<nobr>Jun 8, 2010</nobr>

ERIC Commends PBGC Decision to Allow Plan Sponsors to Correct Inadvertent Premium Filing Errors

ERIC News Release
For Immediate Release: June 8, 2010

Washington, D.C. -- The ERISA Industry Committee (ERIC), the Washington, D.C.-based trade association representing America's major employers, today commended the Pension Benefit Guaranty Corporation (PBGC) for allowing plan sponsors to correct inadvertent errors in electing the alternative premium funding target (APFT) in their PBGC comprehensive premium filings.

In a June 7th letter to the Chairmen and Ranking Members of the Senate Finance Committee and Senate Health, Education, Labor and Pensions Committee, PBGC Acting Director Vincent Snowbarger said that, pending OMB approval, PBGC plans to issue a Technical Update announcing that relief will be provided to any plan that intended to make the election to use the APFT but did not check Box 5 in its premium filing.

The PBGC recently informed hundreds of defined benefit plan sponsors that they failed to correctly elect the APFT in their 2009 PBGC comprehensive premium filing. The error relates to the failure to elect the "Alternative Premium Funding Target" in Box 5 of the comprehensive premium filing, even though plan sponsors clearly indicated that they would be using the alternative method by checking Box 7.

In response to PBGC's decision to change course, ERIC President Mark Ugoretz said "We believe the PBGC made the right decision in upholding a commitment to work with those in the pension community. Plan administrators were not looking to game the system -- the large number of plan administrators affected demonstrates that this issue was neither one of individualized carelessness nor a disguised effort to rewrite a prior election."

"That so many plan administrators failed to check both Boxes 5 and 7 indicates honest confusion about the form, instructions, and software that could have been clearer," Ugoretz added.

PBGC's relief is consistent with the relief requested by ERIC in a May 19th letter to Snowbarger. ERIC's letter argued that a series of factors appear to have played a role in tripping up plan sponsors, who otherwise have complied with the both statutory funding requirements and PBGC's rules, believed that at the time they filed the form they were correctly making the election.

According to Snowbarger's letter, the conditions for relief are as follows:

• The plan filed on time


• The plan used the APFT to determine the VRP


• The "Alternative" box was checked in line 7(d), where the actuary reports the method that was used to determine the VRP


• Plan sponsors who meet the criteria will have a limited amount of time to take advantage of the relief

In addition to the relief outlined, the PBGC is expected consider on a case-by-case basis requests that fall outside of the conditions set out in the agency's letter to Members of Congress.

Links to Acting Director Snowbarger's letter to the Committee Chairmen and ERIC's letter to Snowbarger appear below.

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For more information:
Ted Godbout
Director, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

PBGC Letter

ERIC Letter to PBGC

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