In September, the Pension Benefit Guaranty Corporation (PBGC) said it intends to revise the 2015 premium filing procedures and instructions to, among other things, require reporting of certain undertakings by defined benefit (DB) plan sponsors to cash out or annuitize benefits for a specified group of former employees.
In its letter, ERIC explains that plan sponsors can increase the strength and longevity of their DB plans through a variety of de-risking methods, and the PBGC, accordingly, should support the efforts of companies that continue to sponsor and/or administer defined benefit plans.
“By allowing companies to have flexibility and choice with respect to approaches to managing retirement plans, policymakers can support companies in their efforts to continue to provide their workers with retirement benefits through pension plans. We believe this goal falls squarely within the PBGC’s mission—ensuring that plan sponsors have the appropriate tools to manage pension plans within the current economic, political, and global pressures,” wrote Kathryn Ricard, ERIC senior vice president for retirement policy.
ERIC’s letter emphasizes that many companies want to continue to sponsor their DB plans, but need to minimize the risks associated with them. “De-risking activities is one method that companies are utilizing to reduce their risks associated with defined benefit plans, while simultaneously maximizing and securing benefits for participants and retirees,” Ricard noted. “These plan sponsors are able to continue to sponsor their pension plans through managing investment risks, purchasing annuities from reputable companies, offering lump sums, and amending their plan designs,” she further explained.
As to the specific information collection request, ERIC’s letter points out that the request is somewhat vague and open-ended with respect to the type of information that the PBGC plans to collect, and urges the agency to provide additional clarification about the data that needs to be reported.
Among ERIC’s recommendations are that the time frames for collecting data for each year’s filing should be consistent; that additional time should be provided between the date of the lump sum window and the collection of the data; and that the labels used in the 2015 instructions are confusing and should be clarified.