Pension plan sponsors lately have come to expect an increase in their bill for Pension Benefit Guaranty Corporation (PBGC) premiums as each new plan year begins, and 2019 is no different.
A new, 70-page “Comprehensive Premium Filing Instructions for 2019 Plan Years” guide from the federal agency provides information on what plans owe and how to report the various data elements required for premium payments.
There are two kinds of PBGC annual premiums: the flat-rate premium, which applies to all plans, and the variable-rate premium, which applies only to single-employer plans. Payment of annual premiums to the PBGC by every private-sector defined benefit plan covered under Section 4021 of the Employee Retirement Income Security Act of 1974 (ERISA) is required by ERISA and PBGC regulations.
Electronic filing is mandatory for all covered plans. The PBGC in the 2019 guide also included information about how plan administrators may certify their filing manually instead of electronically.
Due dates are outlined in a table in the “When to File” section, starting on Page 6 of the guide. In general, if a filing is not made by the due date, late payment charges will apply, including both interest and penalty fees. The guide also enumerates the deadlines that apply in certain special situations.
While the filing requirements for 2019 are almost identical to those for 2018, according to the PBGC, here are the key changes to note for 2019:
Changes in Premium Rates
- Single-employer plans: The flat-rate premium rises to $80 per participant, up from $74. The variable-rate premium for these types of plans is also now higher, at $43 per $1,000 of unfunded vested benefits capped at $541 times the number of participants, up from $38 per $1,000 of unfunded vested benefits capped at $523 times the number of participants.
- Multiemployer plans: The flat-rate premium for these plans is $29 per participant, rising from $28. Multiemployer plans do not pay variable-rate premiums.
The PBGC also revised the instructions regarding disaster relief to reflect recent changes made to the agency’s practices in this area. See the guide’s “When to File” section for these instructions.
In addition, the PBGC said it increased the functionality of its submission platform, My PPA, by adding a “Submit a Request” Quick Link button. The agency also clarified the instructions for reporting a business code, and expanded the list of common filing errors (see Appendix 4). The frequently seen errors highlighted include:
- Incorrect identifying information;
- Sending payment without properly identifying the plan;
- New plans failing to do a first-year filing;
- Small-plan lookback rule inconsistencies; and
- Entering incorrect plan-year information for final, short plan years.