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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Rules and Regulations determining the highest contribution rate under section 305g3 of ERISA, or 2 The highest contribution rate for any plan year after the plan year that includes the expiration date of the first collective bargaining agreement of the withdrawing employer requiring plan contributions that expires after the plan is no longer in endangered or critical status, or, if earlier, the date as of which the withdrawing employer renegotiated a contribution rate effective after a plan is no longer in endangered or critical status.
An example illustrating this simplified method is provided in 4219.3 of PBGCs notice, collection, and redetermination of withdrawal liability regulation. PBGC received two comments about the simplified method provided in 4219.3. One commenter asked for clarification about the contribution rate that should be included in determining the highest contribution rate if an employer withdraws after its collective bargaining agreement expires, but before a new collective bargaining agreement is adopted. Another commenter stated that under the simplified method, if the plan year ends soon after the expiration date of the collective bargaining agreement, a higher contribution rate could be imposed on an employer than the plans later negotiated contribution rate. PBGC
agrees that this could occur under the simplified method if the bargaining parties do not reach agreement by the plan year after the plan year that includes the expiration date of the first collective bargaining agreement of the withdrawing employer requiring plan
contributions that expires after the plan is no longer in endangered or critical status.
A commenter suggested that a grace period could be provided after the expiration date of the collective bargaining agreement, such as 180 days, during which the higher rate would not apply if it had not been agreed to in collective bargaining. While in many cases collective bargaining agreements are not renegotiated until after the expiration date of the collective bargaining agreement, PBGC believes that the collective bargaining parties will generally have time to resolve the scenario described by the commenter before a plan emerges from endangered or critical status. In addition, PBGCs simplified method already extends the disregard period beyond the highest contribution rate for plan years during which the plan was in endangered or critical status to include the period through the end of the plan year after the plan year that includes the expiration date of the first collective bargaining agreement that expires after the plan is no longer in endangered or critical status. Therefore, PBGC did not adopt the commenters suggestion to change the simplified method in the final rule.
V. Compliance With Rulemaking Guidelines Executive Orders 12866, 13563, and 13771
The Office of Management and Budget OMB has determined that this rulemaking is not a significant
regulatory action under Executive Order 12866 and Executive Order 13771. The rule provides simplified methods, as required by section 305g5 of ERISA, to determine withdrawal liability and payment amounts, which multiemployer plan sponsors may choose, but are not required, to adopt. Accordingly, this final rule is exempt from Executive Order 13771 and OMB has not reviewed the rule under Executive Order 12866.
Executive Orders 12866 and 13563
direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits including potential economic, environmental, and public health and safety effects, distributive impacts, and equity. E.O. 13563 emphasizes retrospective review of regulations, harmonizing rules, and promoting flexibility.
Although this is not a significant regulatory action under Executive Order 12866, PBGC has examined the economic implications of this final rule and has concluded that the amendments providing simplified methods for plan sponsors to comply with the statutory requirements will reduce costs for multiemployer plans by approximately $1,476,000. Based on 2016 data, there are about 450 plans that are in endangered or critical status.10 PBGC
estimates that a portion of these plans using the simplified methods under the final rule will have administrative savings, as follows:
Estimated number of plans affected
Annual amounts
1269

Savings per plan
Total savings
Savings on actuarial calculations using simplified methods and assuming an average hourly rate of $400
Disregarding benefit suspensions Section III.B.2.
Exceptions to disregarding contribution increases Section IV.A.
Allocation fraction numerator Section IV.B.1.
Allocation fraction denominator using 2014 contribution rate Section IV.B.2.
Allocation fraction denominator using proxy group of employers Section IV.B.3.

5
40
200
160
40

$2,000
4,000
1,200
4,000
8,000

$10,000
160,000
240,000
640,000
320,000

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Other estimated savings Reduced plan valuation cost for plans that have a benefit suspension and use the static value method
Savings on potential withdrawal liability arbitration costs assuming an average hourly rate of $400

3

2,000

6,000

5

20,000

100,000

Total savings

1,476,000

PBGC invited public comment on the expected savings on actuarial
calculations and other costs using the simplified methods. A commenter noted
that expected savings on actuarial calculations and plan administration
10 https www.pbgc.gov/sites/default/files/2017_
pension_data_tables.pdf, Table M18.

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