PBGC Single Employer Coverage: A Complicated Failsafe
The security the Pension Benefit Guaranty Corporation (PBGC) offers plans and their participants comes at a price — obtaining that succor can be complicated, as PBGC panelists attested at an April 3 session of the Enrolled Actuaries meeting in Washington, D.C. The conference was sponsored by the American Academy of Actuaries and the Conference of Consulting Actuaries.
Five PBGC officials offered comments and answered questions about their agency’s work with single employer plans:
- Kristina Archeval, senior advisor, Corporate Finance & Restructuring Department;
- Adi Berger, Director, Corporate Finance & Restructuring Department;
- Stephanie Cibinic, deputy assistant general counsel for regulatory affairs, Office of the General Counsel;
- Stacey Day, actuary, Negotiations and Restructuring Actuarial Division; and
- Amy Viener, senior policy actuary.
A Helping Hand
The PBGC does more to assist plans and participants than funding, panelists pointed out, and cited programs in which it provides education and advice to plan sponsors and works with sponsors to structure protection. Of the early warning program it offers, Berger said that the PBGC holds 300 event and transactions per year, of which approximately one-third result in more in-depth reviews.
The PBGC’s help does come at a price.
The first filings under the new requirement that the Form 4010 be filed are due this April 17. Viener acknowledged that doing so can be complicated and said of the form, with great candor, “It’s a pain in the neck the first time you do it,” but added that it’s easier after the initial filing since the process ordinarily entails updating data from previous filings.
According to Viener, the most common filing issues are:
- using outdated forms;
- incomplete forms; i.e., those with missing attachments with no accompanying explanation or with fields left unfilled;
- incorrect financial information;
- incomplete controlled group information;
- late filing;
- missing filings; and
- forms lacking a signature.
The missing participant program is mandatory for PBGC-insured single employer plans as part of a standard termination program and expanded by the Pension Protection Act, Cibinic reminded attendees. There have been “modest changes” to the program for defined benefit plans, she said, concerning how the amount to transfer to the PBGC is determined and how the PBGC will determine benefits to pay out once an individual is located.
Viener had bad and good news regarding premiums. She noted that while they have gone up, at the same time the PBGC has cut penalties for late premiums in half and that there are additional reductions in penalties for plans that typically pay their premiums on time and those that pay their late premiums within 30 days of receiving a notice from the PBGC. And she reminded attendees of the carrot-and-and stick quality of the penalty rate structure: a lower rate for self-correction and a higher rate if premiums are paid after a PBGC notice is sent.