A new guidance document released by the Pension Benefit Guaranty Corporation (PBGC) outlines the process for measuring and paying the two kinds of annual premiums owed by pension plan sponsors.
As PBGC explains, flat-rate premiums apply to all plans, while the variable-rate premiums apply only to single-employer plans. Every covered plan under Employee Retirement Income Security Act (ERISA) section 4021 must make a premium filing each year. The due dates are described in the “When to File” section.
The guidance outlines how plan sponsors must use the My Plan Administration Account portal to electronically submit premium filings in accordance with PBGC’s regulations. Electronic filings may be prepared using the data entry screens or with compatible private-sector software. See the “How to File” section for more information.
The PBGC document further provides instructions for each data element that must be reported. If plan sponsors are filing for a previous year, they must follow the instructions for that year, available from the “Premium Payment Instructions and Addresses” webpage.
According to PBGC, the filing requirements for 2017 are almost identical to the filing requirements for 2016. The key changes to note for 2017 relate to changes in premium rates. For example, concerning the flat-rate premiums, PBGC says the per-participant flat-rate premium rate for single-employer plans is now $69, up from $64. For multiemployer plans the rate is $28, up from $27. For variable-rate premiums, the rate per $1,000 of unfunded vested benefits is $34, up from $30.
There is a new cap on variable-rate premium, PBGC explains. The cap is now $517 times the number of participants, up from $500 times the number of participants. In addition, a new section has been added providing additional guidance about determining premiums in a year when a plan is involved with a spinoff, merger or consolidation.
“We added this section because we’ve encountered several situations where premiums for these plans were not determined properly,” PBGC notes. “To avoid the possibility of late payment charges, we encourage you to read this new section in its entirety if your plan is involved in any of these transactions.”
The full instructions are available for download here.