At the end of fiscal year 2013, PBGC had a deficit of about $36 billion in its insurance programs. Current PBGC premiums are insufficient.

Regulatory Objectives and Priorities

PBGC's regulatory objectives and priorities are developed in the context of the Corporation's statutory purposes:

Pensions and the statutory framework in which they are maintained and terminate are complex. Despite this complexity, PBGC is committed to issuing simple, understandable, flexible, and timely regulations and other guidance that do not impose undue burdens that could impede maintenance or establishment of defined benefit plans.

Through its regulations and other guidance, PBGC strives to minimize burdens on plans, plan sponsors, and plan participants; simplify filing; provide relief for small businesses and plans; and assist plans in complying with applicable requirements. To enhance policy-making through collaboration, PBGC also plans to expand opportunities for public participation in rulemaking (see Open Government and Public Participation below).

PBGC's current regulatory objectives and priorities are to simplify its regulations and reduce burden, particularly in the areas of premiums and reporting, enhance retirement security, and complete implementation of the Pension Protection Act of 2006 (PPA 2006).

Rethinking Existing Regulations

Pursuant to section 6 of Executive Order 13563 "Improving Regulation and Regulatory Review" (Jan. 18, 2011), the following Regulatory Identifier Numbers (RINs) have been identified as associated with retrospective review and analysis in the Department's final retrospective review of regulations plan. The regulatory actions associated with these RINs, as well as other regulatory review projects, are described below.

Reportable events. PPA 2006 affected certain provisions in PBGC's reportable events regulation, which requires employers to notify PBGC of certain plan or corporate events. In November 2009, PBGC published a proposed rule to conform the regulation to the PPA 2006 changes and make other changes.[2] In response to Executive Order 13563 and comments on the proposed rule, in April 2013, PBGC published a new proposal that would exempt more than 90 percent of plans and sponsors from many reporting requirements. The new proposal takes advantage of other existing reporting requirements and methods to avoid burdening companies and plans and expands waivers and redefines events to reduce reporting. The new proposal implements stakeholder suggestions that different reporting requirements should apply in circumstances where the risk to PBGC is low or compliance is especially burdensome. PBGC is developing the final rule, taking into account the public comments.

Premiums. In January and March 2014 PBGC published final rules to make its premium rules more effective and less burdensome. [3] PBGC developed the rules in response to regulatory review and public comments. The changes simplify due dates, coordinate the due date for terminating plans with the termination process, make conforming and clarifying changes to the variable-rate premium rules, and provide for relief from penalties. Large plans no longer have to pay flat-rate premiums early; small plans get more time to value benefits. The changes were favorably received by the pension community.

Multiemployer plans. In May 2014, PBGC published a final rule amending PBGC's multiemployer regulations.[4] The changes were developed as a result of PBGC's regulatory review. The amendments reduce the number of actuarial valuations required for certain small terminated but not insolvent plans, shorten the advance notice filing requirements for mergers in situations that do not involve a compliance determination, and remove certain insolvency notice and update requirements.

Allocation of Assets in Single-Employer Plans; Valuation of Benefits and Assets. In FY 2014, PBGC began an internal process to establish routine, periodic review of PBGC regulations and policies to ensure that the actuarial and economic content remains current.

ERISA section 4062(e). The statutory provision requires reporting of, and liability for, certain substantial cessations of operations by employers that maintain single-employer plans. In August 2010, PBGC issued a proposed rule to provide guidance on the applicability and enforcement of section 4062(e).[5] In light of comments on the proposal and PBGC's enforcement practices, in November 2012, PBGC announced a 4062(e) enforcement pilot program under which it did not enforce in the case of small plans or financially strong sponsors (90 percent of plans are small or have financially strong sponsors). In July 2014, PBGC announced a moratorium, until the end of 2014, on the enforcement of 4062(e) cases.[6] The moratorium will enable PBGC to further target at-risk plans and work with the business community, labor, and other stakeholders to minimize effects on necessary business activities. At this time, PBGC is withdrawing RIN 1212-AB20 from its regulatory agenda.

ERISA section 4010. PBGC is reviewing its regulation on Annual Financial and Actuarial Information Reporting (part 4010) and the related e-filing application to consider ways of reducing reporting burden and ensuring that PBGC receives the critical information it needs.

Retirement security

DC to DB plan rollovers.

In April 2014, PBGC published a proposed rule that would clarify the treatment of benefits resulting from a rollover distribution from a defined contribution plan to a defined benefit plan, if the defined benefit plan was terminated and trusteed by PBGC.[7] Under the proposal, a benefit resulting from rollover amounts generally would not be subject to PBGC's maximum guaranteeable benefit or phase-in limitations and would be in the second highest priority category of benefits in the allocation of assets. The proposed rule was well-received by the public, and PBGC expects to publish a final rule early in FY 2015. This rulemaking is part of PBGC's efforts to enhance retirement security by promoting lifetime income options.

