For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC), along with the Plan Sponsor Council of America (PSCA), and the U.S. Chamber of Commerce (Chamber) today submitted comments to the Pension Benefit Guaranty Corporation (PBGC) supporting the agency’s efforts to implement a missing participants program in 401(k) and similar plans.
The group letter was in response to a PBGC “Request for Information” (RFI) issued June 21 indicating that the agency is soliciting information about a new missing participant program for participants in certain terminating defined contribution plans. The Pension Protection Act of 2006 (PPA) directed the PBGC to create a program whereby plan administrators of defined contribution plans could transfer a missing participant’s benefits to the PBGC upon the termination of the plan.
“ERIC believes that a missing participant program run by the PBGC would create a win-win situation for both sponsors and participants, as terminating plans oftentimes cannot find lost participants, and participants many times don’t know where to look for lost benefits or cannot find their former plan,” said Kathryn Ricard, ERIC’s Senior Vice President for Retirement Policy, in a separate statement.
In responding to a series of questions in the RFI, the letter explained that the group believes there would be significant demand for a missing participants program, as plan sponsors are frequently unable to find IRA providers to accept smaller account balances, particularly those with less than $1,000.
“We anticipate that many fiduciaries would be interested in using services provided by the PBGC, particularly for smaller accounts. However, the demand for such services would be impacted by the fees charged by the PBGC and any regulatory burden that was imposed,” Ricard said.
ERIC, PSCA, and the Chamber recommended that the PBGC create a program whereby fiduciaries of terminating plans that transfer the accounts for missing participants to the PBGC can be confident that: (1) the funds will be handled appropriately; (2) the account will be charged no more than reasonable fees; (3) the participant (once found) will be able to obtain an accounting of the manner in which their funds have been handled by the PBGC; and (4) the administrative burden is not significant. The group recommended that any program be optional, as provided in the PPA.
The group also encouraged the PBGC to coordinate with the U.S. Department of Labor to provide fiduciary relief for plans that use the missing participants program. However, they emphasized that the PBGC should not delay the creation of the program in order to obtain this relief.
To access the comment letter, click on the link below: