On September 11, 2015, the Pension Benefit Guarantee Corporation (PBGC) issued final reportable events regulations that are intended to reduce the burden of reporting for plan sponsors that present the least risk of not being able to fund their plans in the future. The PBGC estimates that the new rules will exempt approximately 94% of plans and plan sponsors from many reporting requirements.
By way of background, under the Employee Retirement Income Security Act of 1974, as amended (ERISA), sponsors of defined benefit pension plans are required to notify the PBGC of certain so-called “reportable events” that may signal financial issues with the plan or a contributing employer that could potentially put the pension plan at risk of a need for PBGC intervention. These “reportable events” include plan sponsor events such as bankruptcy, corporate transactions, extraordinary dividends, and loan defaults, as well as plan events such as missed contributions, insufficient funds, and large pay-outs.
The major changes in the final reportable events regulation involve (a) changes to the waivers to the reportable event requirements, (b) clarification in the timing of when a change in a controlled group member is deemed to occur, (c) elimination of most filing extensions, and (d) new requirements requiring reports to be submitted electronically. The changes to the waiver requirements include the addition of waivers that were not available under the old regulation, including waivers based on the plan sponsor’s financial metrics, and based upon public disclosure on a public company’s securities filings. We will address the changes in the new reportable events regulations in greater detail in an upcoming LawFlash.
The final rule will be effective 30 days after publication in the Federal Register and generally take effect for events that occur on or after January 1, 2016 (or for advance reporting, for reports due on or after January 1, 2016).