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Regulation and Compliance > Federal Regulation

Feds Complete Multiemployer Notice Rules

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The U.S. Department of Labor has published final funding notice regulations for union pension plans and other multiemployer pension plans.

The regulations implement a provision of the Pension Funding Equity Act of 2004 that requires plan administrators to send annual funding status notices to plan members, labor organizations, contributing employers and the Pension Benefit Guaranty Corp.

The notice must tell recipients whether the plan is fully funded and compare the plan’s assets to the plan’s benefit payments, Labor Department officials say.

The regulations include a model notice and suggestions about how to use the model notice.

The final rule, published today in the Federal Register, is based on a draft released in February 2005.

Labor Department officials say they received only 7 comment letters on the draft from members of the public.

Officials resisted several suggestions that they believe might have reduced the clarity of the notices.

One commenter, for example, objected to a section in the draft regulations that would have required the annual funding notice to give the market value of the plan’s assets, rather than the actuarial value.

Another commenter argued that administrators should be permitted to include any clear, accurate information with the notice, not just information that is “necessary or helpful” to explaining the mandatory information, according to the Labor Department officials who wrote the preamble to the final rule.

In the department’s view, “a market value approach is more appropriate for this particular statement,” officials write in the preamble. “A market value approach is more likely to increase the transparency of a plan’s financial condition for all parties interested in the financial viability of the plan. Actuarially derived figures, on the other hand, may be contrary to increased transparency.”

The Labor Department officials also rejected the request that they relax restrictions on the information that could be included with the funding notice.

The commenter who asked for relaxed restrictions worried that the proposed restrictions “might hamper an administrator’s ability to add desirable explanatory or contextual information to notices, such as why the plan has a funding shortfall,” officials write.

The final rule does give plan administrators “substantial discretion” to add additional information to a plan’s notice, but any additions should be relevant to the information Congress requires in the notices, officials write.

Another commenter was afraid that letting administrators include extra “necessary or helpful” information in funding notices might let administrators obscure the key funding information.

“The department shares the concern raised by this commenter,” Labor Department officials write.

Because of that concern, officials have amended the final rule to require plan administrators to put any extra information at the end of the notice, under the heading ”Additional Explanation.”

A copy of the new final rule is on the Web at Document Link


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