2013 SupStmt_Prem Filings_to OMB.091012

Supporting Statement for Paperwork Reduction Act Submission

AGENCY:

Pension Benefit Guaranty Corporation

TITLE:

Payment of Premiums (29 CFR Part 4007) and PBGC forms and instructions
thereunder (PBGC paper Comprehensive Premium Filing form (Form 1-C) and
PBGC Estimated Flat-Rate Premium form (Form 1-ES), and related instructions;
and electronic premium filing forms and instructions)

STATUS:

Request for approval of revision of currently approved collection (OMB control
number 1212-0009; expires December 31, 2013)

CONTACT: Catherine B. Klion (326-4223, ext. 3041) or James J. Bloch (326-4223, ext. 3530)

1. Need for collection. Section 4007 of Title IV of the Employee Retirement Income
Security Act of 1974 (“ERISA”) requires the Pension Benefit Guaranty Corporation (“PBGC”)
to collect premiums from pension plans covered under Title IV pension insurance programs.
Pursuant to section 4007, PBGC has issued its regulation on Payment of Premiums (29 CFR
Part 4007). Under § 4007.3 of the premium payment regulation, plan administrators are required
to file premium payments and information prescribed by PBGC. Premium information must be
filed electronically using “My Plan Administration Account” (“My PAA”) through PBGC’s Web
site except to the extent PBGC grants an exemption for good cause in appropriate circumstances,
in which case the information must be filed using an approved PBGC form. The plan
administrator of each pension plan covered by Title IV of ERISA is required to submit one or
more premium filings for each premium payment year. Under § 4007.10 of the premium
payment regulation, plan administrators are required to retain records about premiums and
information submitted in premium filings.
All plans covered by Title IV of ERISA pay a flat-rate per-participant premium. An
underfunded single-employer plan also pays a variable-rate premium based on the value of the

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plan’s unfunded vested benefits. The variable-rate premium is subject to a cap added by the
Moving Ahead for Progress in the 21st Century Act (MAP-21). Premium rates and the level of
the cap are adjusted for inflation pursuant to MAP-21.
Large-plan filers (i.e., plans that were required to pay premiums for 500 or more
participants for the prior plan year) are required to pay PBGC’s flat-rate premium early in the
premium payment year (the last day of February for calendar-year plans). To accommodate
plans that find it impractical to do an accurate participant count until later in the premium
payment year, PBGC permits filers to make an estimated flat-rate premium filing.
All plans are required to make a comprehensive premium filing. Comprehensive filings
are used to report flat- and (for single-employer plans) variable-rate premiums, premium-related
data, and information about plan identity, status, and events. (For large plans, the comprehensive
filing reconciles an estimated flat-rate premium paid earlier in the year.)
PBGC intends to revise the 2013 filing instructions to:
•

Provide for revoking a prior election to use the Alternative Premium Funding Target

(APFT) to determine unfunded vested benefits (UVBs). (Under PBGC regulations, an
election to use the APFT is irrevocable for 5 years; 2008 was the first year that plans
were permitted to elect the APFT, so 2013 is the first year for which it is necessary to
collect this information.)
•

Require plan administrators to provide a breakdown of the total premium funding

target into the same categories of participants used for reporting on Schedule SB to Form
5500, i.e., active participants, terminated vested participants, and retirees and
beneficiaries receiving payment. PBGC uses the premium funding target to estimate
termination liability, e.g., for the annual contingency list, and a breakdown will enable

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PBGC to make a much better estimate than simply using only the total premium funding
target.
•

Require plan administrators to report a contact name to make it easier for PBGC to

contact a plan. Filers also will have the option of providing an additional plan contact.
•

Require plan administrators to report the plan effective date for all plans rather than

just new and newly covered plans. This date helps PBGC trace plans that change
Employer Identification Number or Plan Number.
•

Require plan administrators to break down the premium credit information in the

comprehensive premium filing into two items rather than aggregating the premium credit.
This information will help PBGC to manage the application of overpayments.
•

Add a data item for the MAP-21 variable-rate premium cap, which is first effective

for 2013.
•

Explain how MAP-21 affects premium computations.

•

Eliminate the following data items —
o The plan sponsor’s address.
o The boxes to check if there has been a change in name for a plan sponsor or a
change in name or address for a plan administrator.
o The payment method for paper filers.

