PENSION BENEFIT GUARANTY CORPORATION (PBGC)
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 private-sector defined benefit plans. PBGC is currently responsible for the benefits of about 1.5 million people in failed 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.
At the end of fiscal year (FY) 2017, PBGC had a deficit of $10.9 billion in its single-employer insurance program and $65 billion in its multiemployer insurance program. PBGC's projections show that the financial position of the single-employer program is likely to continue to improve, but the multiemployer program is in dire financial condition and likely to run out of funds by the end of fiscal year 2025. If that happens, PBGC will not have the money to pay benefits at the current guarantee levels to participants in insolvent plans.
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:
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:
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.
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 has proposed 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).
A couple of proposed rulemakings would update PBGC's regulations and policies to ensure that the actuarial and economic content remains current. 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).
PBGC takes into account the special needs and concerns of small businesses in making policy. For example, the "Terminated and Insolvent Multiemployer Plans and Duties of Plan Sponsors" proposal 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 created a new page on its website that highlights when there are opportunities to comment on proposed rules, information collections, and other Federal Register notices. PBGC's current efforts to reduce regulatory burden in the projects discussed above are in substantial part a response to public comments. Last year PBGC asked for feedback on its regulatory planning and review of existing regulations by way of a Request for Information (RFI). A number of individuals and organizations responded, and PBGC considered the comments, some of which are 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.