PBGC to Launch Pilot Mediation Program

By John Iekel • October 18, 2017 • 0 Comments
The Pension Benefit Guaranty Corporation (PBGC) announced on Oct. 16 that it is launching a new pilot program that will offer mediation in certain Termination Liability Collection and Early Warning Program cases. The PBGC says that it decided that the pilot project would concern such cases because it considers them to be the ones most likely to benefit from mediation.

The Pilot’s Purpose

The new mediation program is part of the PBGC’s Early Warning and Risk Mitigation Program. It is intended not only for current plans; the PBGC also intends it to help resolve the pension liabilities of underfunded pension plans that terminated.

The PBGC intends the project to facilitate resolution of cases “with the assistance of a skilled, neutral and independent dispute resolution professional in a timely and cost-effective manner.” The PBGC says that its subject matter experts will be trained in mediation practice and that members of its case teams will participate in the mediation of their case. Plan sponsors may participate in the mediation along with, or through, the representatives of their choice.

The PBGC’s goals for the mediation pilot are the following:

  • resolving disputes early;
  • promoting improved relations with stakeholders;
  • reducing the costs of protracted negotiations and other proceedings; and
  • making alternative dispute resolution an integral part of the agency’s dispute resolution process.
Eligibility and Timing

Only cases selected from among the Termination Liability Collection and the Early Warning Programs will be eligible for inclusion in the pilot. Eligible respondents must volunteer for the mediation. Generally, cases will not be eligible if one of the following applies:
  • the plan sponsor has a minimal ability to pay;
  • there is a court proceeding pending; or
  • there is limited time to act and the plan sponsor has declined to sign a standstill or tolling agreement.
In eligible Termination Liability cases, respondents have 120 days to satisfy their disclosure requirements. After that, the PBGC will review, verify and analyze the information, and the parties may then engage in good faith negotiations. The PBGC will make mediation available within a reasonable time after it completes its review and analysis of the information.

In eligible Early Warning engagements, companies will be advised of the availability of mediation at the outset of negotiation. Mediation shall be available after PBGC receives sufficient responses to its information requests, but the timing of the transaction at issue will determine the window for mediation. Mediation must be completed before the date of the closing, with sufficient time left for the parties to document the mediated resolution or take legal action, if warranted.

Measuring Success

The PBGC says that after one year, it will evaluate the program’s success on:

  • percentage of screened cases found eligible to participate;
  • the percentage of cases in which the parties opt for mediation;
  • resolution rate;
  • impact on case inventory;
  • time it takes for resolution of cases;
  • cost savings; and
  • outside stakeholder reaction to the pilot.

Said PBGC Director Tom Reeder in a press release, “By providing an alternative dispute resolution option for employers who sponsor ongoing and terminated plans, we expect to save time and money for both the government and our stakeholders.”