ERIC Submits Comments to IRS and Treasury on Pension Equity Plans

CC:PA:LPD:PR (Notice 2016-67)
Room 5203
Internal Revenue Service
P.O.  Box 7604
Ben Franklin Station Washington, DC 20044

RE:     Comments on Notice 2016-67 – Applicability of § 411(b)(5)(B)(i) to Implicit Interest Pension Equity Plans

Ladies and Gentlemen:

The ERISA Industry Committee (“ERIC”) is pleased to respond to the request of the U.S. Treasury Department and the Internal Revenue Service (collectively, the “Agencies”) for comments regarding Notice 2016-67 (the “Notice”), which addresses the applicability of Code § 411(b)(5)(B)(i) to “implicit interest” pension equity plans. See 2016-47 I.R.B. 748 (Nov. 21, 2016). ERIC appreciates the efforts of the Agencies to provide guidance that facilitates and encourages the establishment and maintenance of defined benefit pension plans, including pension equity plans.

ERIC’s Interest in the Notice

ERIC is the only national trade association advocating solely for the employee benefit and compensation interests of the country’s largest employers. ERIC supports the ability of its large employer members to tailor health, retirement, and other benefits for millions of employees, retirees, and their families. ERIC’s members provide comprehensive benefit packages to tens of millions of active and retired workers and their families.  ERIC has a strong interest in subregulatory guidance, such as the Notice, that would affect its members’ ability to provide secure retirement benefits in a cost-effective manner.

In response to public requests from the Agencies, ERIC has provided detailed comments on pension equity plans on numerous occasions since the passage of the Pension Protection Act of 2006. The most comprehensive of these comments appeared in ERIC’s separate comment on pension equity plans submitted in response to the proposed and final hybrid plan regulations published in the Federal Register on October 19, 2010. See The ERISA Industry Committee, Sixth Comment in a Series of Six Comments on Proposed and Final Regulations on Hybrid Retirement Plans: Pension Equity Plans (Jan. 12, 2011) (the “2011 ERIC Comment”). That comment was intended, in part, to provide background information on variations in design among pension equity plans in response to a specific request from the Agencies for such information.

Comment on Notice 2016-67

The Notice describes variations in design among pension equity plans that were fully explored in the 2011 ERIC Comment, including the notion of implicit and explicit interest. ERIC was therefore puzzled when the Notice expressed uncertainty in late 2016 about the implications of these design variations under the Pension Protection Act of 2006. ERIC believes that the best path forward at this time lies in gaining a better understanding of the Agencies’ remaining questions.

A fundamental purpose of the Pension Protection Act of 2006 was to eliminate legal uncertainties surrounding cash balance and pension equity plans and to secure and expand pension coverage by facilitating their adoption and maintenance. Millions of employees and their families rely on these plans for their retirement security. ERIC looks forward to assisting the Agencies in resolving the remaining uncertainties they perceive with respect to pension equity plans in a manner that is consistent with the statute and Congressional intent. If you have any questions concerning our comments, or if we can be of further assistance, please contact us at (202) 789-1400 or


Will Hansen
Senior Vice President, Retirement Policy