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May 12 — Pension plan sponsors will be paying a lot more in PBGC penalties when they don't provide certain required notices or other material information.
In an interim final rule issued May 12, the Pension Benefit Guaranty Corporation announced higher civil penalties for the failure to provide notices consistent with the agency's annual financial and actuarial information reporting requirements under Employee Retirement Income Security Act Section 4071.
The rule will also raise penalties for the failure to provide certain multiemployer plan notices under ERISA Section 4302.
Under the rule, the new maximum amount for noncompliance with the Section 4071 requirements will nearly double, from the current $1,100-per-day penalty to $2,063. The penalty under ERISA Section 4302 will increase from $110 per day to a $275 daily assessment.
The rule (RIN:1212-AB33), which is slated to appear in the Federal Register on May 13, will take effect Aug. 1.
Will Hansen, the ERISA Industry Committee's senior vice president of retirement policy, told Bloomberg BNA on May 12 that while his organization “recognizes the need for the PBGC to consider inflation adjustments,” ERIC “encourages the agency to focus on taking action to help plan sponsors by reducing burdensome reporting and other requirements that increase the costs of offering pension benefits.”
A PBGC official who spoke on the condition of anonymity told Bloomberg BNA on May 12 that these penalties are rarely assessed.
The PBGC said in the rule that it was required to raise these penalties by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and Office of Management and Budget Memorandum M-16-06.
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Text of the interim final rule is at http://src.bna.com/eU2.
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