Supporting Statement 05-2017 rev 2

SUPPORTING STATEMENT FOR REQUEST FOR OMB APPROVAL
UNDER THE PAPERWORK REDUCTION ACT AND 5 CFR PART 1320

AGENCY:

Pension Benefit Guaranty Corporation

TITLE:

Liability for Termination of Single-Employer Plans (29 CFR part 4062)

STATUS:

Request for regular review and extension of currently approved collection (OMB
control No. 1212-0017; expires May 31, 2017)

CONTACT: Deborah Chase Murphy (202 326-4400, extension 3451) or Jo Amato Burns (202
326-4400, extension 3072)
A.

Justification.
1. Need for collection. Section 4062 of the Employee Retirement Income Security Act

of 1974 (“ERISA”) provides that the contributing sponsor of a single-employer pension plan and
members of the sponsors controlled group (the “employer”) incur liability (“employer liability”)
to the Pension Benefit Guaranty Corporation (“PBGC”) if the plan terminates with assets
insufficient to pay benefit liabilities under the plan. The determination of the amount of
employer liability that is subject to PBGC’s statutory lien and the payment terms for employer
liability are dependent on the employer’s net worth. Specifically, for each of these matters it is
necessary to determine whether and to what extent employer liability exceeds 30 percent of the
employer’s net worth.
Section 4062.6 of PBGC’s employer liability regulation (29 CFR § 4062.6) requires a
contributing sponsor or member of the contributing sponsors controlled group that believes
employer liability upon plan termination exceeds 30 percent of the employer’s net worth to so
notify PBGC and submit net worth information to PBGC. Net worth information with respect to
a person consists of: (1) an estimate of the persons net worth on the net worth record date and a
statement of the basis of the estimate; (2) the persons financial statements for the five full fiscal

years plus any partial fiscal year preceding the net worth record date; (3) a statement of all sales
and copies of all offers or agreements to buy or sell specified percentages of the persons assets,
stock, or partnership interest, made on or about the net worth record date; (4) a statement of the
persons current financial condition and business history; (5) a statement of the persons business
plans; (6) any appraisal of the persons fixed and intangible assets made on or about the net worth
record date; and (7) a copy of any plan of reorganization involving the person and occurring
within five calendar years prior to or any time after the net worth record date. This information
is necessary to enable PBGC to determine whether and to what extent employer liability exceeds
30 percent of the employer’s net worth.
2. Use of information. The information that is collected under 29 CFR § 4062.6 is used
by PBGC to determine the net worth of the employer that maintained an insufficient plan. The
information is needed to ensure that PBGC’s rights with respect to its lien and the employer’s
statutory rights with respect to payment terms are fully protected.
3. Reducing the burden. PBGC will accept this information in an electronic format, but
not all of the information is typically maintained in an easily retrievable electronic form.
Moreover, the universe of respondents is very small (only 30 employers). However, PBGC will
continue to explore whether broader use of electronic alternatives is practicable. PBGC has
attempted to minimize the burden of this collection of information by requiring the minimum
information needed to determine net worth.
4. Duplicate or similar information. Some of the required information (e.g., a copy of a
plan of reorganization) may already be in the possession of other Federal agencies. However,

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there is no timely and reliable way to locate the required documents, particularly since the
reporting person may have changed its name or tax identifying number, or have submitted to
Federal agencies some, but not all, of the documents required under this regulation. In most
cases, it would take a respondent more time to assist PBGC in tracking down and verifying
documents in other agencies files than simply to submit the information to PBGC.
Some of the required information may previously have been submitted to PBGC. If so, a
person may respond to this collection of information by identifying the previous submission in
which that information was provided (§ 4062.6(a)(4)).
PBGC believes that there is no information similar to that required under the regulation
that could be used instead of the required information for the purposes served by the regulation.
5. Reducing the burden on small entities. Inapplicable.
6. Consequence of reduced collection. Typically this collection of information occurs
only once in the life of a pension plan — at its termination. Therefore, the collection cannot be
conducted less frequently unless it were not conducted at all. If this information were not
collected, PBGC would not be able to determine whether employer liability upon plan
termination exceeded 30 percent of the employer’s net worth and therefore would not be able to
ensure that PBGC’s rights with respect to its lien and the employer’s statutory rights with respect
to payment terms were fully protected.
7. Consistency with guidelines. Under § 4062.6(a), the deadline for submitting net worth
information is the 120th day after the proposed termination date or, if no notice of intent to
terminate is filed and PBGC institutes proceedings under § 4042 of ERISA, within 120 days after

