ERISA Industry Committee backs PBGC proposal to reduce premium filings

A proposal by the Pension Benefit Guaranty Corp. to reduce the number of pension insurance premium filings employers with large pension plans must make has won the backing of the ERISA Industry Committee.

“ERIC applauds the PBGC for proposing to change the due dates for premiums as a common-sense approach” that will reduce employers' administrative burden, Kathryn Ricard, the ERISA Industry Committee's senior vice president for retirement policy, said in a statement Monday.

Under the agency's proposal, which was unveiled in July for public comment, employers with at least 500 pension plan participants would have to make just one filing and payment a year. Currently, they often have to make three filings and payments in a year.

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

The first payment 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 as of the end of the prior year. The current flat-rate premium is $42 per plan participant.

In addition, 9 1/2 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 at the end of the prior year.

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, 9 1/2 months after the start of a plan year.