Pension plans that are covered by Title IV of ERISA are required to pay premiums to the Pension Benefit Guaranty Corporation (PBGC). The PBGC uses these premiums to pay guaranteed benefits under terminated defined benefit plans. Covered plans that fail to pay premiums must pay interest and penalties, which can be significant and equal 100% of the unpaid premium amounts.

To encourage compliance with the premium requirements and to reduce the workload of plans that never paid required premiums, the PBGC announced on January 31, 2012 that it will waive premium penalties for past-due premiums (and related information penalties for failure to timely file premium information) if the plan administrator or a representative:

However, interest owed on past-due premiums will not be waived. After this voluntary compliance program ends, the PBGC will increase its enforcement efforts and assess penalties against covered plans that have not paid any required premiums.

Plan administrators of plans covered by Title IV of ERISA should determine whether their plans have paid premiums to the PBGC. If not, plan administrators should consider taking advantage of this compliance program to avoid the harsh penalties that they can incur once the program ends later this year.