•

Reorder and renumber some items on the illustrative forms that accompany and are

part of the instructions, and make other minor changes.
2. Use of information. PBGC uses information from premium filings to identify the
plans for which premiums are paid, to verify whether the amounts paid are correct, to help PBGC
determine the magnitude of its exposure in the event of plan termination, to help track the
creation of new plans and transfer of participants and plan assets and liabilities among plans, and

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to keep PBGC’s insured-plan inventory up to date. That information and the retained records are
used for audit purposes.
3. Information technology. Electronic filing is required under PBGC’s regulations for all
plans for plan years beginning on or after January 1, 2007. PBGC provides for premium filing
through the “My PAA” electronic facility on PBGC’s Web site. In addition, PBGC offers two
electronic filing options that allow filers to use private-sector premium-filing-preparation
software compatible with My PAA: (1) a filer can draft a premium filing and then import it into
My PAA’s data entry and editing screens for review, certification, and submission to PBGC; and
(2) a filer can create a premium filing and then upload it directly to PBGC via the My PAA
application. Filers can pay premiums and receive premium refunds by electronic funds transfer.
4. Duplicate or similar information.
General
In general, the information required in premium filings is not routinely filed with, and
available from, any other Federal Government agency, and there is no similar information that
can be used “as is” instead of the information reported in premium filings.
Variable-rate premium (VRP) Data
Plans may or may not base VRP calculations on asset and/or liability figures that are also
reported on Schedule SB to Form 5500, the annual report form filed with the Internal Revenue
Service, Department of Labor, and PBGC. Since the premium numbers may not be the same as
the Schedule SB numbers, PBGC needs to know what the premium numbers are, even if they
happen to coincide with the Schedule SB numbers.
Frozen plan data
In recent years, many defined benefit plan sponsors have implemented some sort of plan
freeze, which results in cessation or partial cessation of future benefit accruals. There are many

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ways in which a plan can be frozen. For example, in some cases existing participants continue to
accrue benefits, but new employees are excluded from the plan (a “participation freeze”). In
other cases, all benefit accruals cease, or accruals based on salary increases continue but future
service is disregarded when determining benefits. In addition, there are many situations where a
plan freeze applies to some, but not all, participants. To be able to predict and address the
impact of plan freezes on PBGC’s future premium revenues and net financial position, PBGC
needs to know which of the plans that PBGC covers have been frozen and the exact nature of the
freeze.
PBGC currently collects plan freeze information on ERISA section 4010 filings, but 4010
filers are a small percentage of covered plans. PBGC needs the information sooner for the small
group of 4010 filers. PBGC has considered exempting 4010 filers from reporting this
information again in the premium filing, but concluded that it would be a control problem if the
agency’s premium database was not internally consistent.
Form 5500 collects general information on whether a plan has been frozen, but it does not
collect specific information as to the nature of the freeze (Form 5500, Item 8.a. – Plan
Characteristic code – 1I: Frozen plan). Furthermore, the Form 5500 “plan freeze” question
pertains only to the most severe type of freeze (when all accruals cease for all participants). The
Form 5500 data are not sufficient for PBGC to adequately monitor the agency’s potential
exposure and to project future premium income.
Plan transfer data
PBGC’s plan transfer questions ask about transfers to and from other plans, as well as
transfer types, e.g., merger, consolidation, or spin-off. The Form 5500 (item 5b of Schedule H)
only asks for information concerning assets and/or liabilities transferred from a plan to another
plan (or plans) during the plan year, and does not get data on transfer types. Plans are required to

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submit information to the Internal Revenue Service about transfers to and from other plans on
Form 5310-A Notice of Plan Merger or Consolidation, Spinoff, or Transfer of Plan Assets or
Liabilities, but the Form 5310-A exempts filers from filing this notice if the transaction is de
minimis, and PBGC needs this information regardless of transaction size. In addition, PBGC
would not be able to receive Form 5310-A information in a timely manner.
Final filing data
Form 5500 collects general information on whether a plan was terminated in a standard
or distress termination, or whether PBGC became trustee of a plan (Form 5500, Item 8.a. – Plan
Characteristic code - 1H: plan covered by PBGC that was closed out and terminated for PBGC
purposes). Form 5500 also collects data on whether a plan is covered by PBGC (Plan
Characteristic code - 1G: plan covered by PBGC). However, the data collected on Form 5500
often are not sufficient for PBGC to adequately know why filings have ceased in cases where
plans merge out of existence. For example, a plan may file its final premium filing under an
Employer Identification Number (EIN) and Plan Number (PN) different from that on the Form
5500. In addition, terminated or merged plans often do not submit a final Form 5500, especially
when the final plan year is short.
5. Reducing the burden on small entities. The VRP due date for small plans is
6½ months later than for large and mid-size plans to accommodate the later UVB valuation dates
used by some small plans.
The VRP is capped for certain plans of small employers (those with 25 or fewer
employees). This cap is generally lower than the MAP-21 VRP cap that applies to all VRP
filers. Plans that qualify for the small-employer VRP cap and pay the full amount of the cap do
not need to determine or report UVBs.

