December 22, 2015
- Council Issues Benefits Passport Summarizing OECD Meeting; Members Invited to Help Review Draft Papers
- IRS Meets with Employer Groups on Readiness for ACA Information Reporting
- PBGC Finalizes Rules for Multiemployer Pension Plan Partitions
- DOL Announces New 2015 ERISA Advisory Council Members
Council Issues Benefits Passport Summarizing OECD Meeting; Members Invited to Help Review Draft Papers
On December 22, the Council issued the latest edition of its Benefits Passport, a series of updates and webinars that examines global benefits and compensation developments and what they mean for U.S. companies.
The latest edition of the Council’s Benefits Passport provides analysis of OECD’s recent work on private pension policies through its Committee on Insurance and Private Pensions and its subgroup, the Working Party on Private Pensions. The Council has, for many years, served as a private sector advisor to the U.S. government delegation to the OECD. Now, under an enhanced agreement with the OECD, Richard Hinz (Senior Advisor for the Council and formerly the Chair of the Working Party on Private Pensions) participates in twice-yearly meetings and serves as a private-sector liaison to the U.S. Department of Labor (DOL), the formal participant on these OECD committees. The topics for this latest meeting include:
- Core principles for private pension regulation
- Review of the pension systems in Ireland and Mexico
- Fiscal and financial incentives for retirement savings, including tax incentives
- Policy considerations for annuity products
- Mortality differences across socio-economic groups
- Report to the G20 on regulation of insurance companies and pension funds
- Long-term investing by institutional investors
- Proposed future projects, such as public-private retirement provision, pension design and behavioral economics and financial technology and pensions
As an extension of the Council’s growing work on global benefits issues, a small working group of members was established in 2014 to participate in reviewing OECD’s ongoing and completed work products. Council staff will review these OECD materials and prepare draft comments to share with the DOL. We will distribute these draft comments to interested Council members in early January 2016 for review and to solicit input prior to the Council forwarding them to DOL. Other Council members interested in participating in this review process should contact Richard Hinz at email@example.com by January 6 to be included in the distribution. Going forward, we hope to be able to offer the opportunity for one or two Council members that have been engaged in this commentary process to attend, on a rotating basis, each of the OECD meetings in Paris as part of the U.S. delegation.
Benefits Passports are sent separately to members who elect to join our separate international benefits distribution list, which includes several hundred individuals from member companies. If you are interested in being included on this list, please send an e-mail to Deanna Johnson (firstname.lastname@example.org), director, membership, with the subject line “International Benefits.” Past issues and other international resources can be found on the International Benefits page of the Council website.
If there are other colleagues within your company/organization who are responsible for international benefits issues, we encourage you to share this e-mail with them. They, too, are invited to sign-up to receive international benefits updates by clicking this link and filling out the form with the phrase “International Benefits” in the “comments and suggestions” field. For more information about the Council’s international benefits outreach, contact Lynn Dudley, senior vice president, global retirement and compensation policy, at (202) 289-6700.
IRS Meets with Employer Groups on Readiness for ACA Information Reporting
The Council recently was one of a small group of employer organizations invited to a meeting with Internal Revenue Service (IRS) Commissioner John Koskinen, his deputy commissioners and the Affordable Care Act (ACA) implementation team regarding readiness for required ACA information reporting by employers. The IRS is holding stakeholder meetings to obtain feedback regarding challenges that this complex new undertaking poses for employers, vendors and the IRS.
The Council urged IRS to provide flexibility in the process for requesting extensions for the deadline to furnish statements to employees. According to informal comments last month, the IRS anticipates a potential increase in requests for 30-day extensions of the February 1, 2016, deadline for providing statements to employees.The agency is considering guidance that would make it easier to request an extension for 2015.
As we reported in the November 9 Benefits Byte, the IRS is also soliciting feedback from employers, insurance providers, software developers, and transmitters through an ongoing online survey to assess readiness for transmitting information returns 1095-C and 1095-B to the IRS as required by ACA. The ACA Information Returns (AIRS) Readiness Survey is also available at the IRS website for the AIRS Program. The survey is voluntary and anonymous. The IRS receives only compiled data, which does not allow for the identification of any individual or company.
