[Federal Register Volume 61, Number 96 (Thursday, May 16, 1996)]
[Rules and Regulations]
[Pages 24694-24696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12335]



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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 2627

RIN 1212-AA77


Disclosure to Participants

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This document amends the PBGC's regulation on disclosure to 
participants (29 CFR part 2627) to describe changes in the way 
participants can obtain the booklet ``Your Guaranteed Pension.''

EFFECTIVE DATE: May 16, 1996.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, or Catherine B. Klion, Attorney, Office of the General 
Counsel, PBGC, 1200 K Street, NW., Washington, DC 20005-4026, 202-326-
4024 (202-326-4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION: The PBGC's regulation on disclosure to 
participants (29 CFR Part 2627) implements section 4011 of ERISA. 
Section 4011 requires certain underfunded plans to provide notice to 
plan participants and beneficiaries of the plan's funding status and 
the limits on the PBGC's guarantee. Plans with more than 100 
participants were first subject to the notice requirement for the 1995 
plan year; plans with 100 or fewer participants will first be subject 
to the requirement for the 1996 plan year.
    The PBGC is amending the regulation to reflect the fact that the 
booklet ``Your Guaranteed Pension'' can now be obtained without charge 
by writing to the Consumer Information Center. (Previously, the booklet 
cost $1.25.) The PBGC also is amending the regulation to

[[Page 24695]]

allow plan administrators to include a statement in the Participant 
Notice that the booklet can be obtained on the PBGC's new Homepage on 
the World Wide Web.
    This rule also makes corresponding changes to the Model Participant 
Notice (Appendix A to Part 2627). The PBGC is republishing the Model 
Participant Notice and the Table of Maximum Guaranteed Benefits 
(Appendix B to Part 2617) in their entireties. (Information on 1996 
maximum guaranteed benefit amounts was added to this table on December 
15, 1995 (60 FR 64324).)
    In light of the minor nature of the changes, and plan 
administrators' current need for a regulation that includes correct 
information, the PBGC has for good cause found that notice and public 
procedure are unnecessary and contrary to the public interest. The PBGC 
also has determined for these reasons that good cause exists for making 
these amendments effective immediately. For a reasonable time period, 
the PBGC will treat a plan administrator that uses the existing 
regulation (including the existing Model Participant Notice) as 
satisfying the Participant Notice requirements.
    The PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
12866.
    Because no general notice of proposed rulemaking is required for 
this regulation, the Regulatory Flexibility Act does not apply (5 
U.S.C. 601(2)).

List of Subjects in 29 CFR Part 2627

    Pension insurance, Pensions.

    Accordingly, 29 CFR Part 2627 is amended as follows:

PART 2627--DISCLOSURE TO PARTICIPANTS

    1. The authority citation for part 2627 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1311.

    2. Sec. 2627.10, paragraph (h) introductory text is republished and 
paragraph (b)(9) is revised to read as follows:


Sec. 2627.10  Form of notice.

* * * * *
    (b) Content. The Participant Notice for a plan year shall include--
* * * * *
    (9) A statement that further information about the PBGC's guarantee 
may be obtained by requesting a free copy of the booklet ``Your 
Guaranteed Pension'' from Consumer Information Center, Dept. YGP, 
Pueblo, Colorado 81009. The Participant Notice may include a statement 
that the booklet may be obtained through electronic access via the 
World Wide Web from the PBGC Homepage at http://www.pbgc.gov/ygp.htm.
* * * * *
    3. Appendix A to Part 2627 is amended to read as follows (and 
Appendix B is republished for the convenience of the public):

Appendix A to Part 2627--Model Participant Notice

    The following is an example of a Participant Notice that 
satisfies the requirements of Sec. 2627.10 when the required 
information is filled in (subject to Secs. 2627.10(d)-(e), where 
applicable).

NOTICE TO PARTICIPANTS OF [PLAN NAME]

    The law requires that you receive information on the funding 
level of your defined benefit pension plan and the benefits 
guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a 
federal insurance agency.

YOUR PLAN'S FUNDING

    As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGE 
(DETERMINED IN ACCORDANCE WITH Sec. 2627.10(c))] percent of the 
money needed to pay benefits promised to employees and retirees.
    To pay pension benefits, your employer is required to contribute 
money to the pension plan over a period of years. A plan's funding 
percentage does not take into consideration the financial strength 
of the employer. Your employer, by law, must pay for all pension 
benefits, but your benefits may be at risk if your employer faces a 
severe financial crisis or is in bankruptcy.

[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE PREVIOUS 
FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT FULLY REPAID 
A FUNDING WAIVER.]

