<nobr>Feb 25, 2005</nobr>
PBGC Amends Rule Regarding Plant Shutdowns
The PBGC February 25 published a proposed amendment to the rules governing liability calculations for shut down benefits in the case where there is only one employer.
The law currently requires employers who withdraw from a multiemployer plan after a cessation of operations at a facility that results in more than one in five plan participants being separated from employment to provide the PBGC with a bond or escrow for five years. The bond is cancelled, or the escrow returned if the plan has not terminated five years after operations are ceased.
A similar liability lies against the employer in the case where there is only one employer and more than 20% of the total number of employees who participate in the plan are separated from employment. But the formula used to calculate the liability in the first instance is inappropriate for this second instance. The amendment specifies a different method of calculating the amount of bond or escrow based on the percentage reduction in the number of employees under the plan as a result of the shut down.
PBGC Proposed Amendment
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