By Nick Thornton
An amendment to ERISA that would redefine how the Pension Benefit Guarantee Corporation
enforces regulation 4062(e) passed the Senate committee on Health, Education, Labor and Pensions by a bipartisan voice vote.
The new language would restrict PBGC’s enforcement of the controversial 4062(e) regulation. PBGC recently announced a moratorium on the enforcement of 4062(e) through the end of 2014.
Introduced by Sen. Tom Harkin, D-Iowa, the proposed amendment addresses the specific concerns industry interest groups have raised to the Departments of Labor, Commerce and Treasury, which oversee PBGC.
The regulation grants PBGC authority to levy charges against companies that cease operations at a facility through a shutdown or sale. The charges are then paid into the sponsors defined benefit plan.
The enforcement of 4062(e)
has come under fire from industry since outgoing Director Josh Gotbaum was appointed to head the PBGC in 2010.
Momentum peaked in June, when a consortium of benefits advocates and industry leaders penned a letter to the Secretaries of Labor, Commerce and Treasury alleging PBGC’s enforcement of the regulation was not consistent with the law.
The amendment passed this week by the HELP committee clarifies the definition of “substantial cessation of operations.”
Specifically, in order to constitute a “cessation of operations,” all operations in a facility will have to be shut down, as opposed to just one part or a portion of a facility’s operations.
The cessation of operations will also have to be expected to be permanent, as opposed to temporary, in order to instigate 4062(e) action.
Also, sponsors would be able to shut down an operation in one facility and move it to another, in another location, without instigating 4062(e).
The new language would also exempt instances when operations are sold, and soon after run under the control of a new plan sponsor.
Originally published on BenefitsPro.com