Sptg.stmt_VRP final rule to OMB_12.20.07

Sptg.Stmt. VRP final rule (to OMB)

Supporting Statement for Paperwork Reduction Act Submission

AGENCY:

Pension Benefit Guaranty Corporation

TITLE:

Payment of Premiums (29 CFR Part 4007) and PBGC premium data requirements
and premium filing instructions (including PBGC paper Comprehensive Premium
Filing form (Form 1-C) and Estimated Premium Payment form (Form 1-ES)), and
corresponding electronic premium filing screens.

STATUS:

Request for approval of revision of currently approved collection (OMB control
number 1212-0009; expires April 30, 2008)

CONTACT: James J. Bloch (202-326-4223, ext. 3530)

1. Need for collection. Section 4007 of Title IV of the Employee Retirement Income
Security Act of 1974 (“ERISA”) requires the Pension Benefit Guaranty Corporation (“PBGC”)
to collect premiums from pension plans covered under Title IV pension insurance programs.
Pursuant to section 4007, PBGC has issued its regulation on Payment of Premiums (29 CFR
Part 4007). Under § 4007.3 of the premium payment regulation, plan administrators are required
to file premium payments and information prescribed by PBGC. The plan administrator of each
pension plan covered by Title IV of ERISA is required to submit one or more premium filings
for each premium payment year. Under § 4007.10 of the premium payment regulation, plan
administrators are required to retain records about premiums and information submitted in
premium filings.
PBGC needs information from premium filings to identify the plans for which premiums
are paid; to verify whether the amounts paid are correct; and to help the PBGC determine the
magnitude of its exposure in the event of plan termination. That information and the retained
records are needed for audit purposes. PBGC also needs the information to help track the

-2movement of participants and plan assets when there are transfers to and from other plans, as
well as give PBGC the ability to know to what extent new plans are being created; and to keep
PBGC’s insured-plan inventory up-to-date.
All plans covered by Title IV of ERISA pay a flat-rate per-participant premium. For the
2008 premium payment year, the flat-rate per-participant premium is $33 for single-employer
plans and $9 for multiemployer plans. Because flat-rate premiums are adjusted for inflation
pursuant to the Deficit Reduction Act of 2005 (DRA 2005), these premium amounts may change
for the 2009 and subsequent premium payment years.
An underfunded single-employer plan also pays a variable-rate premium based on the
value of the plan’s unfunded vested benefits. On August 17, 2006, the President signed into law
the Pension Protection Act of 2006, Pub.L. 109-280 (PPA 2006), which makes changes to the
funding rules in Title I of ERISA and in the Internal Revenue Code of 1986 (Code) on which the
variable-rate premium is based. Section 401(a) of PPA 2006 amends the variable-rate premium
provisions of ERISA section 4006 to conform to those changes in the funding rules.
PBGC has published two proposed rules to amend PBGC’s regulations on Premium
Rates (29 CFR Part 4006) and Payment of Premiums (29 CFR Part 4007) to implement changes
made by DRA 2005 and PPA 2006 – the first on February 20, 2007 (72 FR 7755), and the
second on May 31, 2007 (72 FR 30308). PBGC published a final rule based on the first
proposed rule on December 17, 2007 (72 FR 71222). A final rule based on the second proposed
rule is now under Executive Order 12866 review. The statutory and regulatory changes to the
premium rules are reflected in the information collection that is the subject of this request for
OMB approval, which is made in connection with the final rule now under OMB review.

