[Federal Register Volume 63, Number 239 (Monday, December 14, 1998)]
[Rules and Regulations]
[Pages 68684-68685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33036]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 4007

RIN 1212-AA79


Payment of Premiums

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: This amendment to the Pension Benefit Guaranty Corporation's 
regulation on Payment of Premiums moves the final filing due date for 
premium declarations to October 15th for calendar year plans (so that 
it is the same as the extended Form 5500 due date) and makes parallel 
changes for non-calendar year plans.

EFFECTIVE DATE: February 12, 1999. The amendment applies to premium 
payment years beginning after 1998.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, or Deborah C. Murphy, Attorney, Office of the General Counsel, 
Pension Benefit Guaranty Corporation, 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 202-326-
4024.)

SUPPLEMENTARY INFORMATION:

Background

    Under the PBGC's regulation on Payment of Premiums (29 CFR Part 
4007), final premium filings are generally due on the 15th day of the 
eighth full calendar month following the month in which the premium 
payment year begins (e.g., for calendar year plans, September 15th). 
(Special rules apply to plans that change plan years and to new and 
newly-covered plans.) On April 10, 1992, the PBGC published in the 
Federal Register (at 57 FR 12666) a proposed amendment to its 
regulations that would (among other things) have deferred the final 
filing due date to the end of the ninth full calendar month of the 
premium payment year (e.g., for calendar year plans, September 30th).
    Seven commenters addressed this issue. Two indicated simple 
approval. The other five urged a further deferral, to the middle of the 
following month (e.g., for calendar year plans, October 15th). The 
latter date is the due date (as often extended) for the Form 5500 and 
Schedule B thereto, on which the Alternative Calculation Method in the 
PBGC's regulation on Premium Rates (29 CFR part 4006) is based. Reasons 
given for the further deferral included the avoidance of confusion and 
administrative burdens caused by the premium form's not being 
coordinated with the Form 5500 and Schedule B, and the consistency and 
simplicity that would result if the filing due dates were coordinated.
    The PBGC has concluded that the further deferral suggested by the 
commenters is appropriate, and that the method of computing the premium 
filing deadline for plans whose plan years do not begin on the first of 
a month should match the method for computing the Form 5500 filing 
deadline for such plans.
    Accordingly, this final rule moves the final filing due date to the 
15th day of the tenth full calendar month of the premium payment year, 
subject to the existing special rules for plans that change plan years 
and for new and newly-covered plans. Thus, the due date will now be 
October 15th for calendar year plans. For non-calendar-year plans with 
plan years beginning on the first day of the month, the extension is 
one month. For example, the final premium filing date for a July 1 plan 
moves from March 15 to April 15. A plan whose plan year begins on a 
date other than the first of a month gets a two-month extension from 
the due date under the old rule in order to parallel the Form 5500 due 
date. Thus, for example, a plan whose plan year begins on January 2d 
will now have until November 15 to file (compared to September 15 under 
the old rule).

Compliance With Rulemaking Guidelines; Economic Impact Analysis

    This action has been reviewed by the Office of Management and 
Budget under Executive Order 12866 as an economically significant 
regulatory action. The Office of Management and Budget has determined 
that this action is a ``major rule'' as defined in 5 U.S.C. 804(2) for 
purposes of Congressional review of agency rulemaking under subtitle E 
of title II of the Small Business Regulatory Enforcement Fairness Act 
of 1996.
    PBGC premium payments are included as receipts in the Federal 
budget. Moving the final premium due date will shift an estimated $350 
million (representing primarily calendar year plans' final premium 
payments) from the end of fiscal year 1999 to the beginning of fiscal 
year 2000. Under the Congressional review provisions of the Small 
Business Regulatory Enforcement Fairness Act of 1996, OMB treats a rule 
with a Federal budget impact of over $100 million in one year as a 
major rule. Thus, the movement of the final premium filing date--which 
results only in deferral, not loss, of the approximately $350 million 
in premium payments that would otherwise be

[[Page 68685]]

received on September 15--makes this a major rule.
    The due date change will reduce the PBGC's interest income by about 
$2 million per year (one month of lost interest income on most plans' 
final premium payments), which represents less than one-quarter of one 
percent of the PBGC's annual premium revenue. Because the PBGC's lost 
interest income will be offset by an interest gain for premium payers, 
this extension creates a transfer from the PBGC to premium payers of 
approximately $2 million per year.
    The rule, aimed at providing better customer service, will create 
benefits for premium payers in the form of reduced administrative 
burdens associated with PBGC premium filings. This is because plans 
will be able to prepare their final premium filings at the same time as 
their Form 5500 filings (including the Schedule B actuarial 
information). No alternative final due date would achieve this result 
more effectively or with less cost.
    The PBGC certifies under section 605(b) of the Regulatory 
Flexibility Act that this rule will not have a significant economic 
impact on a substantial number of small entities. The effect of this 
rule is simply to give most plan administrators one more month to file 
premium declarations and pay premiums than under the existing 
regulation. Premium payers that take advantage of the deferral will 
have the opportunity to get an additional month's investment earnings 
on the amount of their premium payments, and their service providers 
may charge less because the premium forms can be prepared at the same 
time as the Form 5500 filing. However, while the PBGC expects plans to 
realize administrative cost savings from this rule, it does not expect 
the economic impact to be significant for small entities. Accordingly, 
sections 603 and 604 of the Regulatory Flexibility Act do not apply.

List of Subjects in 29 CFR Part 4007

    Penalties, Pension insurance, Pensions, Reporting and recordkeeping 
requirements.
    In consideration of the foregoing, 29 CFR part 4007 is amended as 
follows:

PART 4007--PAYMENT OF PREMIUMS

    1. The authority citation for part 4007 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

    2. In Sec. 4007.11, paragraph (a)(1) is amended by removing the 
words ``the fifteenth day of the eighth full calendar month following 
the month in which the plan year began'' and adding in their place the 
words ``the fifteenth day of the tenth full calendar month following 
the end of the plan year preceding the premium payment year''; 
paragraph (a)(2)(ii) is amended by removing the words ``the fifteenth 
day of the eighth full calendar month following the month in which the 
premium payment year begins'' and adding in their place the words ``the 
fifteenth day of the tenth full calendar month following the end of the 
plan year preceding the premium payment year''; and paragraph (c)(1) is 
revised to read as follows:


Sec. 4007.11  Due dates.

* * * * *
    (c) * * *
    (1) The fifteenth day of the tenth full calendar month that began 
on or after the later of--
    (i) The first day of the premium payment year; or
    (ii) The day on which the plan became effective for benefit 
accruals for future service;
* * * * *
    Issued in Washington, DC, this 7th day of December, 1998.
Alexis M. Herman,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.

    Issued on the date set forth above pursuant to a resolution of 
the Board of Directors authorizing its Chairman to issue this final 
rule.
James J. Keightley,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. 98-33036 Filed 12-11-98; 8:45 am]
BILLING CODE 7708-01-P