[Federal Register Volume 62, Number 243 (Thursday, December 18, 1997)]
[Proposed Rules]
[Pages 66319-66320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33028]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4022

RIN 1212-AA87


PBGC Recoupment and Reimbursement of Benefit Overpayments and 
Underpayments

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Proposed rule.

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SUMMARY: The Pension Benefit Guaranty Corporation proposes to amend its 
regulation governing recoupment of benefit overpayments in trusteed 
plans to stop the reduction of monthly benefits under its actuarial 
recoupment method once the amount of the benefit overpayment is repaid. 
The amendment also makes other related changes.

DATES: Comments must be received on or before January 20, 1998.

ADDRESSES: Comments may be mailed to the Office of the General Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, 
DC 20005-4026, or delivered to Suite 340 at the above address. Comments 
also may be sent by Internet e-mail to [email protected]. Comments 
will be available for inspection at the PBGC's Communications and 
Public Affairs Department in Suite 240 at the above address during 
normal business hours.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, or James L. Beller, Attorney, Pension Benefit Guaranty 
Corporation, Office of the General Counsel, Suite 340, 1200 K Street, 
NW., Washington, DC 20005-4026, 202-326-4024. For TTY/TDD users, call 
the Federal relay service toll free at 1-800-877-8339 and ask to be 
connected to 202-325-4024.

SUPPLEMENTARY INFORMATION: Some participants and beneficiaries in PBGC-
trusteed plans receive benefit payments in excess of their entitlements 
under Title IV of ERISA after plan termination and before the PBGC 
determines their benefit entitlements. Under the PBGC's current 
recoupment regulation, unless a participant or beneficiary elects to 
repay a benefit overpayment in a single payment, the overpayment is 
recouped through a permanent actuarial reduction in future benefit 
payments.
    When overpayments are made, recipients are generally unaware that 
they are receiving amounts in excess of their entitlements. In effect, 
overpayments are unsolicited loans. Many participants and beneficiaries 
are unable to afford to repay the overpayment in a single payment and 
thus cannot avoid permanent actuarial reductions. Participant and 
beneficiary inquiries reflect their difficulty understanding why the 
PBGC would continue to reduce their monthly benefit beyond the time the 
PBGC has fully recouped the amount of the overpayment.
    The PBGC proposes to revise the regulation to provide that 
recoupment will cease when the amount of the overpayment is repaid. 
This will help to minimize hardship to participants and beneficiaries 
as well as to cut down the number of participant and beneficiary 
inquiries about recoupment, thereby reducing burden both on them and 
the PBGC. The amendment also gives the PBGC flexibility to waive 
recoupment of de minimis amounts and to accept repayment ahead of the 
recoupment schedule, and modifies the rules governing calculation of 
net overpayments and underpayments.

E.O. 12866 and the Regulatory Flexibility Act

    The PBGC has determined that this proposed rule is not a 
``significant regulatory action'' under the criteria set forth in 
Executive Order 12866.
    This rule affects only individuals. Therefore, the PBGC certifies 
that, if adopted, the amendment will not have a significant economic 
effect on a substantial number of small entities. Accordingly, as 
provided in section 605(b) of the Regulatory Flexibility Act, sections 
603 and 604 do not apply.

List of Subjects in 29 CFR Part 4022

    Pension insurance, Pensions.

    For the reasons set forth above, the PBGC proposes to amend 29 CFR 
Part 4022, subpart E as follows:

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE EMPLOYER PLANS

    1. The authority citation for part 4022 continues to read as 
follows:

    Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D) and 1344.

    2. In Sec. 4022.81, paragraph (a) is amended by removing the last 
two sentences, adding a new phrase, and paragraphs (a)(1) and (a)(2) in 
their place, and revising paragraphs (c) and (d)(2) to read as follows:


Sec. 4022.81  General rules.

    (a) Recoupment of benefit overpayments. * * *
    Notwithstanding the previous sentence, the PBGC may, in its 
discretion--
    (1) Decide not to recoup net overpayments that it determines to be 
de minimis; and
    (2) Recover overpayments by methods other than recouping in 
accordance with the rules in this subpart. The PBGC will not normally 
do so unless net benefits paid after the termination date exceed those 
to which a participant or beneficiary is entitled under the terms of 
the plan before any reductions under subpart D.
* * * * *
    (c) Payments subject to recoupment or reimbursement. The PBGC shall 
recoup net overpayments made on or after the latest of the proposed 
termination date, the termination date, or, if no notice of intent to 
terminate was issued, the date on which proceedings to terminate the 
plan are instituted pursuant to section 4042 of ERISA, and shall 
reimburse net underpayments made on or after the termination date.
    (d) Interest. * * *
    (2) Receipt of both overpayments and underpayments. If both benefit 
overpayments and benefit underpayments are made with respect to a 
participant, the PBGC shall compare the net overpayment or underpayment 
calculated without interest to the net overpayment or underpayment 
calculated with interest. (The interest calculation shall be made by 
charging or crediting interest from the first day of the month after 
the date of payment to the first day of the month in which recoupment 
begins.) Of these two net amounts, the PBGC shall use the one more 
favorable to the participant or

[[Page 66320]]

beneficiary in applying either Secs. 4022.81 and 4022.82 or 
Secs. 4022.81 and 4022.83, as applicable.
    3. Section 4022.82 is amended by removing the words, ``lump sum'', 
in paragraph (a)(3) and adding, in their place, the words, ``single 
payment'', and by revising paragraph (a) introductory text and the 
heading of paragraph (b) to read as follows:


Sec. 4022.82  Method of recoupment.

    (a) Future benefit reduction. Unless a participant or beneficiary 
elects otherwise under paragraph (b) of this section, the PBGC shall 
recoup overpayments of benefits in accordance with this paragraph. The 
PBGC shall reduce the amount of each future benefit payment to which 
the participant or any beneficiary is entitled by the fraction 
determined under paragraphs (a)(1) and (a)(2) of this section, except 
that benefit reduction will cease when the amount of the net benefit 
overpayment is recouped. Notwithstanding the preceding sentence, the 
PBGC may accept repayment ahead of the recoupment schedule. Recoupment 
under this section constitutes full repayment of the net benefit 
overpayment.
* * * * *
    (b) Single payment. * * *

    Issued in Washington, D.C. this 12th day of December, 1997.
David M. Strauss,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 97-33028 Filed 12-17-97; 8:45 am]
BILLING CODE 7708-01-P