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the establishment of the termination date. However, PBGC may require a respondent to submit
net worth information in a shorter period, but only when “PBGC believes that its ability to obtain
information or payment of liability is in jeopardy.” PBGC may require a respondent to submit
additional information within 30 days, or a different specified time, after a written request.
Thus, in some circumstances, a respondent may be required to prepare a written response
to a collection of information in fewer than 30 days. This is necessary to protect PBGC’s ability
to obtain information or payment of liability.
In all other respects, this collection of information is not conducted in a manner
inconsistent with 5 CFR § 1320.5(d)(2).
8. Outside input. A Federal Register notice, soliciting public comment on this collection
of information pursuant to 5 CFR § 1320.8(d), was published on March 30, 2017, at 82 FR
15724. No public comments were received in response to the notice.
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 sensitive or private nature.
12. Burden on the public. An employer generally would respond to this collection of
information at about the time the plan is trusteed by PBGC. For each of the next three years,

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PBGC expects that, on average, it will become trustee of 120 plans. Based on its recent
experience concerning the number of plans maintained and terminated by each employer, PBGC
estimates that 100 employers per year potentially could respond to this collection of information.
(Although an employer may terminate several plans, normally it is required to submit net worth
information only once.) However, many of these employers will not respond to this collection of
information because, e.g., the plan is abandoned, the employer is involved in a no-assets
bankruptcy, or PBGC already has concluded that the employer has no net worth. Based on these
factors, PBGC estimates that thirty employers per year will respond to this collection of
information.
PBGC estimates that the average amount of time required to respond to this collection of
information will be 24 hours. It has been PBGC’s experience that there is great diversity in the
character of the employers involved and the effort required to compile and submit the
information. Net worth information often has been compiled by the employer for other business
purposes and, in the case of a distress termination, some of the net worth information required by
this collection of information already will have been submitted to PBGC to comply with the
distress termination regulations (Part 4041). (As noted in item 4 above, any information
previously submitted to PBGC may be referred to as part of a response to this collection of
information.) Therefore, in many cases, only copying and transmission of existing data is
needed. If net worth information has not been compiled, the information generally is in the
possession of and readily available to the employer.

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PBGC assumes that half of the work (12 hours) will be performed by respondents and
half (12 hours) will be contracted to third parties. Thus, the estimated average annual hour
burden per respondent will be twelve hours. The total estimated average annual hour burden for
all respondents will be 360 hours (12 hours x 30 respondents).
PBGC assumes an average rate of $77 per hour for in-house costs (primarily mid-level
administrative staff). This estimate is based on the following assumptions:
•

Wages account for approximately 70% of total labor costs, with the remaining 30%
attributable to benefits costs. 1
0F

•

Four of the 12 in-house hours will be performed by a financial manager (occupational
code 11-3031, mean hourly wage rate $67.17 per hour, approximately $96 per hour
including benefits). 2
1F

•

Eight of the 12 in-house hours will be performed by a financial analyst (occupational
code 13-2051, mean hourly wage rate $46.94 per hour, approximately $67 per hour
including benefits). 3
2F

Thus, PBGC estimates an average rate of $77 per hour based on ((4x$96) + (8x$67))/12. The
total dollar equivalent of the respondents in-house hourly burden will be $27,720 (360 hours x
$77 per hour). The dollar equivalent of the annual hourly burden per respondent will be $924
($27,720 divided by 30 respondents).
13. Costs. As stated in Item 12, PBGC assumes that half of the estimated annual work of
720 hours will be contracted to third parties. Assuming an average rate of approximately $370

1

http://www.bls.gov/news.release/ecec.nr0.htm (see first paragraph).
2 https://www.bls.gov/oes/current/oes113031.htm
3 https://www.bls.gov/oes/current/oes132051.htm

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per hour for contracted services (including professional time, support assistance, overhead, and
other costs), PBGC estimates that the annual cost per respondent for contracted services will be
$4,440 (12 hours x $370 per hour). The total estimated average cost for contracted services will
be $133,200 (30 respondents x $4,440 per respondent).
14. Costs to the Federal government. PBGC estimates there will be eight hours of staff
time per response, based on the following assumptions:
•

Six hours will be performed by a GS 13/step 5 financial analyst, at an hourly rate of
$75 (rate includes salary, benefits and overhead).

•

Two hours will be performed by a GS-15/step 5 manager, at an hourly rate of $102
(rate includes salary, benefits and overhead).

Assuming a blended rate of approximately $82 per hour, ((6x$75) + (2x$102))/8, PBGC
estimates that the total estimated annual cost to the government is $19,680 (30 responses x 8
hours per response x $82 per hour).
15. Adjustments. The change in the estimate of the annual dollar burden of this
collection of information (from $126,000 in the current OMB inventory to $133,200 requested)
reflects revisions in PBGC’s estimates of the costs of contracted services (from $350 an hour to
$370 per hour).
These changes are unrelated to program changes.
16. Publication plans. PBGC does not intend to publish the results of this collection of
information.

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17. Display of expiration date. PBGC is not seeking approval to not display the
expiration date for OMB approval of this information collection.
18. Exceptions to certification statement. There are no exceptions to the certification
statement.
B. Collections of Information Employing Statistical Methods. This collection of
information is not intended for statistical analysis or publication.

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