Benefits and Compensation

PBGC to Require More Detail in Reportable Events Filings, Introduce New Coverage Determination Form

The Pension Benefit Guaranty Corp. (PBGC) will be changing its reportable events filings to include controlled-group information, company financial statements, and defined benefit (DB) plans’ actuarial valuation reports, adding more detail to five plan or employer events already reportable to the agency that rescues failed pensions.

Source: Jer123 / shutterstock

The broadening of data about PBGC reportable events was approved in May by the Office of Management and Budget (OMB). The PBGC has said the additional information is needed to help it decide a DB plan sponsor’s ability to continue to maintain its DB plan.

Last year, the PBGC sought OMB approval for its continued collection of reportable events filings, including these three new inclusions.

The reportable events categories “Active Participant Reduction” and “Distribution to a Substantial Owner” will get all three types of new information approved. One type of information would be added to two events, “Transfer of Benefit Liabilities” and “Change in Contributing Sponsor or Controlled Group.” In addition, two types of information will be added to one event, “Extraordinary Dividend or Stock Redemption.”

Gives Notice of Problems

The Employee Retirement Income Security Act (ERISA) requires DB plan administrators and plan sponsors to disclose some “reportable events” to the PBGC. These reporting requirements give the agency notice of events that may indicate plan or sponsor financial problems.

In 2015, the agency issued final rules that gave most plan sponsors more flexibility to determine whether a waiver from reporting a relevant event would apply (see September 2015 story).

Coverage Determination Form

In May, the PBGC also announced a new coverage determination form designed to ease and standardize plans’ process of asking the agency to decide whether a DB plan is covered by the PBGC’s plan termination insurance. In the pilot program set to run for a year, employer plan sponsors also could use the form to seek opinion letters about certain plans that aren’t yet established.

Now, plan sponsors submit written requests for coverage determination for all kinds of DB plans, but there is no form or instructions for doing this. The new form being piloted would give specific instructions and require certain information for the four types of plans that most often seek coverage determinations:

  • Church plans;
  • Substantial owner plans;
  • Professional service plans with no more than 25 active participants; and
  • Puerto Rico-based plans.

Furthermore, the pilot lets employers use the new form to request an opinion letter on whether a plan not yet in existence is likely to be exempt from coverage as a substantial owner or professional service plan.

Comments on the draft coverage determination form and accompanying instructions, awaiting approval by the OMB, are due to the PBGC by June 7.