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2015 Pension Benefit Guaranty Corporation (PBGC) Premium Filings Must Include Risk Transfer Disclosures

The Pension Benefit Guaranty Corporation (the “PBGC”) recently finalized its premium filing requirements for 2015.  In addition to higher premium rates and other more minor changes, plan sponsors are now required to report information about the number of former employees involved in certain risk transfer activities (i.e., annuity purchases and lump sum windows) that occurred at least sixty days prior to the premium filing date in the current premium payment year or during the prior premium payment year.   

In the case of lump sum windows, plan sponsors must separately report the following information for participants in pay status and participants not in pay status: 1) the number of participants who were eligible for lump sums and 2) the number of participants who elected to receive lump sums.  In the case of annuity purchases, plan sponsors must report: 1) the number of participants in pay status at the time of the annuity purchase and 2) the number of participants who were not in pay status at the time of the annuity purchase.  Certain lump sums and annuity purchases are excluded from the disclosure requirement.  Notably, lump sums offered upon a participant’s separation from service or as part of an early retirement window are exempt from disclosure.  Disclosures are also not required for lump sums offered, or annuity contracts purchased, “in the course of routine plan operations.”

Although it is unclear what the PBGC intends to do with the new risk transfer disclosures, the PBGC has expressed many concerns regarding the effects of recent pension de-risking trends on the PBGC’s financial situation and will likely scrutinize the reported data.  In the meantime, plan sponsors that complete risk transfer activities must prepare to comply with this additional disclosure requirement.  However, in one bit of good news, the PBGC has noted that it will accept reasonable estimates based on readily available plan records if exact counts are not readily available.

© 2019 Proskauer Rose LLP.


About this Author

Justin Alex, Employment Attorney, Proskauer Rose Law Firm

Justin Alex is an Associate in the Washington, DC office and a member of the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center.