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6. Consequence of reduced collection. Since the information collected is essential to
proper administration of PBGC’s insurance programs, including auditing of premium filings,
failure to collect it would seriously impair PBGC’s program operations. Further, the premium
payable to PBGC is an annual premium. Therefore, premium filings cannot be made less often
than annually, and for most plans, filings are made just once per year. To ensure that PBGC
receives a substantial portion of its premium revenue early in the year for which insurance
coverage is provided, large plans (those with 500 or more participants, about 20 percent of all
filers) are required to pay their flat-rate premiums much earlier in the year than small plans
(those with fewer than 100 participants) and mid-size plans (those with 100 or more but fewer
than 500 participants) (see the 1983 recommendations of the Grace Commission (the President’s
Private Sector Survey on Cost Control)). While large plans are not required to file twice a year,
as a practical matter most of them make a flat-rate “reconciliation” filing, after more accurate
data become available, later in the year (by the same filing deadline that applies to mid-size
plans).
PBGC allows mid-size and large plans to make estimated VRP filings and then reconcile
the estimated premium at a later date without a late premium payment penalty. PBGC makes
this accommodation because unusual circumstances could make an accurate VRP filing by the
due date inconvenient. In some cases, therefore, large plans may end up making three filings a
year, rather than two (e.g., a large plan could make an estimated flat-rate filing, a final flat-rate
and estimated VRP filing, and a VRP reconciliation filing); and mid-size plans may make two
filings, rather than one.
7. Special circumstances. PBGC requires plan administrators to retain information
necessary to support premium filings for six years. This is necessary to ensure that records are
available during the period within which PBGC may bring an action to collect premiums (ERISA

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section 4003(e)(6)). The six-year period also corresponds to the record retention requirement of
Title I of ERISA (ERISA section 107).
In unusual circumstances, PBGC may require submission of information in less than
30 days (see 29 CFR § 4007.10). This would accommodate a situation where PBGC determines
that its interests may be prejudiced by a delay in the receipt of the information, e.g., where
collection of unpaid premiums (or any associated interest or penalties) would otherwise be
jeopardized.
In other respects, this collection of information is not conducted in a manner inconsistent
with 5 CFR § 1320.5(d)(2).
8. Outside input. On January 31, 2012, PBGC published a notice (77 FR 4839) of intent
to request an extension of this collection of information with revisions, inviting public comment
by April 2, 2012. At that time, PBGC proposed to add a data item to this information collection
requiring reporting of the effective interest rate defined in ERISA section 303(h)(2)(A). PBGC
received two questions from one commenter concerning (1) whom a plan administrator could list
as an optional contact for PBGC to contact, and (2) how the “effective interest rate” is calculated.
Concerning question (1), PBGC intends to clarify in the “What’s New” section of its premium
instructions that we want to be able to contact an appropriate party regarding issues related to a
premium filing. Concerning question (2), PBGC no longer proposes to add the effective interest
rate data item because of complications resulting from MAP-21.
On May 8, 2012 (before the adoption of MAP-21), PBGC published a notice (at 77 FR
27099) that it was submitting the collection of information to OMB for review. No comments
were received in response to that notice. PBGC has withdrawn that submission and is making a
new submission to provide an opportunity for comments on the MAP-21 changes.