-3Calculation of Variable Rate Premium
For purposes of determining a plan’s variable-rate premium (VRP) for a premium
payment year beginning after 2007, the final rule would require unfunded vested benefits
(UVBs) to be measured as of the funding valuation date for the premium payment year. The
asset measure underlying the UVB calculation would be determined for premium purposes the
same way it is determined for funding purposes, except that any averaging method adopted for
funding purposes would be disregarded. The liability measure underlying the UVB calculation
would be determined for premium purposes the same way it is determined for funding purposes,
except that only vested benefits would be included and a special premium discount rate structure
would be used. The final rule uses the term “standard premium funding target” to describe this
method of measuring liabilities. Filers also would be able to make an election (irrevocable for
five years) to use funding discount rates for premium purposes instead of the special premium
discount rates. The final rule uses the term “alternative premium funding target” to describe this
method of measuring liabilities.
Filing Due Dates
PBGC expects that most plans that are required (or choose) to do funding valuations as of
the beginning of the plan year (and whose UVB valuation date is thus the first day of the
premium payment year) will be able to determine their UVBs by the VRP due date currently
provided for in PBGC’s premium payment regulation (generally, ten-and-a-half months after the
beginning of the plan year). But there are some circumstances that can make timely
determination of the VRP difficult or impossible, for example, use of a valuation date after the
beginning of the plan year (applicable to small plans only) or difficulty in collecting data (e.g.,

-4because of the occurrence of unusual events during the preceding year). To deal with such
circumstances, PBGC proposes to revise its due date and penalty structure to give smaller plans
more time to file and larger plans the ability to make estimated VRP filings and then correct
them without penalty.
PBGC’s current due date structure for flat- and variable-rate premiums is based on two
categories of plans: those that owed premiums for 500 or more participants for the plan year
preceding the premium payment year (“large” plans) and those that did not. The new structure is
based on three categories. The large-plan category remains the same. A new “mid-size”
category will consist of plans that owed premiums for 100 or more, but fewer than 500,
participants for the plan year preceding the premium payment year. A category of “small” plans
will include all other plans.
Small plans
For plans in the “small” category, PBGC proposes to make all premiums due on the last
day of the sixteenth month that begins on or after the first day of the premium payment year (for
calendar-year plans, April 30 of the year following the premium payment year). This will give
any small plan at least four months to determine UVBs following the latest possible small-plan
UVB valuation date (the last day of the premium payment year).
Mid-size plans
For mid-size plans, PBGC proposes to retain the current premium due date — the 15th
day of the tenth month that begins on or after the first day of the premium payment year (October
15th for calendar-year plans) — for both flat- and variable-rate premiums. With rare exceptions,
these plans will perform valuations as of the first day of the premium payment year, and in most

-5cases should be able to calculate UVBs by the current due date. However, in recognition of the
possibility that circumstances might make a final UVB determination by the due date difficult or
impossible, PBGC proposes to permit estimated VRP filings and to provide a penalty-free “trueup” period to correct an erroneous VRP estimate. To obtain penalty relief, an enrolled actuary
would be required to certify that an estimated VRP was reasonable and based on the most current
data available.
Large plans
The due date and penalty structure for “large” plans would be the same as for “mid-size”
plans, except that the early due date for the flat-rate premium under the existing regulation would
be retained, along with the related “safe harbor” penalty rules.
Filings and Recordkeeping
Section 4007.3 of the premium payment regulation requires plan administrators to file
premium payments and information prescribed by PBGC in accordance with the premium
instructions on PBGC’s Web site (www.pbgc.gov). The final rule would provide explicitly that
(in the absence of an exemption) a premium filing made on paper or in any other manner other
than the prescribed electronic filing method (applicable to all plans for plan years beginning after
2006) does not satisfy the requirement to file.
Section 4007.10 of the premium payment regulation requires plans to retain and make
available to PBGC upon request records that support or validate the computation of premiums
paid, including the number of plan participants and the calculation of UVBs.
PBGC prescribes the filing methods to be used to report the computation, determine the
amount, and record the payment of PBGC premiums. The submission of premium information

