In “New PBGC Regs Leave Employers Scratching Their Heads,” benefits and executive compensation partner Gregory Ossi spoke to Law360 about the impact of recently released regulations from the Pension Benefit Guaranty Corp. (PBGC) that describe how a financial assistance program for troubled union pension plans will work.
The publication explained that the regulations’ chosen interest rate — the PBGC rate — could increase employers’ withdrawal liability. However, the regulations also allow actuaries to incorporate the financial assistance that plans will receive from the program into their calculation process in a way that should reduce withdrawal liability. The net effect of these changes remains unclear.
“Is this going to increase withdrawal liability or decrease it? We don’t know because there are a lot of factors that go into it,” noted Ossi. “It’s really a plan-by-plan determination.”
Ossi also said that he noticed a footnote in the regulations (Footnote 18) right away, which indicates that the federal government may be interested in tampering further with withdrawal liability.
“Of great concern was this signal from the PBGC that they are looking at requiring an interest rate assumption for all plans that could potentially increase withdrawal liability for every employer that participates in a multiemployer plan,” Ossi added.