March 24, 2016

PBGC Finalizes Changes to ERISA §4010 Regulation on Financial and Actuarial Reporting for Sponsors of Underfunded Pension Plans

The Pension Benefit Guaranty Corporation (PBGC) has issued a final regulation revising the annual financial and actuarial reporting requirements under Section 4010 of the Employee Retirement Income Security Act (ERISA) for sponsors of defined benefit pension plans with funding percentages of less than 80 percent. The revisions adopt some but not all of the changes proposed by the PBGC on July 27, 2015.

The PBGC’s previous §4010 regulation included a reporting waiver for plan sponsors in any controlled group where aggregate underfunding was $15 million or less. After pension funding relief was enacted, this aggregate underfunding was determined using the same “stabilized interest rates” that are used to determine the minimum funding requirements. Under the final regulation, the aggregate funding must be determined without the use of stabilized interest rates.  

The final regulation also provides a reporting waiver for all controlled groups with fewer than 500 defined benefit pension participants. The PBGC determined that controlled groups that sponsor defined benefit pension plans with few participants (in the aggregate) pose minimal risk to the pension insurance system and, thus, the PBGC did not need the reports. 

The new rules apply for the 2016 reporting year, generally affecting reporting that is due April 17, 2017 and later.

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