Blogging Employee Benefits

January 11, 2006

Multiemployer Pension Plan Funding Notices

Filed under: DOL, Multiemployer Plans, Regulations — Fuguerre @ 9:33 am

Final regulations requiring the administrator of a multiemployer pension plan to provide annual notice of the funding status of the plan have been published by the Department of Labor’s Employee Benefits Security Administration. [Release No. 06-20-NAT; Reg. 2520.101-4] The final regulation is substantially similar to rules proposed by EBSA last February.

Changes and clarifications included in the final regulation –

  • The notice need not be provided to entities in the same controlled group as a participating employer otherwise eligible to receive a notice.
  • Notification is not required to any employer that has withdrawn under ERISA 4203, regardless of annual withdrawal liability payments being made to the plan.
  • As had been provided in the proposed regulation, plan administrators may add information to the notice, provided the supplemental information is necessary or helpful to understanding the notice’s mandatory information. The final regulation requires that any such additional information be added at the end of the notice under the heading, “Additional Explanation.”

The model notice provided in the regulations was changed from the proposed regulation model notice in two respects –

  • Plan Funding Information – Expanation was added to provide context for understanding the significance of the plan’s funded current liability percentage, including text noting that funded current liability is not necessarily indicative of the funding of the plan in the future or upon plan termination.
  • Explanation of Plan Insolvency – The notice’s section on plan insolvency was expanded to more fully explain rules relating to insolvent plans. Additional language includes an explanation that a plan that becomes insolvent must promptly notify participants of the insolvency and explain how benefits will be affected.

Use of the model notice is not mandatory, but would be deemed to satisfy the content, style, and format requirements of the regulations with respect to prescribed information. The preamble of the final regulation expresses the Labor Department’s view that if a plan adds supplementary information to a model notice, the notification will retain deemed compliance status if the supplementary information satisfies conditions placed on the inclusion of such additional information.

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