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9. Payment to respondents. PBGC provides no payments or gifts to respondents in
connection with this collection of information.
10. Confidentiality. Confidentiality of information is that afforded by the Freedom of
Information Act and the Privacy Act. PBGC’s rules that provide and restrict access to its records
are set forth in 29 CFR Part 4901.
11. Sensitive questions. This collection of information does not call for submission of
information of a personal nature.
12. Hour burden on the public. PBGC expects to receive an average of about 29,900
premium filings each year from about 24,600 respondents. Most respondents need only file
annually. However, plan administrators of plans with 500 or more participants (of which there
are about 5,300) also typically make an estimated flat-rate filing. (Note that PBGC projects that
a few plan administrators of mid-size and large plans will make both a comprehensive filing and
an amended comprehensive filing to reconcile an estimated variable-rate premium filing, which
is included in the 29,900 premium filings, above.)
Of these 29,900 premium filings, about 5 percent will be prepared in-house. (Preparation
of the other 95 percent will be contracted out.) PBGC estimates that the hour burden of this
collection of information associated with the 5 percent of premium filings that are prepared inhouse is about 8,200 hours. The annualized cost to respondents for these burden hours is about
$2,863,000 (based on an average hourly rate of $350). These estimates were determined as
follows (“VRP” means “variable-rate premium”):

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Number of
Responses
Estimated flat-rate filing
Comprehensive filing (single-employer plans)
Plans exempt from VRP
Plans paying maximum (capped) VRP
Plans reporting unfunded vested benefits
Estimated VRP filing and VRP reconciliation filing
(Mid-size and Large Plans only)
Standard premium funding target
Alternative premium funding target
Final VRP filing (no VRP reconciliation needed)
Standard premium funding target
Alternative premium funding target
Multiemployer Plans
Totals

Average
Time

Total
Hours

Total
Cost

267

1.75

467

$163,538

122
110

3.6
5.5

439
605

153,720
211,750

0
0

10.5
7.5

0
0

0
0

445
483

8.5
5.5

71

3.25

1,498

3,783
2,657

1,323,875
929,775

231

80,763

8,181

$2,863,420

The recordkeeping requirement in 29 CFR § 4007.10 is not expected to impose
any significant burden on plan administrators, since most of the records covered by this
requirement must already be retained under ERISA section 107. Since this
recordkeeping burden is nominal, it is included in the estimated reporting burden, and no
separate estimate of burden is made for recordkeeping under the regulation.
13. Cost burden on the public. PBGC estimates the cost burden on the public for
operation, maintenance, and purchase of services associated with the 95 percent of premium
filings that are contracted out to be $54,387,000. The costs are based on an hourly rate of $350
and are determined as follows:

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Number of
Responses
Estimated flat-rate filing

5,064

Comprehensive filing (single-employer plans)
Plans exempt from VRP
2,324
Plans paying maximum (capped) VRP
2,081
Plans reporting unfunded vested benefits
Estimated VRP filing and VRP reconciliation filing
(Mid-size and Large Plans only)
Standard premium funding target
0
Alternative premium funding target
0
Final VRP filing (no VRP reconciliation needed)
Standard premium funding target
8,455
Alternative premium funding target
9,179
Multiemployer Plans
Totals

1,343
28,446

Average
Time

Total
Hours

Total
Cost

1.75

8,862

$ 3,101,700

3.6
5.5

8,366
11,446

2,928,240
4,005,925

10.5
7.5

0
0

8.5
5.5

71,868
50,485

25,135,625
17,669,575

3.25

4,365

1,527,663

155,391

$54,386,728

0
0

14. Costs to the Federal government. Based on its operational costs, personnel salaries,
and overhead, PBGC estimates that the annual cost to the Federal Government of processing this
collection of information is about $12.5 million.
15. Change in burden. The change in the estimated annual cost burden of this collection
of information from about $59,960,000 (in the current OMB inventory) to about $54,387,000
(requested) is attributable to a decrease in the number of filings and PBGC’s better data resulting
from experience with post-2007 filings, where filers can calculate unfunded vested benefits one
of two ways.
The change in the estimated annual hour burden from about 9,000 hours (in the current
OMB inventory) — associated with the 5 percent of premium filings that are prepared in-house

- 12 — to about 8,200 hours (requested) is attributable to a decrease in the number of filings and
PBGC’s better data resulting from experience with post-2007 filings.
The additional data items do not impose any increase in burden or cost because filers
have the information readily available, and PBGC’s estimates are high enough to include the
additional items. (The MAP-21 VRP cap item — added since notice was first given of PBGC’s
request for approval of this revised information collection — will be calculated for filers by
PBGC’s electronic filing system.)
16. Publication plans. PBGC does not plan to publish the results of this collection of
information.
17. Display of expiration date. OMB has previously granted approval to omit the
expiration date from the premium forms and instructions.
18. Exceptions to certification statement. There are no exceptions to the certification
statement for this submission.

I:\regulatory\RM\Paperwork\1212-0009 Part 4007\2013 forms & instrucxs\2013 SupStmt_Prem Filings_to OMB.091012.doc