Statement of Regulatory and Deregulatory Priorities

The Pension Benefit Guaranty Corporation (PBGC) is a federal corporation created under title IV of the Employee Retirement Income Security Act (ERISA) to guarantee the payment of pension benefits earned by nearly 40 million workers and retirees in nearly 24,000 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. PBGC administers two insurance programs - one for single-employer defined benefit pension plans and a second for multiemployer defined benefit pension plans.

  • 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 multiemployer program covers 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 structured differently from, and is generally significantly smaller than, the single-employer guarantee.

    At the end of fiscal year (FY) 2017, PBGC had a deficit of $11 billion in its single-employer insurance program and $65 billion in its multiemployer insurance program. While the financial position of the single-employer program is likely (but not certain) to continue to improve, the multiemployer program is likely to run out of funds by the end of 2025. If that happens, PBGC will not have the money to pay benefits at the current guaranteed levels to multiemployer plan participants whose plans run out of money.

    To carry out its statutory functions, PBGC issues regulations on such matters as how to pay premiums, when reports are due, what benefits are covered by the insurance program, how to terminate a plan, the liability for underfunding, and how withdrawal liability works for multiemployer plans. PBGC follows a regulatory approach that seeks to encourage the continuation and maintenance of defined benefit plans. So, in developing new regulations and reviewing existing regulations, PBGC seeks to reduce burdens on plans, employers, and participants, and to ease and simplify employer compliance wherever possible. PBGC particularly strives to meet the needs of small businesses that sponsor defined benefit plans. In all such efforts, PBGC's mission is to protect the retirement incomes of plan participants.

    Regulatory/Deregulatory Objectives and Priorities

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

  • To encourage the continuation and maintenance of voluntary private pension plans;

  • To provide for the timely and uninterrupted payment of pension benefits; and

  • To keep premiums at the lowest possible levels.

    Pension plans and the statutory framework in which they are maintained and terminated are complex. Despite this complexity, PBGC is committed to issuing simple, understandable, flexible, and timely regulations to help affected parties. PBGC's regulatory/deregulatory objectives and priorities for the fiscal year are:

  • To enhance the retirement security of workers and retirees;

  • To implement statutory changes through regulatory actions that ease compliance burdens and achieve maximum net benefits; and

  • To simplify existing regulations and reduce burden.

    PBGC endeavors in all its regulatory and deregulatory actions to promote clarity and reduce burden with the goal that net cost impact on the public is zero or less overall. PBGC's most important actions are:

    Missing participants. A major focus of PBGC's current efforts is to finalize rules to simplify and revise the existing missing participants program to help connect more participants with their lost retirement savings. As authorized by the Pension Protection Act of 2006 (PPA), the revised program will cover terminating defined contribution plans, defined benefit plans of small professional-service employers that are not covered by title IV of ERISA, and multiemployer plans, in addition to terminating single-employer defined benefit plans. The program will save retirement plans time and money in dealing with the benefits of missing participants. And a centralized search directory and periodic searching by PBGC will make finding lost benefits much easier. PBGC expects many more workers and retirees will be reunited with their retirement dollars. PBGC published a proposed rule on September 20, 2016, received 14 comments, and intends to publish a final rule early in FY 2018. (See RIN 1212-AB13.)

    Mergers and Transfers Between Multiemployer Plans. The Multiemployer Pension Reform Act of 2014 (MPRA) established new options (plan partitions and mergers) for trustees of multiemployer plans that will potentially run out of money to apply to PBGC for technical or financial assistance. This action primarily will prescribe guidance to facilitate mergers of certain financially troubled multiemployer plans pursuant to MPRA, thereby reducing plan costs and significantly benefitting plan participants. Mergers are a way some plans can preserve and protect benefits earned by workers. Such plans could stabilize or increase their base of contributing employers, combine plan assets for more efficient investing, and reduce plan administrative costs. PBGC published a proposed rule on June 6, 2016, received 10 comments, and intends to publish a final rule early in FY 2018. (See RIN 1212-AB31.)

    Rethinking Existing Regulations

    Most of PBGC's regulatory/deregulatory actions are the result of its ongoing retrospective review program to identify and ameliorate inconsistencies, inaccuracies, and requirements made irrelevant over time. PBGC undertook a review of its multiemployer plan regulations and has identified rules in which it can reduce burden and clarify guidance. For example, PBGC plans to propose reductions in actuarial valuation requirements for certain small terminated multiemployer pension plans, notice requirements on plan sponsors of plans terminated by mass withdrawal, and reporting and disclosure requirements on sponsors of insolvent plans ("Terminated and Insolvent Multiemployer Plans and Duties of Plan Sponsors" RIN 1212-AB38). Another proposal would simplify how multiemployer plans calculate withdrawal liability where changes in contributions or benefits are, by statute, to be disregarded in that calculation ("Methods for Computing Withdrawal Liability" RIN 1212-AB36).

    PBGC plans to propose a "housekeeping" rulemaking project to make miscellaneous technical corrections, clarifications, and improvements to PBGC's regulations, such as the reportable events regulation (particularly addressing duplicative active participant reduction event reporting) and the regulation on annual financial and actuarial information reporting ("Miscellaneous Corrections, Clarifications, and Improvements" RIN 1212-AB34). PBGC expects to undertake periodic rulemaking projects like this that deal with minor technical and clarifying issues. The "Benefit Payments" proposal (RIN 1212-AB 27) would make clarifications and codify policies in PBGC's benefit payments and valuation regulations involving payment of lump sums, entitlement to a benefit, changes to benefit form, partial benefit distributions, and valuation of plan assets. PBGC's regulatory review also identified a need to update the rules for administrative review of agency decisions (RIN 1212-AB35).

    Multiple proposed rulemakings would update PBGC's regulations and policies to ensure that the actuarial and economic content remains current. PBGC plans to publish proposed rules that would amend its benefit valuation and asset allocation regulations by updating its valuation assumptions and methods. Chief among the modifications PBGC is considering at this time are to interest and mortality assumptions under the asset allocation regulation (RIN 1212-AA55), and the methodology for setting interest assumptions under the benefit payments regulation (RIN 1212-AB41).

    Small Businesses

    PBGC takes into account the special needs and concerns of small businesses in making policy. Many plans PBGC insures are sponsored by small businesses. PBGC is considering several proposed actions that will have a positive impact on small businesses, notably its "Missing Participants" final rule discussed above. This rule 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 (i.e., defined contribution plans and plans of small professional-service employers). The "Terminated and Insolvent Multiemployer Plans and Duties of Plan Sponsors" proposal also discussed above would reduce valuation and reporting burdens primarily on small multiemployer plans, which generally are comprised of small employers.

    Open Government and Increased Public Participation

    PBGC encourages public participation in the regulatory process. For example, PBGC highlights when there are opportunities to comment on proposed rules and requests for information on its "Retirement Matters" blog and in its "What's New for Employers and Practitioners" updates. PBGC's current efforts to reduce regulatory burden in the projects discussed above are in substantial part a response to public comments. Most recently, PBGC asked for feedback on its regulatory planning and review of existing regulations by way of a Request for Information (RFI) published on July 26. A number of individuals and organizations responded, and PBGC is actively considering the comments, some of which are already reflected in this Fall agenda. PBGC encourages comments on an on-going basis as we continue to look for ways to further improve PBGC's regulations.