ERIC Offers Recommendations on PBGC Information Collection Request on De-Risking Activities

ERIC News Release

Washington, DC – The ERISA Industry Committee (ERIC), the Washington, D.C.-based trade association representing America’s major employers, today in a letter to the Pension Benefit Guaranty Corporation (PBGC) urged the agency to support plan sponsors’ efforts to maintain their defined benefit pension plans, including methods used by companies which enable them to continue to sponsor these plans. 

The PBGC, which is charged with insuring private sector defined benefit pension plans, announced that it is planning to start collecting information on actions taken to cash out or annuitize benefits for certain former employees.  PBGC collects information related to premium payments each year and indicated that it plans to revise the 2015 filing procedures and instructions to obtain this additional information.   

ERIC offers recommendations that seek to ensure that the PBGC collects information that represents data related to the transactions subject to the Information Collection Request (and does not inadvertently over or under-report relevant data).  In addition, ERIC also provides background information regarding de-risking transactions that it believes the PBGC will find helpful as the agency begins to collect data related to these activities. 

ERIC explains that plan sponsors can increase the strength and longevity of their defined benefit plans through a variety of de-risking methods, and the PBGC, accordingly, should support the efforts of companies that continue to sponsor and/or administer defined benefit plans. 

“By allowing companies to have flexibility and choice with respect to approaches to managing retirement plans, policymakers can support companies in their efforts to continue to provide their workers with retirement benefits through pension plans.  We believe this goal falls squarely within the PBGC’s mission – ensuring that plan sponsors have the appropriate tools to manage pension plans within the current economic, political, and global pressures,” wrote Kathryn Ricard, ERIC Senior Vice President for Retirement Policy. 

ERIC’s letter emphasizes that many companies want to continue to sponsor their defined benefit plans, but need to minimize the risks associated with them. “De-risking activities is one method that companies are utilizing to reduce their risks associated with defined benefit plans, while simultaneously maximizing and securing benefits for participants and retirees,” Ricard noted.  “These plan sponsors are able to continue to sponsor their pension plans through managing investment risks, purchasing annuities from reputable companies, offering lump sums, and amending their plan designs,” she further explained. 

As to the specific information collection request, ERIC’s letter points out that the request is somewhat vague and open-ended with respect to the type of information that the PBGC plans to collect, and urges the agency to provide additional clarification with respect to the data that needs to be reported.  Among ERIC’s recommendations are that the time frames for collecting data for each year’s filing should be consistent; that additional time should be provided between the date of the lump sum window and the collection of the data; and that the labels used in the 2015 instructions are confusing and should be clarified.  

ERIC Letter to PBGC

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All media inquiries to The ERISA Industry Committee should be directed to:

Kelly Broadway, 202.627.1918, kbroadway@eric.org

About the ERISA Industry Committee
ERIC helps America’s largest employers stay ahead of employee benefit policy. ERIC member companies are leaders in every sector of the economy, and we represent them in their capacity as sponsors of employee benefit plans for their own workforce. Only ERIC provides the combination of intel, expertise, collaboration, and lobbying that exclusively serves the interests of large employers who provide health, retirement, and compensation benefits to their nationwide workforce.