    Your plan received a funding waiver for [LIST ANY OF THE FIVE 
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS 
NOT BEEN FULLY REPAID]. If a company is experiencing temporary 
financial hardship, the Internal Revenue Service may grant a funding 
waiver that permits the company to delay contributions that fund the 
pension plan.

[INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE PAYMENT 
THAT MUST BE DISCLOSED UNDER Sec. 2627.10(b)(6):]

    Your plan was required to receive a payment from the employer on 
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was 
made on [LIST APPLICABLE PAYMENT DATE(S)]].

PBGC GUARANTEES

    When a pension plan ends without enough money to pay all 
benefits, the PBGC steps in to pay pension benefits. The PBGC pays 
most people all pension benefits, but some people may lose certain 
benefits that are not guaranteed.
    The PBGC pays pension benefits up to certain maximum limits.
     The maximum guaranteed benefit is [INSERT FROM TABLE IN 
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year 
for a 65-year-old person in a plan that terminates in [INSERT 
APPLICABLE YEAR].
     The maximum benefit may be reduced for an individual 
who is younger than age 65. For example, it is [INSERT FROM TABLE IN 
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year 
for an individual who starts receiving benefits at age 55. [IN LIEU 
OF AGE 55, YOU MAY ADD OR SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE 
PLAN. FOR EXAMPLE, YOU MAY ADD OR SUBSTITUTE THE MAXIMUM BENEFIT FOR 
AGES 62 OR 60 FROM THE TABLE IN APPENDIX B. IF THE PLAN PROVIDES FOR 
NORMAL RETIREMENT BEFORE AGE 65, YOU MUST INCLUDE THE NORMAL 
RETIREMENT AGE.]

[IF THE PLAN DOES NOT PROVIDE FOR COMMENCEMENT OF BENEFITS BEFORE 
AGE 65, YOU MAY OMIT THIS PARAGRAPH.]

     The maximum benefit will also be reduced when a benefit 
is provided for a survivor.
    The PBGC does not guarantee certain types of benefits.

[INCLUDE THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE BENEFITS 
AVAILABLE UNDER YOUR PLAN.]

     The PBGC does not guarantee benefits for which you do 
not have a vested right when a plan ends, usually because you have 
not worked enough years for the company.
     The PBGC does not guarantee benefits for which you have 
not met all age, service, or other requirements at the time the plan 
ends.
     Benefit increases and new benefits that have been in 
place for less than a year are not guaranteed. Those that have been 
in place for less than 5 years are only partly guaranteed.
     Early retirement payments that are greater than 
payments at normal retirement age may not be guaranteed. For 
example, a supplemental benefit that stops when you become eligible 
for Social Security may not be guaranteed.
     Benefits other than pension benefits, such as health 
insurance, life insurance, death benefits, vacation pay, or 
severance pay, are not guaranteed.
     The PBGC does not pay lump sums exceeding $3,500.

WHERE TO GET MORE INFORMATION

    Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)]. 
If you would like more information about the funding of your plan, 
contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF 
INDIVIDUAL OR ENTITY].
    For more information about the PBGC and the benefits it 
guarantees, you may request a free copy of ``Your Guaranteed 
Pension'' by

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writing to Consumer Information Center, Dept. YGP, Pueblo, Colorado 
81009.

    [THE FOLLOWING SENTENCE MAY BE INCLUDED:]

    ``Your Guaranteed Pension'' is also available from the PBGC 
Homepage on the World Wide Web at http://www.pbgc.gov/ygp.htm.

    Issued: [INSERT AT LEAST MONTH AND YEAR]

Appendix B to Part 2627--Table of Maximum Guaranteed Benefits

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                                                   The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below
                                                                              is the amount (monthly or annual) listed below:                           
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            If a plan terminates in--                      Age 65                    Age 62                    Age 60                    Age 55         
                                                 -------------------------------------------------------------------------------------------------------
                                                    Monthly       Annual      Monthly       Annual      Monthly       Annual      Monthly       Annual  
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1995............................................    $2,573.86   $30,886.32    $2,033.35   $24,400.20    $1,673.01   $20,076.12    $1,158.24   $13,898.88
1996............................................     2,642.05    31,704.60     2,087.22    25,046.64     1,717.33    20,607.96     1,188.92    14,267.04
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    The maximum guaranteed benefit for an individual starting to 
receive benefits at ages other than those listed above can be 
determined by applying the PBGC's regulation on computation of 
maximum guaranteeable benefits (29 CFR Sec. 2621.4).
    Issued in Washington, DC, this 13th day of May, 1996.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 96-12335 Filed 5-15-96; 8:45 am]
BILLING CODE 7708-01-P