PBGC Announces Mediation Pilot Program for Early Warning Program and Termination Liability Collection Cases | Practical Law

PBGC Announces Mediation Pilot Program for Early Warning Program and Termination Liability Collection Cases | Practical Law

The Pension Benefit Guaranty Corporation (PBGC) has announced a new pilot program for resolving certain early warning program and termination liability collection cases. Under the new program, eligible defined benefit plan sponsors may participate in mediation with the PBGC to help resolve their cases.

PBGC Announces Mediation Pilot Program for Early Warning Program and Termination Liability Collection Cases

by Practical Law Employee Benefits & Executive Compensation
Published on 19 Oct 2017 • USA (National/Federal)
The Pension Benefit Guaranty Corporation (PBGC) has announced a new pilot program for resolving certain early warning program and termination liability collection cases. Under the new program, eligible defined benefit plan sponsors may participate in mediation with the PBGC to help resolve their cases.
On October 16, 2017, the Pension Benefit Guaranty Corporation (PBGC) announced a one-year pilot program that will offer mediation to eligible defined benefit plan sponsors to help resolve certain:
The PBGC created the pilot program in response to the business community's comments and concerns. The goals of the pilot program include:
  • Resolving disputes earlier.
  • Improving stakeholder relations.
  • Reducing the costs of lengthy negotiations and other proceedings.
  • Integrating alternative dispute resolution into the PBGC's dispute resolution process.

Eligibility for the Pilot Program

Eligibility for the pilot program is limited to:
  • Early warning program cases.
  • Termination liability collection cases.
The pilot program is not available in the following situations:
  • The plan sponsor has minimal ability to pay.
  • There is pending litigation.
  • The PBGC must act within a limited time period, and the plan sponsor refuses to sign a standstill or tolling agreement.
Eligible plan sponsors' participation in the pilot program is voluntary.

Timing of Mediation

For eligible termination liability collection cases, the PBGC will offer mediation within a reasonable time after it completes its review of a plan sponsor's net worth disclosures (29 C.F.R. § 4062.6).
For eligible early warning program cases, the PBGC will offer mediation after it receives sufficient information in response to its requests for information. The timing of mediation in early warning program cases will depend, in part, on the timing of the business transaction raising concerns about the plan sponsor's ability to fund the plan. However, mediation must finish before the transaction's closing date, and the parties must have enough time before the closing date to either document the agreement reached in mediation or pursue legal action.

Evaluation of the Pilot Program

The PBGC expects the pilot program to last for one year. At the end of that year, the PBGC will evaluate the pilot program based on several factors, including:
  • The percent of cases deemed eligible to participate.
  • The percent of eligible cases that are mediated.
  • The rate at which cases are resolved.
  • The amount of time it takes to resolve cases.
  • The cost savings as compared with litigation or negotiations.
  • Stakeholder reactions to the pilot program.