ERIC News Release
Washington, DC – The ERISA Industry Committee (ERIC) on June 18 testified before a Pension Benefit Guaranty Corporation (PBGC) hearing on the agency’s proposed regulations on reportable events requirements. Mike Francese, a partner in Covington & Burling’s employee benefits practice, testified on behalf of ERIC, where he raised concerns regarding the PBGC’s proposal to modify the rules governing reportable events.
“ERIC strongly supports the current regulatory framework and believes that the PBGC has the tools it needs to protect the system without unduly burdening those employers who choose to continue to sponsor defined benefit plans,” Francese testified.
The PBGC in April 2013 issued proposed regulations under the Employee Retirement Income Security Act (ERISA) that would change the circumstances under which plan administrators must notify the PBGC of the occurrence of certain “reportable events.” The PBGC in November 2009 had previously proposed to increase the reporting requirements by eliminating most reporting waivers currently permitted under the existing regulations, but withdrew the proposal after objections from ERIC and other organizations.
“PBGC has proposed essentially to eliminate its long-standing reliance on the funded status of a plan in determining whether a reportable event can be waived and replace it with a new test that focuses on the financial condition of the employer sponsoring the plan,” Francese said. “If enacted, the proposal would result in a considerable number of increased filings for defined benefit plan sponsors and create considerable uncertainty in how they conduct their businesses,” Francese further argued.
ERIC’s testimony centered on the following four points:
- It is not necessary to overhaul the existing regulations’ approach to waivers;
- The proposed regulations essentially eliminate plan funding as a basis for a waiver;
- The PBGC should focus on the financial soundness of the plan and not the plan sponsor; and
- The proposed safe harbor for financial soundness of a plan sponsor is unworkable and there is no suitable alternative.
To access ERIC’s testimony and comment letter, click on the links below.