PBGC Revises Annual Financial and Actuarial Information Reporting for Single-Employer Plans

On March 23, 2016, the Pension Benefit Guaranty Corporation (PBGC) issued its final rule revising the annual financial and actuarial information reporting under section 4010 of the Employee Retirement Income Security Act of 1974 (ERISA). In addition to making several technical changes, the final rule:

  • Modifies the reporting waiver under the current regulation tied to aggregate plan underfunding of $15 million or less,
  • Adds new reporting waivers for smaller plans and certain plans with statutory liens assessed for either missed contributions or outstanding minimum funding waivers exceeding $1 million, and
  • Provides alternative methods of compliance for reporting certain actuarial information.

These regulatory changes reflect recent statutory changes enacted under the Moving Ahead for Progress in the 21st Century Act ("MAP-21"), the Highway Transportation and Funding Act of 2014 ("HATFA"), and the Bipartisan Budget Act of 2015 ("BBA").

A copy of the final rule is at this link.

Action Needed Now: Sponsors of single-employer plans that are underfunded, have minimum funding waivers, or have missed contributions (thus, making them potentially subject to section 4010 reporting) need to determine whether they will be eligible for any of the new relief from section 4010 reporting for plan years beginning after December 31, 2015.


ERISA Section 4010 Reporting Requirements:

ERISA section 4010 requires the reporting of actuarial and financial information by controlled groups with single-employer pension plans that may have funding problems. ERISA section 4010 also requires PBGC to provide an annual summary report to Congress containing aggregate information filed with PBGC under that section.

Under section 4010, reporting is required if:

  • The funding target attainment percentage ("FTAP") at the end of the preceding plan year of a plan maintained by the contributing sponsor or any member of its controlled group is less than 80 percent (the "80-percent Gateway Test"),
  • The conditions for imposing a lien for missed contributions exceeding $1 million have been met with respect to any plan maintained by any member of the controlled group, or
  • The IRS has granted one or more minimum funding waivers totaling in excess of $1 million to any plan maintained by any member of the controlled group, and any portion of the waiver(s) is still outstanding.

Part 4010 of PBGC's regulations specifies the identifying, financial, and actuarial information that filers must submit under ERISA section 4010. Because filings under part 4010 generally provide current information, PBGC believes they play a major role in PBGC's ability to protect participant and plan interests. However, § 4010.11(a) of the PBGC regulations provided a waiver from reporting if the aggregate underfunding (the "4010 funding shortfall") of pension plans in a controlled group does not exceed $15 million. After the passage of MAP-21, the $15 million was based upon the "stabilized rates" (which are discussed below).

Impact of Interest Rate Stabilization:

  • The FTAP for a plan is generally determined under the rules for determining the minimum required contribution and is therefore determined pursuant to the regulations issued by the IRS under Internal Revenue Code section 430. These rules include the use of segment interest rates based upon corporate bond rates. In recent years, corporate bond rates (especially short-term bond rates) have dropped significantly from the levels that they were at in 2008 (the year the Pension Protection Act of 2006 became effective for funding purposes). Because of the decreases, Congress provided some relief under a series of laws.
  • MAP-21, HATFA, and BBA limited the volatility of the segment interest rates by constraining them within a range, or "corridor," around the 25-year average segment rates. The rates inside the corridor are referred to as "stabilized rates." MAP-21 amended ERISA section 4010 to provide that the stabilized interest rates do not apply for purposes of determining the funding target or the FTAP required to be reported under ERISA section 4010(d). However, the stabilized interest rates do apply to all other section 4010 requirements involving minimum funding-related determinations.
  • The PBGC provided guidance on the determination of the FTAP for purposes of section 4010 with respect to the use of the stabilized interest rates in Technical Update 12-2 and 14-2. These updates also addressed related determinations that were impacted by the segment rates. Under the technical updates, the FTAP for purposes of the 80-percent Gateway test is determined without regard to the stabilized rates, but other calculations (including the $15 million underfunding waiver threshold) are determined with regard to the stabilized rates.


Interest Rate Stabilization Rules:

Under the final rule, the FTAP for purposes of the 80-percent Gateway Test continues to be based upon the segment rates without regard to the interest rate stabilization rules.

Changes to $15 Million Aggregate Underfunding Waiver:

The final rule continues, but modifies, the waiver for aggregate underfunding that does not exceed $15 million. The final rule permits plans of any size to continue to use this waiver, but requires that the liability used to determine the section 4010 funding shortfall be determined using non-stabilized rates. This is a change from the technical updates. Note, the final rule does not change how the asset portion of the section 4010 funding shortfall is calculated (i.e., the asset value used for this purpose is the asset value used for funding purposes, including averaging, if applicable, with no reduction for prefunding or carryover balances).

New Waivers:

  • The final rule adds a new waiver from reporting for plans in controlled groups that have fewer than 500 participants in the aggregate, regardless of plan underfunding.
  • The final rule waives section 4010 reporting required solely on the basis of either a statutory lien resulting from missed contributions over $1 million or outstanding minimum funding waivers exceeding $1 million, provided that the missed contributions that resulted in the lien or the minimum funding waivers were reported to PBGC as a reportable event by the section 4010 filing due date.

Other Changes:

The final rule provides alternative methods of compliance for reporting certain actuarial information:

  • In response to comments that the reporting requirements under § 4010.8 of the regulation were burdensome for plans not "at-risk" (as defined in Code section 430), the final rule provides that such plans will not be required to provide the "at-risk" funding target information determined without regard to the stabilization rules unless PBGC makes a written request for such information, in which case the plan has 30 days to provide the information.
  • To ensure that PBGC receives relevant and timely information about the at-risk funding target from plans in at-risk status (i.e., determined using stabilized rates), PBGC is adding information about the at-risk funding target to the list of information under regulation § 4010.8(a)(11) that is required in the valuation report attached to the 4010 filing.
  • In response to comments, PBGC has agreed that the requirement to calculate asset values without regard to the interest rate stabilization rules (in accordance with IRS Notice 2012-61) for purposes of determining the FTAP is unnecessary. Accordingly, the final rule provides that, for purposes of determining the FTAP, plans may substitute the value of plan assets calculated for minimum funding purposes for the asset value determined without regard to interest rate stabilization rules.

Assumption Change:

The final rule requires the use of the form-of-payment assumption specified in § 4044.51 of the PBGC regulations for purposes of section 4010 reporting.


The regulatory changes in the final rule are applicable to "information years" beginning after December 31, 2015, for which filings are due April 17, 2017 if the information year is the calendar year. (Note section 4010 filings generally are due 105 days after the last day of the information year to which they relate, typically April 15, or the next business day thereafter.)


For single-employer plans that might be subject to section 4010 reporting, the final regulations provide some relief, particularly for sponsors of plans with less than 500 total controlled group participants. Sponsors of larger plans, however, will have to be concerned that the extent of underfunding will now be determined without regard to the stabilized interest rates.

Cheiron pension consultants can assist you in analyzing the impact of these final regulations on your defined benefit plans.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.