-6and retention and submission of supporting records are needed to enable PBGC to perform
premium audits. The plan administrator of each pension plan covered by Title IV of ERISA is
required to submit one or more premium filings for each premium payment year.
Although electronic filing is mandatory, graphical forms (which can be printed) continue
to have utility. The forms can (1) be used by filers that are granted exemptions from electronic
filing, (2) be provided as certification templates by private-sector software designers for use by
filers that upload electronic filings prepared with the software to certify their uploads, and (3)
serve as an organizational reference in PBGC’s premium filing instructions for the descriptions
of the items of information that must be submitted in a premium filing.
PBGC is eliminating the three forms previously used for final premium filings (Form
1-EZ, Form 1, and Schedule A), and introducing a new unified “Comprehensive Premium Filing
form” (Form 1-C) to fulfill the functions described above for all final premium filings (including
filings based on VRP estimates and amendments to reconcile estimated VRP filings). Form 1ES is being retained for estimated flat-rate premium filings by large plans.
PBGC provides for premium filing through an electronic facility, “My Plan
Administration Account” (“My PAA”), on its website at www.pbgc.gov. The electronic forms
are not in the same format as the paper premium forms, but they solicit the same premium
information (required data elements).
Changes from Proposed to Final Rule
The final rule now being reviewed by OMB differs only slightly in substance from the
proposed rule on which it is based. The most significant changes are as follows:

-7Election/Revocation Deadline to Use the Alternative Premium Funding Target
The proposed rule required that an election (or revocation of an election) to use the
alternative premium funding target be made by the end of the first plan year to which it would
apply or, if later, the VRP due date. The final rule would change the election/revocation
deadline to the VRP due date for the first plan year to which the election or revocation would
apply.
Applicability of Transition Rule to the Calculation of the Premium Funding Target
The proposed rule did not explicitly address the inapplicability of the transition rule in
ERISA section 303(h)(2)(G) to the calculation of the premium funding target. The final rule
would make the point explicitly that the transition rule in ERISA section 303(h)(2)(G) does not
apply to the calculation of the premium funding target.
Benefits Being Vested for Premium Purposes
The proposed rule specified two circumstances that would not prevent a participant’s
benefit from being vested for premium purposes. One circumstance is that the benefit would not
be protected under Code section 411(d)(6) and thus may be eliminated or reduced by the
adoption of a plan amendment or by the occurrence of a condition or event (such as a change in
marital status). The other circumstance — applicable to certain benefits payable upon a
participant’s death — would be that the participant is living. The final rule includes two
illustrative examples.
In response to a public comment, PBGC is expanding § 4006.4(d) to provide that a preretirement lump sum death benefit (other than one that returns mandatory employee
contributions) would not be considered vested for premium purposes where the participant is

-8living and that a disability benefit would not be considered vested for premium purposes where
the participant is not disabled.
New and Newly Covered Plans
The final rule would eliminate one of the alternative due date computation rules for new
and newly covered plans. The proposed rule included an alternative under which the due date
would be not earlier than 90 days after the plan’s coverage date. PBGC realized that this
alternative is not necessary given the way the options are structured for alternative due dates.
Changes to Information Collection – Proposed Rule
Estimated Flat-Rate Filings
PBGC is minimizing changes to estimated flat-rate premium filing requirements for
2008. These filings are due for calendar-year plans at the end of February 2008, leaving little
time for implementation of substantive changes in PBGC’s electronic filing application.
Changes described in this submission will be phased in for estimated flat-rate premium filings
for the 2009 plan year. (PBGC submitted the 2008 estimated filing form (Form 1-ES) and
instructions to OMB on November 30, 2007, as a non-material change to the currently approved
collection.)
Plan Funding Notice to Participants
Section 501(b) of PPA 2006 repealed ERISA section 4011, which required certain plan
administrators to provide notice to plan participants and beneficiaries of plan funding status and
the limits on PBGC’s guarantee if a plan terminated while underfunded. The repeal was
effective for plan years beginning after 2006. Through 2007, premium filers were required as

-9part of their filings to certify that they were in compliance with section 4011. This requirement
is being discontinued beginning with the 2008 filing year.
Address
Filers will be required to include in the addresses of the plan sponsor and plan
administrator the countries where the addresses are located (if other than the United States).
Filers will be required to provide an e-mail address for the plan contact.
Enrolled actuary certification
Enrolled actuaries will be required to provide their actuarial firm name in the certification
section.
Premium Proration
Filers will be required to report if they qualify for premium proration (for a short plan
year) and if so, to report the number of months in the proration period. Proration will be reported
separately from credits.
Plan size
Filers will be required to report plan size (small, mid-size, or large) based on the prior
year’s participant count, or report that the plan is new or newly covered.
Premium funding target election
Filers will have an opportunity to make alternative premium funding target elections as
part of the premium filing.
Participant count date
Filers will be required to report the participant count date.

