[Federal Register Volume 60, Number 137 (Tuesday, July 18, 1995)]
[Notices]
[Pages 36837-36838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17629]



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PENSION BENEFIT GUARANTY CORPORATION


Assessment of Penalties for Failure to Provide Required 
Information

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Statement of Policy.

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SUMMARY: The Pension Benefit Guaranty Corporation is revising its 
policy on penalties for failure to provide required information in a 
timely manner. The revised policy is designed to promote voluntary 
compliance. It provides for lower penalties for plans of small 
businesses and for violations that are speedily corrected.

DATES: The revised policy takes effect on July 18, 1995 with respect to 
any matter for which a notice of final penalty assessment has not been 
issued as of that date.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, Office of the General Counsel, Pension Benefit Guaranty 
Corporation, 1200 K Street, NW., Washington, DC 20005-4026; 202-326-
4024 (202-326-4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION: Section 4071 of the Employee Retirement 
Income Security Act of 1974 authorizes the PBGC to assess a penalty of 
up to $1,000 per day for failure to provide any required notice or 
other material information within the specified time limit. A decision 
to assess a penalty under section 4071 does not preclude other 
enforcement or remedial action by the PBGC.
    On March 3, 1992, the PBGC issued its first statement of policy on 
how it would exercise this penalty authority. Pursuant to the 
President's April 21, 1995, directive on penalties, the PBGC has 
reviewed its experience under this penalty policy and has concluded 
that a revised policy statement is appropriate to promote voluntary 
compliance. This replaces the March 1992 statement, and applies to any 
notice or other material information required to be provided to the 
PBGC or other parties to which section 4071 penalties may apply (other 
than premium-related submissions).
    The PBGC will amend Chapter 8, Section 1 of the PBGC Operating 
Policy Manual (and related departmental manuals) to reflect these 
general guidelines. The PBGC may amend these guidelines through changes 
to the Manual as the PBGC gains experience with the new policy.

Penalty Guidelines

    The PBGC will continue to consider the facts and circumstances of 
each case to assure that the penalty fits the violation. Among the 
factors the PBGC will consider are the importance and time-sensitivity 
of the required information, the extent of the omission of information, 
the willfulness of the failure to provide the required information, the 
length of delay in providing the information, and the size of the plan. 
In most cases, the PBGC will: (1) increase penalties as the period of 
delinquency increases; (2) reduce penalties for small plans; and (3) 
limit total penalties based on plan size.
    In general, the PBGC will assess a penalty of $25 per day for the 
first 90 days of delinquency, and $50 per day thereafter. In addition, 
the penalty will be proportionately reduced in accordance with the 
number of participants in the case of plans with fewer than 100 
participants,\1\ subject to a floor of $5 per day. For example, the 
penalty for a plan with 25 participants 

[[Page 36838]]
would be $6.25 per day (25% of $25 per day) for the first 90 days, and 
$12.50 per day (25% of $50 per day) thereafter.

    \1\ The participant count calculation will be tied to the 
appropriate participant count. Thus, in the case of a post-
distribution certification, the appropriate participant count will 
be the number of participants entitled to a distribution in the 
termination. Where there is no clearly appropriate participant 
count, the participant count generally will be determined using the 
most recently filed Form 1 for the relevant plan or plans.
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    Under these general guidelines, the total penalty for any violation 
would not exceed $100 times the number of plan participants. In the 
above example, because the plan has 25 participants, the total penalty 
would not exceed $2,500.
    The PBGC may assess a penalty larger than the general penalty if 
there is a willful failure to comply (e.g., where a plan administrator 
willfully fails to issue a notice to participants required under 
section 4011 of ERISA) or if there is a pattern or practice of failure 
to provide material information. Similarly, the PBGC may assess a 
penalty larger than the general penalty if the harm to participants or 
the PBGC resulting from a failure to timely provide material 
information is substantial. For example, a larger penalty may apply 
where there is a failure to provide the PBGC with timely post-event 
notice of a reportable event involving a large company or plan or with 
annual information required by section 4010 of ERISA.
    The PBGC will generally assess the full $1,000 per day penalty for 
failure to provide an advance notice of a reportable event under ERISA 
section 4043(b) or a notice to the PBGC of a missed contribution under 
ERISA section 302(f)(4). This information is so time sensitive and 
significant that a larger penalty is warranted.

Reasonable Cause Guidelines

    The PBGC will waive all or part of a section 4071 penalty where 
reasonable cause is shown. The PBGC will evaluate each request for a 
waiver to determine whether the responsible person exercised ordinary 
business care and prudence and delay resulted from circumstances beyond 
that person's control.

Other Matters

    The PBGC will continue to review initial penalty assessments if 
requested in writing within 30 days of the date of the notice of 
initial penalty assessment. Assignment of penalty assessment and review 
functions remains unchanged.

    Issued in Washington, DC, this 12th day of July 1995.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 95-17629 Filed 7-17-95; 8:45 am]
BILLING CODE 7708-01-P