Compliance November 21, 2017

PBGC Wants to Keep Requiring Disclosures for Distressed DB Plan Terminations

The agency has requested that the OMB continue to allow it to do so.

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The Pension Benefit Guaranty Corporation (PBGC) is requesting that the Office of Management and Budget (OMB) approve a collection of information under its regulations on the disclosure of termination information for distress terminations, and for PBGC-initiated terminations of defined benefit (DB) plans.

As background, Sections 4041 and 4042 of the Employee Retirement Income Security Act (ERISA) govern the termination of single-employer defined benefit pension plans that are subject to Title IV of ERISA. A plan administrator may initiate a distress termination undersection 4041(c), and the PBGC may itself initiate proceedings to terminate a pension plan under section 4042 if PBGC determines that certain conditions are present. 

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Sections 4041 and 4042 of ERISA were amended by Section 506 of the Pension Protection Act (PPA) to require that, upon a request by an affected party, a plan administrator must disclose information it has submitted to the PBGC in connection with a distress termination filing, and a plan administrator or plan sponsor must disclose information it has submitted to the PBGC in connection with a PBGC-initiated termination. 

The PBGC is also required to disclose the administrative record relating to a PBGC-initiated termination upon request by an affected party.

This collection of information was most recently approved by OMB, and the PBGC is requesting that OMB approve the collection of information for three years, without change.

The agency is seeking public comments about its request. More information is here.
Data & Research November 21, 2017

Scant Withdrawals From DC Plans in First Half of Year

The number of participants taking hardship withdrawals remained less than 1%.

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Few defined contribution (DC) plan participants took withdrawals from their plans in the first half of the year, the Investment Company Institute reports. Just 2.2% of participants took withdrawals, a mere blip from the 2.1% that did so in the first half of 2016. Only 0.9% of participants took hardship withdrawals, on par with 2016.

In the first half of the year, 16.7% of participants had an outstanding loan from their DC plan, up only slightly from the 16.6% of participants who could say the same at the end of the first half of 2016. However, this is up from 15.3% at the end of 2008 and down slightly from the 18.5% at the end of 2011.

Participants also remained committed to investing in their DC plan, with a mere 1.6% ceasing contributions, down from 1.9% in the first half of last year.

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Participants also displayed contentment with their investment choices, with only 6.8% reallocating their account balances and 4.3% directing new investments for their contributions. Account balance changes were on par with 2016 and contribution reallocations were slightly lower than in the first half of 2016, ICI says.

“The withdrawal and contribution data indicate that, essentially, all [defined contribution] DC plan participants continued to save in their retirement plans at work,” ICI says in its report, “Defined Contribution Plan Participants’ Activities, First Half 2017,” based on data from recordkeepers.

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