- 10 VRP information
Most existing VRP information items will be eliminated in connection with the
implementation of the new VRP rules. Items retained will be the identification of any applicable
VRP exemption and the amount of UVBs.
New VRP data required will be qualification for the VRP cap for certain plans of small
employers, the UVB valuation date, the premium funding target as of the UVB valuation date,
the premium funding target method (standard or alternative), whether the reported premium
funding target is an estimate, the segment rates used to compute the premium funding target (or
indication that the full yield curve was used), the market value of assets as of the UVB valuation
date, the (unprorated) VRP cap (for plans eligible for the cap), and the (unprorated) uncapped
VRP (for plans not eligible for the cap).
Final filing data
For a plan’s final filing, filers will be required to report the date and type of event that
results in the cessation of the filing obligation. Hundreds of plans terminate or merge out of
existence after their premium filing in a given year, but the information currently collected by
PBGC about transfers from disappearing plans does not explain why many of the plans have
ceased filing. PBGC’s data bases consider these plans to be in existence until PBGC learns
otherwise. PBGC has not been able to track all these plans down, even when using information
from the Form 5500 (see Final filing data subsection in section 4, Duplicate or similar
information). Requesting premium filers to report whether the filing obligation is ceasing and, if
so, the reason why will enable PBGC to track final filings in a more efficient and timely manner
than it can currently.

- 11 Transfers from and to other plans
The existing item on transfers from disappearing plans will be replaced by two new
items: information about transfers from other plans (whether disappearing or not) and
information about transfers to other plans. (See also Plan transfer data subsection in section 4,
Duplicate or similar information.) Collecting information on all plan transfers will better enable
PBGC to track movements between plans and cross-check plan transfers, and also give PBGC
the ability to know to what extent new plans are being created. In addition, receiving this data
sooner than PBGC receives Form 5500 data would help PBGC with plan audits because PBGC’s
audit group flags plans with significant increases or decreases in assets, liabilities, and/or
participants. With timely in-house data to explain the discrepancies, PBGC will be able to
exclude from the audit pool plans whose changes in reported data are adequately explained by
the information reported about transfers.
Frozen plans
For frozen plans, filers will be required to identify the type of freeze (participation and/or
accrual) and its effective date. The data collected on Form 5500 (see Frozen plan data
subsection in section 4, Duplicate or similar information) are not sufficient for PBGC to
adequately monitor the agency’s potential exposure and to project future premium income. For
example, if there is a participation freeze, plan size eventually will decline. Declining plan size
will have an adverse impact on PBGC premium revenues, which are based largely on an annual
per-participant charge. Without knowing how many plans have been closed to new entrants (and
the sizes of such plans), PBGC cannot adequately project changes in its flat-rate premium
income or estimate what the impact will be on its net financial position.

- 12 PBGC is including two new items in its new comprehensive filing requirements
requesting information on plan freezes. The data provided by PBGC’s participation freeze and
accrual freeze questions will allow PBGC to better understand developments in the universe of
plans the agency insures and to better prepare to address problems that extensive freezing of
plans might cause.
Amended filings
For amended filings, filers will be required to report any change in the beginning and
ending dates of the plan year being reported and any change in the plan identifying numbers
being reported from those in the original filing.
If a comprehensive filing is amended for a reason other than reconciling an estimated
VRP, and the amended filing shows a lower premium than the amount originally reported, an
explanation of the specific circumstances or events that caused the reduction must be provided.
This requirement previously has been subject to a $500 threshold, i.e., no explanation has been
required if the premium dropped by less than $500. This threshold is being eliminated to better
monitor refund information.
Changes in the draft VRP-rule information collection since last OMB submission
The comprehensive filing form (Form 1-C) and instructions herewith submitted differ
from those submitted to OMB in connection with publication of the proposed rule as follows:
•

In item 3b(2), which relates to a change in a plan’s plan-year-commencement date since the
filer’s last filing, PBGC changed the wording to clarify that a change in a plan year should be
reported only if it was a result of a plan amendment.

