This is a printer friendly version.
The Retirement Protection Act of 1994 added a new requirement to ERISA (Section 4011) that certain underfunded plans annually
notify participants and beneficiaries of the plan's funding status and the limits of the PBGC's guarantee.
On June 30, 1995, the PBGC published a final rule implementing the notice requirement. The regulations include a model notice that plans can use to meet the requirement. See 29 CFR Part 4011 .
Plans with more than 100 participants first became subject to the notice requirement for 1995. Plans with 100 or fewer participants
first became subject to the notice requirement for 1996.
For the convenience of plan administrators, this Technical Update provides the Model Participant Notice, updated to reflect
the 1997 maximum guaranteed benefits.
The following is an example of a Participant Notice that satisfies the requirements of § 4011.10 when the required information
is filled in.
The law requires that you receive information on the funding level of your defined benefit pension plan and the benefits guaranteed
by the Pension Benefit Guaranty Corporation (PBGC), a federal insurance agency.
YOUR PLAN'S FUNDING
As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGEDETERMINED IN ACCORDANCE WITH § 4011.10(c)] percent of the money
needed to pay benefits promised to employees and retirees.
To pay pension benefits, your employer is required to contribute money to the pension plan over a period of years. A plan's
funding percentage does not take into consideration the financial strength of the employer. Your employer, by law, must pay
for all pension benefits, but your benefits may be at risk if your employer faces asevere financial crisis or is in bankruptcy.
[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE PREVIOUS FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT FULLY
REPAID AFUNDING WAIVER.]
Your plan received a funding waiver for [LIST ANY OF THE FIVE PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND
HAS NOT BEEN FULLY REPAID]. If a company is experiencing temporary financial hardship, the Internal Revenue Service may grant
a funding waiver that permits the company to delay contributions that fund the pension plan.
[INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE PAYMENT THAT MUST BE DISCLOSED UNDER § 4011.10(b)(6):]
Your plan was required to receive a payment from the employer on [LIST APPLICABLE DUE DATE(S)]. That payment [has not been
made] [was made on [LIST APPLICABLE PAYMENT DATE(S)]].
PBGC GUARANTEES
When a pension plan ends without enough money to pay all benefits, the PBGC steps in to pay pension benefits. The PBGC pays
most people all pension benefits, but some people may lose certain benefits that are not guaranteed.
The PBGC pays pension benefits up to certain maximum limits.
[IN LIEU OF AGE 55, YOU MAY ADD OR SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE PLAN. FOR EXAMPLE, YOU MAY ADD OR SUBSTITUTE THE
MAXIMUM BENEFIT FOR AGES 62 OR 60. THE MAXIMUM BENEFIT IS $2,181.47 PER MONTH OR $26,177.64 PER YEAR AT AGE 62; IT IS $1,794.88
PER MONTH OR$21,538.56 PER YEAR AT AGE 60. IF THE PLAN PROVIDES FOR NORMAL RETIREMENT BEFORE AGE 65, YOU MUST INCLUDE THE
NORMAL RETIREMENT AGE.]
[IF THE PLAN DOES NOT PROVIDE FOR COMMENCEMENT OF BENEFITS BEFORE AGE 65, YOU MAY OMIT THIS PARAGRAPH.]
The PBGC does not guarantee certain types of benefits. [INCLUDE THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE BENEFITS
AVAILABLE UNDER YOUR PLAN.]
WHERE TO GET MORE INFORMATION
Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)]. If you would like more information about the funding of your
plan, contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF INDIVIDUAL OR ENTITY].
For more information about the PBGC and the benefits it guarantees, you may request a free copy of ``Your Guaranteed Pension'' by writing to Consumer Information Center, Dept. YGP, Pueblo, Colorado 81009. [THE FOLLOWING SENTENCE MAY BE INCLUDED:]``Your Guaranteed Pension'' is also available from the PBGC Homepage on the World Wide Web at http://www.pbgc.gov.