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PBGC Proposes Rule to Facilitate Mergers of Multiemployer Pension Plans

The Pension Benefit Guaranty Corporation (PBGC) on June 2 announced that it is proposing a rule that would facilitate mergers of multiemployer pension plans.

The proposed rule, which will be published in the Federal Register on June 6, would implement changes under the Multiemployer Pension Reform Act of 2014 (MPRA). Section 121 of MPRA amends the existing rules under Section 4231 of ERISA by adding a new Section 4231(e), which clarifies the PBGC’s authority to facilitate the merger of two or more multiemployer plans if certain statutory requirements are met.

For purposes of Section 4231(e), “facilitation” may include:

  • training;

  • technical assistance;

  • mediation;

  • communication with stakeholders; and

  • support with related requests to other government agencies.

In addition, under Section 4231(e)(2), the PBGC may provide financial assistance (as defined by Section 4261 of ERISA) to facilitate a merger it determines is necessary to enable one or more of the plans involved to avoid or postpone insolvency.

The proposed rule also would provide guidance on the process for requesting a facilitated merger under Section 4231(e), including a request for financial assistance. The proposed rule would also reorganize and update the existing regulation.

Why?

Most multiemployer plans are not in danger of running out of money, the PBGC says; nonetheless, more than 10% of all participants in multiemployer plans — more than one million people — are covered by what it calls “troubled plans that are projected to run out of money.”

Mergers are a way some plans can preserve and protect the benefits earned by workers and retirees, argues the PBGC, which says that its limited financial resources constrain its ability to provide financial assistance to such plans.

The PBGC has the authority to facilitate plan mergers by providing technical assistance, or financial assistance if necessary to avoid plan insolvency. Before it assists a merger, the PBGC must determine it is necessary to avoid plan insolvency, will reduce PBGC's expected long-term loss and will not harm the PBGC’s ability to meet existing obligations.

“Plan mergers can make multiemployer pensions more stable and secure,” said PBGC Director Tom Reeder in a press release, continuing, “PBGC can help save troubled multiemployer plans before they fail. That helps plan participants and reduces the long-term costs of the pension insurance program.”

Public Comments Accepted

The PBGC will accept comments on the proposed rule through Aug. 6, 2016.

Comments must be identified by Regulation Identifier Number (RIN) 1212-AB31. They may be submitted by any of the following methods:

The federal eRulemaking Portal: http://www.regulations.gov; follow the website
instructions for submitting comments.
E-mail: [email protected].
Fax: (202) 326-4112.
Mail or hand delivery: Send to Regulatory Affairs Group, Office of the General Counsel,
Pension Benefit Guaranty Corporation, 1200 K Street, NW, Washington, DC 20005?4026.