- 13 •

In item 3c(3), PBGC added space for an explanation if the EIN and PN are not both the same
as on the 2007 Form 5500.

•

In item 6b(1) of the “Flat-rate premium” section, the single-employer and multiemployer
premium rates were changed from $31 to $33, and $8 to $9, respectively, to reflect the
increase in premium rates for 2008 premium filers.

•

In item 19 of the “Amended Filing” section, PBGC added space (item 19c) for an
explanation if this is an amended filing for a reason other than reconciling an estimated
variable-rate premium and the amended filing shows a lower premium than the amount that
was originally reported.

•

The plan administrator and enrolled actuary certifications in items 21 and 22, respectively,
were reworded for uniformity with certification language used on the electronic filing
screens.
Changes have been made to the instructions to conform to changes in the final rule and in

the comprehensive filing form. PBGC also has made minor editorial changes to the instructions.
2. Use of information. PBGC uses information from premium filings to identify the
plans for which premiums are paid; to verify whether the amounts paid are correct; and to help
the PBGC determine the magnitude of its exposure in the event of plan termination. That
information and the retained records are used for audit purposes. PBGC also uses the
information to help track the movement of participants and plan assets when there are transfers
to and from other plans; and to keep PBGC’s insured-plan inventory up-to-date.
3. Information technology. PBGC provides for premium filing through the “My PAA”
electronic facility on PBGC’s Web site. In addition, PBGC has two programs under which filers

- 14 can use private-sector premium-filing-preparation software compatible with My PAA: (1) a filer
can draft a premium filing and then import it into My PAA’s data entry and editing screens for
review, certification, and submission to PBGC; and (2) a filer can create a premium filing and
then upload it directly to PBGC via the My PAA application. Filers can pay premiums and
receive premium refunds by electronic funds transfer.
Although electronic filing is required under PBGC’s regulations, PBGC may grant
exemptions from the electronic filing requirement for good cause in appropriate circumstances.
PBGC therefore receives some paper premium forms. PBGC uses intelligent character
recognition (“ICR”) technology to process paper filings.
4. Duplicate or similar information.
General
In general, the information required in premium filings is not routinely filed with, and
available from, any other Federal Government agency, and there is no similar information that
can be used “as is” instead of the information reported in premium filings.
VRP Data
Plans may or may not base VRP calculations on asset and/or liability figures that are also
reported on Schedule SB to Form 5500, the annual report form filed with the Internal Revenue
Service, Department of Labor, and PBGC. Since the premium numbers may not be the same as
the Schedule SB numbers, PBGC needs to know what the premium numbers are, even if they
happen to coincide with the Schedule SB numbers.

- 15 Frozen plan data
In recent years, many defined benefit plan sponsors have implemented some sort of plan
freeze, which results in cessation or partial cessation of future benefit accruals. There are many
ways in which a plan can be frozen. For example, in some cases existing participants continue to
accrue benefits, but new employees are excluded from the plan (a “participation freeze”). In
other cases, all benefit accruals cease, or accruals based on salary increases continue but future
service is disregarded when determining benefits. In addition, there are many situations where a
plan freeze applies to some, but not all, participants. To be able to predict and address the
impact of plan freezes on PBGC’s future premium revenues and net financial position, PBGC
needs to know which of the plans that PBGC covers have been frozen and the exact nature of the
freeze.
PBGC currently collects plan freeze information on ERISA section 4010 filings, but 4010
filers are a small percentage of covered plans. PBGC needs the information sooner for the small
group of 4010 filers. PBGC considered exempting 4010 filers from reporting this information
again in the premium filing, but concluded that it would be a control problem if the agency’s
premium database was not internally consistent.
Form 5500 collects general information on whether a plan has been frozen, but it does not
collect specific information as to the nature of the freeze (Form 5500, Item 8.a. – Plan
Characteristic code – 1I: Frozen plan). Furthermore, the Form 5500 “plan freeze” question
pertains only to the most severe type of freeze (when all accruals cease for all participants). The
Form 5500 data are not sufficient for PBGC to adequately monitor the agency’s potential
exposure and to project future premium income.

