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PBGC Simplifies Withdrawal Liability Calculation for Multiemployer Pension Plans
The agency expects the changes will reduce actuarial fees paid by multiemployer plans, but it admits the simplified methods might not reduce the withdrawal liability assessed on employers.
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The Pension Benefit Guaranty Corporation (PBGC) has issued a final rule regarding methods for computing withdrawal liability under the Multiemployer Pension Reform Act of 2014 (MPRA).
The agency says it expects that the final rule will reduce the actuarial fees historically paid by financially troubled multiemployer plans when calculating withdrawal liability. However, it admits that the withdrawal liability assessed on employer members of multiemployer pension plans that withdraw from a plan could go up or down with the simplified calculations.
PBGC Issues Final Rule with Simplified Methods for Withdrawal Liability Calculations | Proskauer - Employee Benefits & Executive Compensation Blog jdsupra.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from jdsupra.com Daily Mail and Mail on Sunday newspapers.
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On January 7, 2021, the Pension Benefit Guaranty Corporation (“PBGC”) issued final regulations updating its guidance under sections 4211 and 4219 of the Employee Retirement Income Security Act of 1974 (“ERISA”), which govern the calculation of an employer’s withdrawal liability and the payment of that liability, respectively. Specifically, the regulations provide simplified methods for calculating withdrawn employers’ allocable share of the plan’s unfunded vested benefits disregarding certain benefit reductions and contribution increases, as required by law. The final regulations closely follow proposed regulations that PBGC issued on February 6, 2019.
Background
The Pension Protection Act of 2006 (“PPA”) permits plans in critical status to reduce “adjustable benefits”, which most commonly include early retirement subsidies for participants not in pay status and benefit improvements that have been i