The Pension Benefit Guaranty Corporation (PBGC) announced new final rules for reportable events, focusing on the minority of plans and sponsors that pose the greatest risk of defaulting on their financial obligations.
The new rules provide most plan sponsors with increased flexibility to determine whether a waiver from reporting will apply, in response to comments on the proposed rules.
“This regulation helps us get the information we need and will reduce the burden for employers whose pension plans are not at risk,” said Acting Director Alice Maroni. “We give companies flexibility to use information they have readily at hand to see if they are eligible for a waiver and need not report to us.”
The final rule, published in the Federal Register on September 11, 2015, finalizes the agency’s 2013 proposed rule on reportable events, and continues PBGC’s efforts to reduce regulatory burden in response to a directive from the President.
The new reportable events rule will apply to events that occur after Jan. 1, 2016. Reportable events have a financial impact on companies and the plans they sponsor.
Under federal law, plan sponsors and administrators must report these events to PBGC so the agency can fulfill its mission to maintain pension plans for the benefit of participants. This information often indicates whether the sponsor is able to keep the plan going.
Final rule creates new structure for reportable events waivers 94% of plans and sponsors waived from reporting several events
Under the final rule, some reportable events waivers will be based on whether plans and their sponsors pose a risk of not being able to maintain their pension plan. This approach is a departure from the old regulation, which focused solely on plan funding levels.
The new waiver structure would focus on situations where risk is higher, reducing filing requirements for the majority of plans and sponsors where risk to the pension insurance system is lower. As a result, PBGC anticipates about 94% of plans and sponsors will be exempt from many reporting requirements.
Reportable events are rare and the need to report is often waived by PBGC. Historically, just 4% of plans annually experienced an event and were required to report it. Under the final rule, PBGC expects to receive filings from a reduced number of plans when compared to the old regulation. PBGC also has the authority to grant waivers on a case-by-case basis.
For more information on the final rule see the PBGC Reportable Events FAQs.