PBGC Issues Final Regulations on Mergers
In September 2018, the Pension Benefit Guaranty Corporation (PBGC) published final regulations regarding multiemployer plan mergers and transfers. Under ERISA and the Multiemployer Pension Reform Act, the PBGC can facilitate mergers of pension plans by providing financial assistance if one of the plans is expected to become insolvent in 15 to 20 years.
The final regulations make numerous minor changes to the existing rules regarding mergers and transfers, and one major change to the rules regarding facilitated mergers. Under the change, the PBGC can only provide financial assistance if that assistance does not impair its ability to meet its existing financial obligations to other plans.
Merging with another plan may help strengthen an at-risk plan by lowering administration costs and investment expenses, and provide more stability due to a larger and more varied base of contributing employers.