The Pension Benefit Guaranty Corporation (PBGC) said it will provide new flexibility for variable-rate premium filers to help mitigate the effects of the COVID-19 pandemic.
The PBGC said the move was necessary because the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allows minimum contributions required by the Employee Retirement Income Security Act (ERISA) that were due during 2020 to be paid on Jan. 1, 2021, did not provide any special rules related to PBGC premiums.
As a result of the action, a premium refund will be available to account for employer contributions received by the plan during the extended period provided by the CARES Act.
“As COVID-19 continues to affect workers, families, and job creators across the country, PBGC continues to look for opportunities to provide the relief they need,” PBGC Director Gordon Hartogensis said in a statement. “This relief will support theadministration’s efforts to continue driving economic recovery and helping those in need.”
Under the new guidance, premium filings due on or after March 1, 2020, and before Jan. 1, 2021, the date by which “prior year” contributions must be received by the plan to be included in plan assets, will be extended to Jan. 1, 2021. That means the discounted value of the contributions received by the plan after the premium is filed will be included in the asset value used to determine the variable-rate premium. As a result, plans will be able to amend the premium filing to revise the originally reported asset value when all prior year contributions have been made, and receive the corresponding refund of variable-rate premiums.
As an example, the PBGC used a calendar year plan to demonstrate the various due dates as they relate to PBGC premium filings:
The premium for the 2020 plan year is due Oct. 15, 2020.
The due date for 2019 plan year contributions was extended to Jan. 1, 2021, from Sept. 15, 2020.
Absent the relief provided, and assuming the premium is filed on Oct. 15, the discounted value of contributions for the 2019 plan year received by the plan:
On or before Oct. 15, 2020, are included in the asset value used to determine the 2020 variable-rate premium and
After Oct. 15, 2020, are not included in the asset value used to determine the 2020 variable-rate premium.