2016 Form T sptgstmt.dcm.d1

Supporting Statement for Paperwork Reduction Act Submission

AGENCY:

Pension Benefit Guaranty Corporation

TITLE:

Termination Premium

STATUS:

Currently approved collection (unmodified)

1. Need for collection. The Pension Benefit Guaranty Corporation (PBGC) administers
the pension plan termination insurance program under title IV of the Employee Retirement
Income Security Act of 1974 (ERISA). Section 4006(a)(7) of ERISA provides for a
“termination premium” (in addition to the flat-rate and variable-rate premiums under section
4006(a)(3)(A) and (E) of ERISA) that is payable for three years following certain distress and
involuntary plan terminations. PBGC’s regulations on Premium Rates (29 CFR part 4006) and
Payment of Premiums (29 CFR part 4007) implement the termination premium. Sections 4007.3
and 4007.13(b) of the premium payment regulation require the filing of termination premium
information and payments with PBGC. PBGC has promulgated Form T and instructions for
paying the termination premium.
In general, the termination premium applies where a single-employer plan terminates in a
distress termination under ERISA section 4041(c) (unless contributing sponsors and controlled
group members meet the bankruptcy liquidation requirements of ERISA section
4041(c)(2)(B)(i)) or in an involuntary termination under ERISA section 4042, and the
termination date under section 4048 of ERISA is after 2005. The termination premium does not
apply in certain cases where termination occurs during a bankruptcy proceeding filed before
October 18, 2005.

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The termination premium is payable for three years. The same amount is payable each
year. The amount of each payment is based on the number of participants in the plan as of the
day before the termination date. In general, the amount of each payment is equal to $1,250 times
the number of participants. However, the rate is increased from $1,250 to $2,500 in certain cases
involving commercial airline or airline catering service plans. The termination premium is due
on the 30th day of each of three consecutive 12-month periods. The first 12-month period
generally begins shortly after the termination date or after the conclusion of bankruptcy
proceedings in certain cases.
The termination premium and related information must be filed by a person liable for the
termination premium. The persons liable for the termination premium are contributing sponsors
and members of their controlled groups, determined on the day before the plan termination date.
Interest on late termination premiums is charged at the rate imposed under section 6601(a) of the
Internal Revenue Code, compounded daily, from the due date to the payment date. Penalties
based on facts and circumstances may be assessed both for failure to timely pay the termination
premium and for failure to timely file required related information and may be waived in
appropriate circumstances. A penalty for late payment will not exceed the amount of termination
premium paid late. Section 4007.10 of the premium payment regulation requires the retention of
records supporting or validating the computation of premiums paid and requires that the records
be made available to PBGC.
2. Use of information. The information in Form T identifies the plan for which a
termination premium is paid to PBGC and the persons liable for the premium and provides a

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basis for verifying the amount of the premium. That information and the retained records may
be used for audit purposes.
3. Information technology. PBGC has not developed information technology
applications to deal with termination premiums. The volume of filings is not high enough to
justify development of an electronic filing method. Termination premium filings are exempt
from mandatory premium e-filing under the premium payment regulation. Form T is designed to
be filled out on a computer screen, but it must be printed out for signature and submission.
4. Duplicate or similar information. The information required in termination premium
filings is not available from any other source. Although a plan’s participant count and the
identity of members of its sponsor group may be reported as of other dates for other purposes,
this information is subject to change over time, and only Form T requests the information as of
the day before the plan’s termination date.
5. Reducing the burden on small entities. No special methods are used to reduce burden
on small entities. The termination premium does not affect a substantial number of entities of
any size.
6. Consequence of reduced collection. By statute, termination premiums are payable
once a year for three years. Form T filings are required on the same schedule. Collecting the
information on a different schedule would impair the proper administration of the pension plan
termination insurance program.
7. Special circumstances. The premium payment regulation requires “designated
recordkeepers” to retain information necessary to support termination premium filings for six
years. This is necessary to ensure that records are available during the period within which

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PBGC may bring an action to collect premiums under ERISA section 4003(e)(6). The six-year
period also corresponds to the record retention requirement under title I (section 107) of ERISA.
In unusual circumstances, ' 4007.10 of the premium payment regulation may require
submission of information in less than 30 days. This provision would accommodate a situation
where PBGC determined that the payment of the termination premium (or any associated interest
or penalty) would otherwise be jeopardized, e.g., because a statutory limitations period was
about to expire.
In other respects, this collection of information is conducted in a manner consistent with
5 CFR ' 1320.5(d)(2).
8. Outside input. On November 22, 2016 (at 81 FR 83882), PBGC published a notice
soliciting public comment on this collection of information pursuant to 5 CFR § 1320.8(d). 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. Personal questions. The collection of information does not call for submission of
information of a sensitive or private nature.
12. Hour burden on the public. Form T filings have declined significantly, and PBGC
now estimates, based on recent experience, that over the next three years it will receive one first-

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year, one second-year, and one third-year termination premium filing annually from a total of
three respondents.
Three years ago, PBGC contacted a filer with no controlled group information to report
and a pension professional who had prepared several Form T filings where there was controlled
group information to report. Both people had prepared second- and third-year filings as well as
first-year filings. Both people said that all the records they consulted to fill out Form T were
maintained for other purposes. Both estimated the hour burden for each of the three filings as
about 10 minutes. The pension professional estimated that the amount billed for preparing
Form T was $240 for a first-year filing and $80 for a second- or third-year filing.
PBGC tried unsuccessfully to obtain more recent burden data from current filers and is
therefore using the data from three years ago. From the information provided by the pension
professional, PBGC concludes that the estimated cost of preparing controlled group data (which
is done for the first filing) is about $160 and that the estimated cost of filling out Form T is about
$80.
For each of the three filings that PBGC estimates it will receive each year, therefore, the
estimated hour burden is 10 minutes if the form is prepared in-house, with a dollar equivalent of
$80. PBGC assumes that Form T filings are prepared in-house if there is no controlled group
and — based on recent filing experience — that not more than half of all filers have controlled
groups. Thus the estimated annual average hour burden is 15 minutes (one-half of three filings
at 10 minutes per filing).
13. Cost burden on the public. If all filers had controlled groups and preparation of all
filings were contracted out, the estimated annual dollar burden would be about $400 ($240 for

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the first-year filing plus $80 each for the second- and third-year filings). On the assumption that
only half of all filers have controlled groups, PBGC estimates that the annual dollar burden will
be about $200.
14. Costs to the Federal government. PBGC estimates that the annual cost to the Federal
Government of processing this collection of information is about $270 (about $90 per filing).
15. Change in burden. Estimated hour and cost burden on the public have gone down
from ten hours to 15 minutes and down from $8,800 to $200. The difference reflects primarily a
significant drop in Form T filings. Part of the difference represents changes in the assumptions
and methods used in calculating the burden, notably the assumption that half (rather than all) of
Form T filers have controlled groups.
16. Publication plans. PBGC does not plan to publish the results of this collection of
information.
17. Display of expiration date. PBGC is not requesting approval to omit from Form T
the date OMB=s paperwork approval expires.
18. Exceptions to certification statement. There are no exceptions to the certification
statement for this submission.