The Pension Benefit Guaranty Corporation (PBGC) issued 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.
Reportable events have a financial impact on companies and the plans they sponsor (see “A Review of PBGC Reportable Events”). 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.
Under the final rules, 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.
The final rules make the funding level for satisfying the well-funded plan safe harbor lower and tied to the variable-rate premium. It also adds company waivers for five events.
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.
Text of the final rules is here.