The Pension Benefit Guaranty Corporation (“PBGC”) recently announced a change to its enforcement policy under ERISA § 4062(e) and issued answers to frequently asked questions on the subject.  The new enforcement policy would impose § 4062(e) liability only on large employers who are not “financially sound.”  As discussed below, however, the new policy does not provide complete relief.

ERISA § 4062(e) applies if an employer ceases operations at a facility and the cessation of operations results in 20% of the employees participating in the employer’s pension plan terminating employment.  If a § 4062(e) event occurs, the company must report the event to the PBGC and becomes responsible for a withdrawal liability.  The withdrawal liability is based on the plan’s underfunding on a termination basis times the percentage reduction of the active participants.  For most employers, the dollar amount can be quite significant.
Continue Reading PBGC Changes Section 4062(e) Enforcement Policy, But Not Expansive Interpretation of Section 4062(e)