PPA 2006 implementation

Cash balance plans. PPA 2006 changed the rules for determining benefits in cash balance plans and other statutory hybrid plans. In October 2011, PBGC published a proposed rule implementing the changes in both PBGC-trusteed plans and in plans that close out in the private sector.[8] The final rule is on hold until Treasury issues final regulations.

Missing participants. A major focus of PBGC's current regulatory efforts is the development of a proposal to improve and expand our missing participants program. The expanded program will cover terminating defined contribution plans, non-covered defined benefit plans, and multiemployer plans. The proposal will take into account comments received from employers, plans, and other stakeholders in response to a 2013 Request for Information. PBGC is working with IRS and DOL to coordinate government requirements for dealing with missing participant issues. PBGC expects to publish a proposed regulation early in FY 2015.

Shutdown benefits. Under PPA 2006, the phase-in period for the guarantee of a benefit payable solely by reason of an "unpredictable contingent event," such as a plant shutdown, starts no earlier than the date of the shutdown or other unpredictable contingent event. PBGC published a final rule implementing this statutory change in May 2014.[9]

Small Businesses

PBGC takes into account the special needs and concerns of small businesses in making policy. A large percentage of the plans insured by PBGC are small or maintained by small employers. PBGC has issued or is considering several proposed rules that will focus on small businesses:

Small plan premium due date. The March 2014 final rule discussed above under Retrospective Review of Existing Regulations addresses concerns that some small plans determine funding levels too late in the year to be able to use current-year figures for the variable-rate premium by the new uniform due date. Under the final rule, small plans generally use prior-year figures for the variable-rate premium (with a provision for opting to use current-year figures).

Reportable events. The reportable events proposed rule discussed above under Retrospective Review of Existing Regulations would waive many reporting requirements for plans with fewer than 100 participants.

Missing participants. The missing participants proposed rule discussed above under PPA 2006 Implementation would benefit small businesses by simplifying and streamlining current requirements, better coordinating with requirements of other agencies, and providing more options for sponsors of terminating non-covered plans.

Open Government and Increased Public Participation

PBGC is doing more to encourage public participation in the regulatory process. For example, PBGC's current efforts to reduce regulatory burden are in substantial part a response to public comments. Regulatory projects discussed above, such as reportable events, ERISA section 4062(e), and ERISA section 4010, highlight PBGC's customer-focused efforts to reduce regulatory burden.

PBGC's Regulatory Review Plan sets forth ways to expand opportunities for public participation in the regulatory process. For example, in June 2013, PBGC held its first ever regulatory hearing on the reportable events proposed rule, so that the agency would have a better understanding of the needs and concerns of plan administrators and plan sponsors. PBGC's 2013 Request for Information on missing participants in individual account plans is another example of PBGC's efforts to solicit public participation in the regulatory process.

PBGC plans to provide additional means for public involvement, including on-line town hall meetings, social media, and continuing opportunity for public comment on PBGC's Web site. PBGC also invites comments on the Regulatory Review Plan on an on-going basis as we engage in the review process. Comments should be sent to regs.comments@pbgc.gov.

PBGC will continue to look for ways to further improve its regulations.

[1] http://www.pbgc.gov/documents/plan-for-regulatory-review.pdf . Progress reports on the plan can be found at http://www.pbgc.gov/res/laws-and-regulations/reducing-regulatory-burden.html .

[2] 74 Fed. Reg. 61248 (Nov. 23, 2009), http://www.pbgc.gov/Documents/E9-28056.pdf .

[3] 79 Fed. Reg. 347 (Jan. 3, 2014), http://www.pbgc.gov/documents/2013-31109.pdf; 79 Fed. Reg. 13547 (Mar. 11, 2014), http://www.pbgc.gov/documents/2014-05212.pdf .

[4] 79 Fed. Reg. 30459 (May 28, 2014), http://www.pbgc.gov/documents/2014-12154.pdf .

[5] 75 Fed. Reg. 48283 (Aug. 10, 2010), http://www.pbgc.gov/Documents/2010-19627.pdf .

[6] http://www.pbgc.gov/news/press/releases/pr14-09.html .

[7] 79 Fed. Reg. 18483 (Apr. 2, 2014), http://www.pbgc.gov/documents/2014-07323.pdf .

[8] 76 Fed. Reg. 67105 (Oct. 31, 2011), http://www.pbgc.gov/Documents/2011-28124.pdf .

[9] 79 Fed. Reg. 25667 (May 6, 2014), http://www.pbgc.gov/documents/2014-10357.pdf