Compliance September 7, 2004

PBGC Offers Admin Relief to Natural Disaster-Afflicted Plans

July 21, 2003 (PLANSPONSOR.com) - The federal pension insurer is waiving certain penalties and extending certain deadlines for filing the required annual Form 5500 for employers in several parts of the country recently hard hit by natural disasters.
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According to a news release from the Pension Benefit Guaranty Corporation (PBGC), the aid steps cover plan sponsors and administrators in:

  • West Virginia, hit by storms, flooding, and landslides beginning June 11, 2003
  • Kentucky, hit by storms, tornadoes, and flooding beginning June 14, 2003
  • American Samoa, hit by storms on May 19 to 21, 2003
  • Arkansas, hit by storms, tornadoes, and flooding from May 2, 2003, to June 10, 2003.

The PBGC said the administrative relief covers employer deadlines for filing the 5500 document for firms located in federally designated disaster areas as well as plans having to rely for needed data for the 5500 submission from service providers located in the disaster areas.

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PBGC officials cautioned that their move does not offer relief for certain filings that involve particularly important or time?sensitive information where there may be a high risk of substantial harm to participants or the PBGC insurance program. As examples, the agency cited:

  • notices of large missed contributions under section 302(f) of ERISA (Form 200)
  • advance notices of reportable events under ERISA section 4043
  • annual financial and actuarial information reports from certain controlled groups under ERISA section 4010.  

A person claiming disaster relief for a filing made with the PBGC should print or type the words Tornadoes/Flooding at the top of the filing.   (On Form 1 or Form 1-EZ, also check the Disaster Relief box at the top of the form.)   Similarly, if a person receives an inquiry or bill from the PBGC that appears not to take disaster relief into account, the inquiry or bill should be returned to the PBGC with the same wording written at the top

Many Deadlines Extended to August 25

In addition to Form 5500 deadlines, for those in designated disaster areas, the PBGC will waive late payment penalties with respect to any premium payment required to be made for the plan on or after May 2, 2003, and before August 25, 2003, if the payment is made by August 25, 2003, and late filing penalties with respect to any premium filing required to be made for the plan on or after May 2, 2003, and before August 25, 2003, if the filing is made by August 25, 2003.

If the plan administrator of a plan that is terminating in a standard termination is in a disaster designated area, any of the following plan termination deadlines for the plan that falls on or after May 2, 2003, and before August 25, 2003, is extended to August 25, 2003:

  • the deadline for filing the standard termination notice (Form 500)
  • the deadline for completing the distribution of plan assets
  • the deadline for filing the post-distribution certification (Form 501) without penalty (29 CFR ‘ 4041.29(b)).  

If the plan administrator of a plan that is terminating in a distress termination is in a disaster area, and the deadline for filing the distress termination falls on or after May 2, 2003, and before August 25, 2003, that deadline is extended to August 25, 2003.   If the administrator of a plan is in a disaster area, any deadline for providing a Participant Notice that falls on or after May 2, 2003, and before August 25, 2003, is extended to August 25, 2003.   If the plan has a Form 5500 Disaster Extension for a plan year, the deadline for providing a Participant Notice for the following plan year is automatically extended to two months after the Form 5500 Disaster Extension Date.

A plan spponsor or administrator  in a disaster area that is responsible for filing a reportable event post-event for which the deadline falls on or after May 2, 2003, and before August 25, 2003, that person’s deadline for filing the notice is extended to August 25, 2003.

Employers in the afflicted areas needing additional help from the PBGC should contact the agency as soon as possible, the agency news release said. The PBGC will work with them in ensuring that they receive appropriate relief

To request case-by-case relief, contact Diane Morstein at the PBGC by:

  • calling 1?800?736?2444, extension 4136, or 202?326?4136 (for TTY and TDD, call 800?877?8339 and request connection to 202?326?4136)
  • sending an e-mail to practitioner.pro@pbgc.gov
  • writing to Diane Morstein, Pension Benefit Guaranty Corporation, Suite 610, 1200 K Street, NW, Washington, DC   20005?4026, Re: June Storms/FloodingBWV Disaster Relief Technical Update 03-11.
Administration September 6, 2004

PA Funds Beg Appeals Court to Stop Auditor General Exams

June 9, 2004 (PLANSPONSOR.com) - Pennsylvania's two largest retirement funds have turned to the state's appeals court to prevent the state's auditor general from examining the retirement systems' investment practices.
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Attorney Edward Mannino, who represents the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS), told Commonwealth Court judges that Auditor General Robert Casey’s only interest in auditing the funds’ investment is to add fodder to his political agenda.   Rather, Mannino said Casey should have an independent, outside auditor examine the performance of the two boards – one who might have more expertise in evaluating pension funds, according to an Associated Press report.

Together, the two funds manage more than $67 billion in assets for approximately 580,000 government workers and retirees.

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Mannino’s argument is the latest step in the ongoing battle between the funds and Casey.   The funds argue Casey does not have the authority to conduct the audits while Casey contends he has both constitutional and statutory authority for the audits.   Attempting to enforce his authority, Casey has said he is interested in scrutinizing how the boards’ overseeing the two huge funds select and monitor the teams of private-sector advisers who help direct where the systems invest their money.   The funds have refused to provide Casey with any information.

Yet this has not deterred Casey, who in January asked the courts to force PSERS and SERS to “consent to and cooperate with” the Auditor General’s audits and to turn over the documents Casey has demanded.   This came after Casey issued subpoenas to PSERS Chair State Treasurer Barbara Hafer and SERS Chair Nicholas Maiale when they refused to provide the Auditor General with crucial documents regarding the Funds’ investment operations (See PA. Auditor General Subpoenas Public Pension Funds ).

Predictably, the ongoing battle has put DemocratCasey at odds with state Treasurer Barbara Hafer , a Republican.   Casey is running against Republican Jean Craige Pepper to replace Hafer as treasurer when her term ends in January and it is those political interest that Mannino says have taken over in this case.

Judge Dan Pellegrini met that argument with some skepticism.   “Why are you opposing this so vigorously?” Pellegrini asked, noting that many of the documents Casey had requested from the boards were public records. “He has the right, as the auditor general, to do a performance audit and say whether you’re doing a good job or a bad job.”

In fact, as of June 30, 2003, PSERS has 44.2% of its assets in domestic stocks, 17.8% in international stocks, 20.8% in domestic and international fixed income investments, 8.9% in alternative investments, 6.7% in real estate, and 1.6% in cash and cash equivalents.

No indication was given by theCommonwealth Court when it would rule on the case.

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