON HILL, Md.—Small pension plans will see some relief from the Pension Benefit Guaranty Corp. in the coming months, including extended reporting deadlines and possible easing of reporting rules, Director Joshua Gotbaum said Tuesday.

Speaking on a panel of federal regulators during the American Society of Pension Professionals & Actuaries annual conference in Oxon Hill, Md., Mr. Gotbaum said his agency is also rethinking its approach to workforce downsizings that allow the PBGC to impose additional funding requirements on a plan. These are known as 4062(e) situations for the Employee Retirement Income Security Act section giving PBGC authority to require more funding when 20% or more of the workforce is affected by a plant layoff or shutdown.

“PBGC exists to serve defined benefit plans. We’re trying to keep our customers, and we would like to ease the burdens for small plans,” Mr. Gotbaum said.

Mr. Gotbaum said the PBGC will extend through 2012 a rule implemented this year that granted small plans relief for reporting missed contributions. Small plans generally are considered to be those with 500 participants or less, although the definition can vary.

The agency is also looking at ways to ease reportable event requirements for small plans. Having reporting rules apply to small plans “was a mistake and we are going to correct it,” Mr. Gotbaum said.

The PBGC also is considering easing provisions for 4062(e) situations requiring additional funding in the event of layoffs if plan sponsors do not pose a risk to the PBGC.

“We’re going to rethink it so we impose responsibilities on our clients only when it is necessary. In cases where the plan sponsors do not pose a risk, we are not going to require it at all,” Mr. Gotbaum said.

“Our goal in life has to be client service. We in the government have actually made it harder to offer defined benefit plans. I think it is incumbent on us to rethink how we do that.”

Hazel Bradford is a reporter at Pensions & Investments, a sister publication of Business Insurance.