The PBGC is proposing a rule that will allow the agency to facilitate mergers of multiemployer pension funds as a way to protect some participants' benefits in troubled plans.
The Pension Benefit Guaranty Corp. already has the authority to help with mergers, but the rule to be published in the June 6 Federal Register implements technical changes from the Multiemployer Pension Reform Act of 2014 that allow the agency to provide technical assistance or, if needed to avoid a plan's insolvency, financial assistance in some cases.
PBGC Director W. Thomas Reeder Jr. said such mergers can help stabilize multiemployer plans, and the agency itself, by increasing the base of contributing employers, reducing administrative costs and consolidating investment assets. “PBGC can help save troubled multiemployer plans before they fail. That helps plan participants and reduces the long-term costs of the pension insurance program,” Mr. Reeder said in a statement.
Unlike the MPRA provisions allowing some plans to apply to the Treasury Department for permission to reduce benefits, the PBGC merger approach does not require benefit reductions. PBGC officials acknowledge that its ability to help with mergers is hampered by its own multiemployer program deficit, and that it would need more resources to help all the potential merger candidates.