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Compliance January 12, 2000
PBGC Simplifies Premium Regs
December 1, 2000 (PLANSPONSOR.com) - The Pension
Benefit Guaranty Corporation (PBGC) has announced changes to
its premium regulations to make things easier for sponsors of
defined benefit pension plans.
Reported by editors@plansponsor.com
Three Amendments
Plan administrators may pay a prorated premium for a short plan year, rather than a full year’s premium and then requesting a refund or claiming credit against a future premium payment, as in the past.
The definition of participant has been simplified for purposes of calculating PBGC premiums. Plans can now exclude from their participant counts individuals who do not have accrued benefits and for whom the plan has no other benefit liabilities.
Finally, the standard for claiming the variable-rate premium exemption for a fully insured plan has been simplified. The exemption will apply to a plan that meets the requirements of Internal Revenue Code section 412 (i) on the premium snapshot date. Fully insured plans are those funded exclusively by individual insurance contracts.
Effective Date
The changes are effective Jan. 1, 2001.
The PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits for some 43 million American workers and retirees participating in nearly 40,000 private-sector defined benefit pension plans. Its operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
– Nevin Adams editors@plansponsor.com
The changes were published in the
December 1 Federal Register