On August 25, 2017, the U.S. Chamber of Commerce submitted comments to the Pension Benefit Guaranty Corporation in response to the agency's request for information on Regulatory Planning and Review of Existing Regulations. The request is intended to gather input on what regulatory and deregulatory actions it should be considering as part of its regulatory program to support PBGC's ongoing regulatory planning and active retrospective review of regulations and responds to the President's executive order on “Enforcing the Regulatory Reform Agenda.”
August 25, 2017
Regulatory Affairs Group
Office of the General Counsel
Pension Benefit Guaranty Corporation
1200 K Street NW
Washington, D.C. 20005–4026
RE: Regulatory Planning and Review
To Whom It May Concern:
On behalf of the US Chamber of Commerce, we submit this letter in response to the Request for Information (RFI) on the Regulatory Planning and Review of Existing Regulations published by the Pension Benefit Guaranty Corporation (PBGC). The U.S. Chamber of Commerce is the world's largest business federation, representing more than three million businesses and organizations of every size, sector, and region. Besides representing a cross-section of the American business community in terms of number of employees, the Chamber represents a wide management spectrum by type of business and location. Each major classification of American business—manufacturing, retailing, services, construction, wholesaling, and finance—is represented. Also, the Chamber has substantial membership in all 50 states. Positions on national issues are developed by a cross-section of Chamber members serving on committees, subcommittees, and task forces. More than 1,000 business people participate in this process.
Chamber members are very concerned about the state of the defined benefit plan system and feel that the ensured stability of the PBGC is vital to that system. Therefore, we appreciate the opportunity to comment on the review of the regulatory system for simplification and easing the burden on defined benefit plan sponsors.
The RFI asks for input on what regulatory and deregulatory actions it should consider pursuant to various executive orders. Recently, the PBGC has made significant efforts aimed at addressing employer concerns. In 2016, the PBGC issued a rule lowering the penalty on late payment of premiums. The rule considerably reduces burdens for defined benefit plan sponsors by revising penalties that are based on the significantly increased single-employer premiums. In 2015, the PBGC issued a final rule on reportable events under section 4043 of the Employee Retirement Income Security Act of 1974 (ERISA) which was substantially revised from the original proposal and removed many of the burdens that the Chamber had identified as unduly burdensome on plan sponsors without providing a corresponding benefit to the PBGC. In 2013, the PBGC issued a rule that simplified premium payments by requiring a single filing deadline for all plans. Consequently, we view the RFI as a significant opportunity to continue these achievements and submit the following comments in furtherance of that effort.
Our comments are focused on areas that we believe will reduce regulatory burdens and simplify the maintenance of defined benefit plans. Specifically, our recommendations encourage the PBGC to establish a voluntary corrections program to allow plan sponsors to self-correct for minor and de minimis errors; urge the PBGC to eliminate the requirement to provide de-risking information on filing forms as the burden of providing it outweighs any benefit to the PBGC; encourage the PBGC to finalize the missing participant regulations; and recommended that the relief granted for payment of late premiums be extended, in certain cases, to late payments made before 2016. Each of these recommendations is detailed below.
Question 2. Are there challenges affecting the establishment and maintenance of pension plans or other aspects of the private pension plan system that should be addressed through rulemaking or other guidance?
The PBGC Should Establish a Voluntary Correction Program. We recommend that the PBGC promote a correction program that is similar to correction programs at other agencies of jurisdiction. Both the Internal Revenue Service (IRS) and the Department of Labor (DOL) have established successful correction programs aimed at helping plan sponsors voluntarily correct errors.
The IRS created its correction programs in 1991 to help plan sponsors correct tax qualification errors. The program has since grown and evolved in large part because of a robust and open dialogue with private industry. About 7,000 correction applications were submitted in fiscal year 2011. Similarly, the DOL’s correction programs have been equally successful. In fiscal year 2015, the DOL’s Voluntary Fiduciary Correction Program received 1,478 applications and the Delinquent Filer Voluntary Compliance Program received more than 22,800 annual reports. The Chamber believes that a correction program at the PBGC addressing filing and related errors would be extremely beneficial to both the PBGC and plan sponsors.
Question 7. Does PBGC have regulations or information collections (e.g., forms, reports, or notices) that are duplicative or that have conflicting requirements with other agencies, such as the Department of the Treasury, Internal Revenue Service, or Department of Labor?
The PBGC Should Eliminate its Proposal to Include De-risking Information on Premium Filing Forms. The PBGC has revised premium filing procedures and instructions to require reporting of certain undertakings to cash out or annuitize benefits for a specified group of former employees. The Chamber strongly discourages collection of this information as we see no benefit to it and also because no reason has been offered for it. In addition, it is not clear exactly what type of information will be sought. In a retirement plan, an employer has the option to satisfy benefit obligations by paying the benefit in a lump-sum cash-out or an annuity. Once this is done, benefit obligations are satisfied and neither the plan sponsor nor the PBGC have any remaining liabilities. Since these benefit payouts have no direct bearing on future liabilities that might fall to the PBGC, any burdens or costs associated with this collection will outweigh the benefits because there are no benefits. As such, the collection of this information cannot be justified.
Question 13. Are there any other areas where PBGC could improve its regulations to better accomplish its mission?
The PBGC Should Finalize the Missing Participant Regulations. We encourage the PBGC to move forward with the missing participant program. In 2016, the PBGC proposed to expand its missing participants program to include multiemployer plans covered by Title IV, most defined contribution plans, and certain plans not already covered. In general, the Chamber supports the proposed rule and encourages the agency to move forward in the finalizing the rule.
Specifically, the Chamber appreciates that the PBGC intends to streamline the process where applicable and minimize burdens on plan sponsors, particularly small plan sponsors. Understanding that the statute addresses only terminated plans, the Chamber nevertheless encourages the PBGC to coordinate with other efforts to track and locate participant accounts in active plans. For example, a bill has been introduced in Congress that would create a pension registry that would serve as a central location of retirement plan information and would connect individuals with their retirement benefits. While the Chamber has not specifically endorsed this bill, it is important that all efforts in this area be coordinated to ensure that various programs do not become complicated or duplicative for plan sponsors and participants.
Penalty Relief for Payment of Late Premiums Should be Extended As Necessary. In 2016, the PBGC issued a rule lowering the penalty on late payment of premiums. The rule considerably reduces burdens for defined benefit plan sponsors by revising penalties that are based on the significantly increased single-employer premiums. While this is a much appreciated step, we again urge the agency to apply the changes as well to any penalty assessments for pre-2016 plan years where the penalty assessment has not yet been resolved. We believe this will advance the intent of the agency and the proposal. We also urge the PBGC to consider providing similar relief, on a case-by-case basis, in appropriate situations involving late premium payments for pre-2016 plan years where the penalty assessment has already been resolved under pre-2016 rules. For example, relief may be appropriate where the post-2015 conditions for relief are met for a pre-2016 plan year, the penalty that had been assessed and resolved under pre-2016 rules was both large and clearly disproportionate in relation to the facts and circumstances surrounding the late payment, and there is clear and convincing evidence that the late payment was the result of inadvertence rather than any attempt to underpay the PBGC premiums.
The Chamber appreciates the opportunity to provide comments on the wide array of regulations under its jurisdiction that affect employers. Thank you for your consideration of these comments and we look forward to working with you on these important issues.