PENSION BENEFIT GUARANTY CORPORATION (PBGC)

Statement of Regulatory and Deregulatory Priorities

The Pension Benefit Guaranty Corporation (PBGC) protects the pensions of more than 40 million people in more than 25,000 private-sector defined benefit plans. PBGC receives no tax revenues. Operations are financed by insurance premiums, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the trusteed plans.

To carry out these functions, PBGC issues regulations on such matters as termination, payment of premiums, reporting and disclosure, and assessment and collection of employer liability. The Corporation is committed to issuing simple, understandable, flexible, and timely regulations to help affected parties.

PBGC continues to follow a regulatory approach that does not inadvertently discourage the maintenance of existing defined benefit plans or the establishment of new plans. Thus, in developing new regulations and reviewing existing regulations, the focus, to the extent possible, is to avoid placing burdens on plans, employers, and participants, and to ease and simplify employer compliance. PBGC particularly strives to meet the needs of small businesses that sponsor defined benefit plans.

PBGC develops its regulations in accordance with the principles set forth in Executive Order 13563 "Improving Regulation and Regulatory Review" (Jan. 18, 2011), and PBGC's Plan for Regulatory Review (Regulatory Review Plan).[1] This Statement of Regulatory and Deregulatory Priorities reflects PBGC's ongoing implementation of its Regulatory Review Plan.

PBGC Insurance Programs

PBGC administers two insurance programs for privately defined benefit plans under title IV of the Employee Retirement Income Security Act of 1974 (ERISA):

Single-Employer Program. Under the single-employer program, when a plan terminates with insufficient assets to cover all plan benefits (distress and involuntary terminations), PBGC pays plan benefits that are guaranteed under title IV. PBGC also pays nonguaranteed plan benefits to the extent funded by plan assets or recoveries from employers.

Multiemployer Program. The smaller multiemployer program covers approximately 1,400 collectively bargained plans involving more than one unrelated employer. PBGC provides financial assistance (in the form of a loan) to the plan if the plan is unable to pay benefits at the guaranteed level. The guarantee is differently structured from and generally significantly smaller than the single-employer guarantee.

At the end of FY 2014, PBGC had a deficit of about $62 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:

To encourage voluntary private pension plans.

To provide for the timely and uninterrupted payment of pension benefits.

To keep premiums at the lowest possible levels.

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, enhance retirement security, and to implement statutory changes, particularly the Multiemployer Pension Reform Act of 2014 (MPRA) and 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.

Title	RIN	Effect on Small Business
Annual Financial and Actuarial Information Reporting; Changes to Waivers	1212-AB30	Expected to reduce burden on small business
Reportable Events	1212-AB06	Expected to reduce burden on small business
Multiemployer Plans; Electronic Filing Requirements	1212-AB28	Expected to reduce burden on small business
Valuation assumptions and methods; interest and mortality	1212-AB25	Undetermined

ERISA section 4010. PBGC reviewed 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. In July 2015, PBGC published a proposed rule[2] that would modify the existing reporting waiver for companies with aggregate underfunding of less than $15 million in all their plans. This change would better align the regulation with the original intent of generally limiting 4010 reporting relief to smaller plans. The proposal would also add two new reporting waivers, codify the guidance provided in recent statutory changes and related PBGC guidance on 4010 reporting, and make other technical changes. PBGC expects to publish a final rule early in FY 2016.

Reportable events. ERISA section 4043 and PBGC's implementing regulation requires that pension plans and the companies that sponsor them give PBGC notice of various events affecting either the company or the plan that may signal financial problems and could potentially put pensions at risk. In September 2015, PBGC published a final rule[3] that will provide the majority of sponsors and plans with increased flexibility to determine whether a reporting waiver will apply. Under the new rules, reporting will be limited to situations that pose the greatest risk to the pension insurance system. The final rule was developed in response to comments on two earlier proposals, discussion at PBGC's first-ever regulatory hearing, and Executive Order 13563.

Multiemployer plans filing requirements. In September 2015, PBGC published a final rule[4] that will require electronic filing of certain multiemployer plan notices. These changes will make the provision of information to PBGC more efficient and effective and result in a slight decrease in burden on the public.

Valuation assumptions and methods; interest and mortality. PBGC has established a routine, periodic review of PBGC's regulations and policies to ensure that the actuarial and economic content remains current. PBGC plans to publish a proposed rule in FY 2016 that would amend its benefit valuation and asset allocation regulations by improving its valuation assumptions and methods. Chief among the modifications PBGC is considering are modifications to mortality rates and the format of its interest factors.

Retirement security

DC to DB plan rollovers. In November 2015, PBGC published a final rule^{^[5]} that clarifies 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.^{^[6]} Under the final regulation, a benefit resulting from rollover amounts generally will not be subject to PBGC's maximum guaranteeable benefit or phase-in limitations and will be in the second highest priority category of benefits in the allocation of assets. This rulemaking was part of PBGC's efforts to enhance retirement security by promoting lifetime income options.

Statutory implementation

MPRA. MPRA established new options for trustees of multiemployer plans that will potentially run out of money to apply to PBGC for financial assistance. In June 2015, PBGC published an interim final rule[7] prescribing the application process and notice requirements for partitions of eligible multiemployer plans under MPRA. PBGC received nine comments on the interim final rule and expects to issue a new final rule in December 2015. PBGC is also developing a proposed rule that would prescribe rules for facilitated mergers of multiemployer plans under MPRA and conform the existing regulation to changes in the law. PBGC expects to publish that proposal in December 2015.

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] Now that Treasury has issued final regulations on statutory hybrid plans, PBGC is developing a final rule, which it expects to publish early in FY 2016.

Missing participants. A major focus of PBGC's current regulatory efforts is the development of a proposal to improve and expand the existing missing participants program. As authorized by PPA 2006, 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 2016.

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:

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

ERISA section 4010. The proposed rule discussed above under Retrospective Review of Existing Regulations would preserve the existing waiver reporting waiver tied to aggregate underfunding of less than $15 million for sponsors of smaller plans.

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. The regulatory projects discussed above 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. Discussion at that hearing informed PBGC's final rule. PBGC's 2015 Request for Information^{^[9]} on partitions and facilitated mergers under MPRA is an 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] http://www.pbgc.gov/Documents/2015-18177.pdf .

[3] http://www.pbgc.gov/documents/2015-14930.pdf .

[4] http://www.gpo.gov/fdsys/pkg/FR-2015-09-17/pdf/2015-23361.pdf

[5] http://www.gpo.gov/fdsys/pkg/FR-2014-11-25/pdf/2014-27826.pdf .

[6] 79 Fed. Reg. 18483 (Apr. 2, 2014), http://www.pbgc.gov/documents/2014-07323.pdf .

[7] http://www.pbgc.gov/documents/2015-14930.pdf .

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

[9] http://www.pbgc.gov/documents/2015-03434.pdf.