Multiemployer pension plan trustees have new guidance from the Pension Benefit Guaranty Corp. on ways to satisfy rules on withdrawal liability, the agency said Tuesday.
A notice to be published in the Federal Register on Wednesday explains how the PBGC reviews plan proposals for alternative withdrawal liability calculations.
"The purpose of this guidance is to make it easier for multiemployer plans to come in and suggest an alternative," PBGC Director W. Thomas Reeder said on a press call. Agency officials also are hoping that more plans will consider making alternative withdrawal liability arrangements if it could help the plan stay solvent. "Hopefully this will bring it to their attention and evaluate whether this is good for their plans," he said.
The agency has experienced an uptick in requests from pension fund trustees for the agency to review their proposals to adopt alternate rules for their pension fund's withdrawal liability payments, and for more insight on the PBGC's review process. That review is not legally required, but it is a safe way for funds to have their proposals accepted. "I would not want to be a trustee of a plan that would adopt a plan without it," Mr. Reeder said on the call.
Alternative payment rules are aimed at keeping employers in plans, particularly those employers unable to pay their withdrawal liability. Many proposals provide discounted withdrawal liability if an employer continues to participate for a certain number of years.
PBGC officials want plan trustees, consultants and actuaries to discuss their proposals before applying, to shorten the review time needed. Interest in alternative payment rule proposals has grown in recent years, and often involve highly troubled plans. The proposals involve analyzing future cash flows and underfunding under various scenarios.
Such arrangements won't be enough to save all severely troubled multiemployer plans, and the agency's underfunded multiemployer insurance program. "We don't view this as the end game, but we do view it as a tool for making it better," Mr. Reeder said.
Connie Mack, chairman of the POWER Coalition, an employers' group pushing for multiemployer legislative reforms, said in a statement that the PBGC guidance underscores the need for a new select congressional committee "to come forward with a real solution to the multiemployer pension plan crisis. The PBGC simply cannot address the entire issue alone."