- 16 Plan transfer data
PBGC’s current plan transfer question relates only to disappearing plans, but most plans
that spin off assets and/or liabilities to a “new” plan continue to exist. The Form 5500 (item 5b
of Schedule H) asks for information concerning assets and/or liabilities transferred from a plan to
another plan (or plans) during the plan year, but PBGC does not receive this information in a
timely manner. PBGC proposes to obtain additional information on this topic by asking about
transfers to and from other plans, as well as transfer types, e.g., merger, consolidation, or spinoff. Plans are required to submit similar information to the Internal Revenue Service on Form
5310-A Notice of Plan Merger or Consolidation, Spinoff, or Transfer of Plan Assets or
Liabilities, but the Form 5310-A exempts filers from filing this notice if the transaction is de
minimis, and PBGC needs this information regardless of transaction size. In addition, PBGC
would not be able to receive Form 5310-A information in a timely manner.
Final filing data
Form 5500 collects general information on whether a plan was terminated in a standard
or distress termination, or whether PBGC became trustee of a plan (Form 5500, Item 8.a. – Plan
Characteristic code - 1H: plan covered by PBGC that was closed out and terminated for PBGC
purposes). Form 5500 also collects data on whether a plan is covered by PBGC (Plan
Characteristic code - 1G: plan covered by PBGC). However, the data collected on Form 5500
often are not sufficient for PBGC to adequately know why filings have ceased in cases where
plans merge out of existence. For example, a plan may file its final premium filing under an
EIN-PN different from that on the Form 5500. In addition, terminated or merged plans often do
not submit a final Form 5500, especially when the final plan year is short.

- 17 5. Reducing the burden on small entities. The final rule would shift from prior-year to
current-year data on UVBs and defer the due date for small plans (those with fewer than 100
participants), which should not affect the burden of compliance. Under existing rules, UVBs are
determined as of the end of the prior year (or in some cases the beginning of the current year)
and the VRP is due 9½ months later. Under the new rules, UVBs would be determined as of the
UVB valuation date, which for most small plans may be any day in the current year. For plans
that choose a valuation date at the beginning of the year, the VRP would now be due 16 months
later, rather than the current 9½ months later. For plans that choose an end-of-year valuation
date, the VRP would be due 4 months after the valuation date.
Section 405 of PPA 2006 caps the VRP for certain plans of small employers (those with
25 or fewer employees), which is a provision that is the subject of another PBGC rulemaking
proceeding. PBGC has decided that plans that qualify for the VRP cap and pay the full amount
of the cap do not need to determine or report UVBs for premium payment years starting in 2008.
PBGC expects that approximately 2,600 plans of small entities will take advantage of this
reporting relief.
6. Consequence of reduced collection. Since the information collected is essential to
proper administration of PBGC’s insurance programs, including auditing of premium filings,
failure to collect it would seriously impair PBGC’s program operations. Further, the premium
payable to PBGC is an annual premium. Therefore, premium filings cannot be made less often
than annually, and for most plans, filings are made just once per year. To ensure that PBGC
receives a substantial portion of its premium revenue early in the year for which insurance
coverage is provided, large plans (those with 500 or more participants, about 21 percent of all