According to the IRS, information from this survey will assist IRS with understanding the readiness of various reporting entities to submit the returns, learning what additional information will be helpful to ensure stakeholder readiness, and determining how best to communicate additional information to stakeholders. Survey respondents can complete the survey more than once if they make repeat visits to the site and different individuals within the same organization may complete the survey. The survey consists of about a dozen short questions that are specifically tailored to whether an employer, insurer, transmitter or software developer is completing the survey. The survey will be open through early 2016. The IRS is modifying the questions as needed to more accurately collect data as the filing season progresses.
The ACA information reporting requirements are effective for tax year 2015. Forms 1095-C must be furnished to full-time employees by February 1, 2016. Forms 1095-C and 1095-B are required to be filed with the IRS by February 29, 2016. Instructions for Forms 1094-C and 1095-C provide information for obtaining 30 day extensions for filing the returns with the IRS and furnishing statements to employees.
The Council will continue to work with the IRS and Treasury Department to address compliance challenges posed by the new information reporting requirements. For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.
PBGC Finalizes Rules for Multiemployer Pension Plan Partitions
The Pension Benefit Guaranty Corporation (PBGC) has finalized rules establishing the agency’s authority to “partition” certain multiemployer plans, under which a plan can apply to PBGC for financial assistance to fund a portion of their benefit liabilities in order to remain solvent. This final rule is a key element of the Multiemployer Pension Reform Act of 2014 (MPRA), which sought to help multiemployer plans struggling with underfunding.
MPRA was enacted as a part of the Consolidated and Further Continuing Appropriations Act (see the December 15, 2014, Benefits Byte). A recent Benefits Blueprint summary, prepared for the Council by Venable LLP, outlines many of the key provisions of MPRA.
Before enactment of these reforms, PBGC’s partition authority was limited to situations involving bankruptcy by some of a plan’s contributing employers. Partitions can relieve plans of some of their financial obligations so they can preserve benefits for participants at levels above the PBGC-guaranteed amounts and continue to pay retirement benefits over the long term, but they also require benefits to be reduced to PBGC guarantee levels.
The new rule, which generally finalizes an Interim Final Rule (IFR) issued on June 17, expands PBGC’s authority to approve such partitions for plans that are projected to run out of money within 20 years.
The final rule makes a number of minor changes to the IFR, including clarification regarding the format of certain required reporting information as well as institution of a 14 calendar day period for PBGC’s initial review process.
Also of note, one commenter on the IFR suggested that PBGC clarify that the Plan Sponsor and Participant Advocate is “responsible solely for representing the plan’s retirees and deferred vested participants,” and that the Advocate should be “offered the opportunity to participate in all meetings between the plan sponsor and PBGC.” The commenter also noted that the advocate should have adequate accounting, actuarial and legal resources as well as unfettered access to all plan records, actuarial worksheets, and databases.
The PBGC rejected this suggestion, noting that “the Advocate’s consultative role in a partition is new” and “PBGC continues to believe that the better approach is to allow that role to evolve on a case-by-case basis.”
Congressional lawmakers have already begun to discuss the “next phase” of multiemployer plan reform which could include additional premium increases for the multiemployer system and options to move to new plan designs. The Council remains closely engaged in matters related to both single-employer and multiemployer plans. For more information, contact Diann Howland, vice president, legislative affairs or Lynn Dudley, senior vice president, global retirement and compensation policy, at (202) 289-6700.
DOL Announces New 2015 ERISA Advisory Council Members
The U.S. Department of Labor (DOL) has announced five new members appointed to the ERISA Advisory Council (EAC). The EAC is a group of benefits experts established by Congress and appointed by the DOL to identify emerging benefits issues and advise the Secretary of Labor on health and retirement policy. A number of individuals from American Benefits Council member companies serve on the EAC, representing employers and other benefits experts
The chair and vice chair, respectively, of the EAC for the 2016 term will be Mark E. Schmidtke, shareholder of Ogletree, Deakins, Nash, Smoak & Stewart, and Jennifer Kamp Tretheway, retired managing director of investment program solutions with Northern Trust Asset Management.
The working group topics for 2016 will be released in the spring. The 2015 topics were (1) “lifetime plan participation” (relating to plan distributions and rollovers), and (2) pension plan “de-risking” (where plan sponsors partially or fully discharge their ERISA plan liabilities) and the disclosures given to participants in these events. The 2015 EAC delivered final recommendations to U.S. Secretary of Labor Thomas Perez and Assistant Secretary Phyllis Borzi of the Employee Benefits Security Administration (EBSA) on November 4 (see the November 5 Benefits Byte).