WASHINGTON — The PBGC unveiled new guidance this month clarifying how it will decide on waiving financial penalties when a company is late with its pension plan premium payments.
Under PBGC regulations, late payments are subject to a penalty of 1% or 5% per month on the amount of the unpaid premium. The 1% penalty applies to companies that correct their delinquency before the PBGC notifies them; the 5% penalty applies to those that wait for notification.
The guidance, which goes into effect Dec. 18, clarifies when waivers of the penalties may be warranted and when a plan has "reasonable cause," including circumstances beyond the plan's control, or if the failure was unavoidable while using "ordinary business care and prudence." Specific situations that could qualify for relief include fires, natural disasters or cases when the individual responsible for taking action was "suddenly and unexpectedly absent or unable to act."