- 18 filers) are required to pay their flat-rate premiums much earlier in the year than small plans
(those with fewer than 100 participants) and mid-size plans (those with 100 or more but fewer
than 500 participants) (see the 1983 recommendations of the Grace Commission (the President’s
Private Sector Survey on Cost Control)). While large plans are not required to file twice a year,
as a practical matter most of them make a flat-rate “reconciliation” filing, after more accurate
data become available, later in the year (by the same filing deadline that applies to mid-size
plans). Elimination of a “double flat-rate filing” for large plans would require that the PBGC
either extend large plans’ early filing date beyond that called for by the Grace Commission or
force those plans to make final premium filings before most of them had all the necessary data.
As discussed above in the “Filing Due Dates” subsection under Need for Collection,
PBGC’s final rule would allow, but not require, mid-size and large plans to make estimated VRP
filings and then reconcile the estimated premium at a later date without a late premium payment
penalty. PBGC is making this accommodation because unusual circumstances could make an
accurate VRP filing by the due date difficult or impossible, which, under PBGC’s current
regulatory scheme, would mean that the plan would be subject to a late payment penalty. In
some cases, large plans may end up making three filings a year, rather than two, as in the past
(e.g., a large plan could make an estimated flat-rate filing, a final flat-rate and estimated VRP
filing, and a VRP reconciliation filing); and mid-size plans may make two filings, rather than
one, as in the past. If PBGC does not allow these VRP reconciliation filings, some plans would
not be able to make an accurate VRP filing by the due date and would be subject to late payment
penalty charges. Giving these plans the option to make a VRP reconciliation filing would enable
them to avoid being subject to the late payment penalty charge.

- 19 7. Special circumstances. The regulation requires plan administrators to retain
information necessary to support premium filings for six years. This is necessary to ensure that
records are available during the period within which the PBGC may bring an action to collect
premiums (ERISA section 4003(e)(6)). The six-year period also corresponds to the record
retention requirement of Title I of ERISA (ERISA section 107).
In unusual circumstances, 29 CFR § 4007.10 may require submission of information in
less than 30 days. This provision would accommodate a situation where PBGC determined that
PBGC’s interests may be prejudiced by a delay in the receipt of the information, e.g., where
collection of unpaid premiums (or any associated interest or penalties) would otherwise be
jeopardized.
In other respects, this collection of information is not conducted in a manner inconsistent
with 5 CFR § 1320.5(d)(2).
8. Outside input. PBGC’s proposed rule (72 FR 30308, May 31, 2007), which amends
its regulations to implement provisions of PPA 2006 that change the VRP for plan years
beginning on or after January 1, 2008 (and makes other changes to the regulations), informed the
public of the submission of this collection of information to OMB for review and solicited public
comment. PBGC received comments on the proposed rule from two commenters – an actuary
and an organization representing plan sponsors and service providers. Their comments are
discussed in the preamble to the final rule.
9. Payment to respondents. The PBGC provides no payments or gifts to respondents in
connection with this collection of information.

- 20 10. Confidentiality. Confidentiality of information is that afforded by the Freedom of
Information Act and the Privacy Act. The PBGC’s rules that provide and restrict access to its
records are set forth in 29 CFR Part 4901.
11. Personal questions. The collection of information does not call for submission of
information of a sensitive or private nature.
12. Hour burden on the public. PBGC expects to receive an average of approximately
34,300 premium filings each year from approximately 28,400 respondents. Most respondents
need only file annually. However, plan administrators of plans with 500 or more participants (of
which there are approximately 5,900) also typically make an estimated flat-rate filing. (Note that
PBGC projects that about 1,100 plan administrators of mid-size and large plans will make both a
comprehensive filing and an amended comprehensive filing to reconcile an estimated variablerate premium filing, which is included in the 34,300 premium filings, above.)
Of these 34,300 premium filings, approximately 5 percent will be prepared in-house.
(Preparation of the other 95 percent will be contracted out.) PBGC estimates that the hour
burden of this collection of information associated with the 5 percent of premium filings that are
prepared in-house is about 9,000 hours. The annualized cost to respondents for these burden
hours is $2,474,780 (based on an average hourly rate of $275). These estimates were determined
as follows (“VRP” means “variable-rate premium”):

- 21 -

Number of
Responses
Estimated flat-rate filing

293

Comprehensive filing (single-employer plans)
Plans exempt from VRP
27
Plans paying maximum (capped) VRP
132
Plans reporting unfunded vested benefits
Estimated VRP filing and VRP reconciliation filing
(Mid-size and Large Plans only)
Standard premium funding target
28
Alternative premium funding target
28
Final VRP filing (no VRP reconciliation needed)
Standard premium funding target
487
Alternative premium funding target
645
Multiemployer Plans
Totals

