The Pension Benefit Guaranty Corp. is acting to ease the worries of pension plan participants who are serving in the uniformed services when a plan terminates.
The PBGC has adopted a final rule that may protect the pension benefits of a defined benefit pension plan participant who is away serving in the military or in some roles in the National Disaster Medical System when the plan terminates.
To be eligible for protection, plan participants must return to their civilian employers within the 5-year time period set by the Uniformed Services Employment and Reemployment Rights Act of 1994.
USERRA guarantees servicemembers and their dependents a right to continue employer-sponsored group health coverage through a mechanism that resembles the Consolidated Omnibus Budget Reconciliation Act group health benefits continuation system.
USERRA also requires employers to take back returning servicemembers, unless the servicemembers’ jobs have been eliminated for legally acceptable reasons, and, for purposes of pension programs and other benefits programs, it requires the employers to treat returning servicemembers as if the servicemembers had never been away.
USERRA applies to members of the Guard and Reserve who go on active duty, and it also applies to employees who sign up to serve in the “active components of the Armed Forces,” PBGC officials write in a preamble to the final rule.
PBGC, the entity that insurers defined benefit pension plans, issued the final rule to amend the PBGC regulation on Benefits Payable in Terminated Single-Employer Plans.
“Under PBGC’s existing regulations, a benefit is guaranteed only if the participant satisfies the conditions for entitlement to the benefit on or before the plan’s termination date,” officials write in the preamble.
“PBGC is providing an exception to this rule in the unique circumstances of persons serving in the uniformed services as of the plan’s termination date, consistent with USERRA’s statutory mandate to treat such persons, upon reemployment, as if they had never left the employ of their former employer,” officials write.
“This final rule provides that so long as a service member is reemployed within the time limits set by USERRA, even if the reemployment occurs after the plan’s termination date, PBGC will treat the participant as having satisfied the reemployment condition as of the termination date,” officials write.