73
1,713

Average
Time

Total
Hours

Total
Cost

1.5

440

$120,863

3.1
5.0

84
660

23,018
181,500

10.0
7.0

280
196

77,000
53,900

8.0
5.0

3,896
3,225

1,071,400
886,875

3.0

219

60,225

8,999

$2,474,780

The recordkeeping requirement in 29 CFR § 4007.10 is not expected to impose
any significant burden on plan administrators, since most of the records covered by this
requirement must already be retained under ERISA section 107. Since this
recordkeeping burden is nominal, it is included in the estimated reporting burden, and no
separate estimate of burden is made for recordkeeping under the regulation.
13. Cost burden on the public. PBGC estimates the cost burden on the public for
operation, maintenance, and purchase of services associated with the 95 percent of premium
filings that are contracted out to be $47,036,605. The costs are based on an hourly rate of $275
and are determined as follows:

- 22 -

Number of
Responses
Estimated flat-rate filing

5,568

Comprehensive filing (single-employer plans)
Plans exempt from VRP
512
Plans paying maximum (capped) VRP
2,506
Plans reporting unfunded vested benefits
Estimated VRP filing and VRP reconciliation filing
(Mid-size and Large Plans only)
Standard premium funding target
538
Alternative premium funding target
538
Final VRP filing (no VRP reconciliation needed)
Standard premium funding target
9,244
Alternative premium funding target
12,264
Multiemployer Plans
Totals

1,385
32,555

Average
Time

Total
Hours

Total
Cost

1.5

8,352

$ 2,296,800

3.1
5.0

1,587
12,530

436,480
3,445,750

10.0
7.0

5,380
3,766

1,479,500
1,035,650

8.0
5.0

73,952
61,320

20,336,800
16,863,000

3.0

4,155

1,142,625

171,042

$47,036,605

14. Costs to the Federal government. Based on its operational costs, personnel salaries,
and overhead, PBGC estimates that the annual cost to the Federal Government of processing this
collection of information is about $6.5 million.
15. Change in burden. The change in the estimated annual burden of this collection of
information (from 3,478 hours and $18,173,000 (in the current OMB inventory) to about 9,000
hours and $47,036,605 (requested)) is attributable primarily to an increase in the burden per
respondent because of changes in the governing statute and in PBGC’s estimation of the time
needed to make premium filings under the new rules (offset somewhat by a downward revision
in PBGC’s estimate of the number of respondents) and secondarily to PBGC’s introduction of
new premium information filing requirements.

- 23 PBGC estimates that about 55 percent of the increase in burden results from the passage
of PPA 2006, which included changes on how PBGC’s variable-rate premium was to be
calculated, and PBGC’s final regulatory changes on premium rates and payment of premiums
that are necessary to implement the variable-rate premium change. For example, PPA 2006
repealed the full funding limit exemption from the variable-rate premium, meaning that more
filers will have to compute and pay the variable-rate premium.
PBGC estimates that about 40 percent of the increase in burden results from changes in
PBGC’s estimation of the amount of time required to provide the information required in
premium filings, offset by PBGC’s projection of the decline in the number of filers. In general,
the number of respondents for this collection of information (plan administrators of defined
benefit plans covered by Title IV of ERISA) has been decreasing year by year. To generate
burden estimates, PBGC has made projections of the number of future respondents based on
analysis of recent data, which shows that the number of plans continues to decrease.
PBGC estimates that about 5 percent of the increase in burden results from the addition
of new information submission requirements to this collection of information.
16. Publication plans. PBGC does not plan to publish the results of this collection of
information.
17. Display of expiration date. OMB has previously granted approval to omit the
expiration date from the premium forms and instructions.
18. Exceptions to certification statement. There are no exceptions to the certification
statement for this submission.

I:\regulatory\RM\Paperwork\1212-0009 Part 4007\Efiling2007\Sptg.stmt_VRP final rule to OMB_12.17.07.doc