2018 SptgStmt.d2

Supporting Statement for Paperwork Reduction Act Submission
AGENCY:

Pension Benefit Guaranty Corporation

TITLE:

Payment of Premiums (29 CFR Part 4007) and PBGC forms and instructions
thereunder

STATUS:

Request for extension of approval of currently approved collection (OMB control
number 1212-0009; expires March 31, 2018)

CONTACT: Stephanie Cibinic (326-4400, ext. 6352)

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 (premium-related data and
information about plan identity, status, and events).
Premium information is filed electronically using “My Plan Administration Account”
(My PAA) through PBGC’s web site. Premium filings must be made annually. Under § 4007.10
of the premium payment regulation, plan administrators are required to retain records about
premiums and information submitted in premium filings.
Section 4006 of ERISA, implemented by PBGC’s regulation on Premium Rates (29 CFR
Part 4006), sets premium rates. All plans covered by Title IV of ERISA pay a flat-rate perparticipant premium. An underfunded single-employer plan also pays a variable-rate premium
(VRP) based on the plan’s unfunded vested benefits (UVBs). The VRP is subject to a cap. The

cap on the VRP, and the premium rates for both single-employer and multiemployer plans, are
adjusted annually for inflation.
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, to help PBGC
determine the magnitude of its exposure in the event of plan termination, to help track the
creation of new plans and transfer of participants and plan assets and liabilities among plans, to
keep PBGC’s insured-plan inventory up to date, to project premium income, to improve financial
projections, and to respond to inquiries from other executive agencies and other branches of
government.
The reported information and the retained records may be used for audit purposes.
3. Information technology. Electronic filing is required under PBGC’s regulations.
PBGC provides data entry and editing screens for premium filing through the My PAA
electronic facility on PBGC’s Web site. In addition, PBGC offers two electronic filing options
that allow filers to 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.
4. Duplicate or similar information. 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.

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Participant count breakdown
Numbers of retired, terminated vested, and active participants are in the annual report that
plans submit using Form 5500, and PBGC is willing to accept numbers determined using the
same methodology for assigning participants to one or another category as for Form 5500.
However, “participant” is defined differently for premium purposes than for reporting on Form
5500, so that the actual numbers reported on the two forms can be expected to be different.
Moreover, for Form 5500 and premium filings due at the same time, the participant-count
information on the Form 5500 filing is a year older than that on the premium filing. PBGC’s
uses for the participant-count breakdown are much better served by getting current data.
VRP Data
Under the look-back rule, many plans’ asset values that are reported on premium filings
are often also available from Form 5500. However, PBGC’s electronic premium-filing system
automatically calculates premiums based on input data, and this feature could not work if assets
were not reported. And for plans not using the look-back rule, there would be a one-year lag
until the Form 5500 figures became available. Using Form 5500 assets data instead of having
premium filers report it directly would thus be inconvenient for both filers and PBGC and would
save filers little time or effort.
Frozen plan data
“Freezes” can affect a plan in several different ways (for example, by ceasing accrual of
benefits or admission of new participants). 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 affected by freezes and the exact nature of each freeze.

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PBGC currently collects freeze information on ERISA section 4010 filings because it
needs the information as early as possible for the small group of 4010 filers, and the information
is reported in section 4010 filings before it is reported in premium filings. PBGC has considered
exempting 4010 filers from reporting this information again in the premium filing, but concluded
that there would be a control problem if the agency’s premium database were not internally
consistent.
Form 5500 collects general information on whether a plan has been frozen, but only for
the most severe type of freeze (when all accruals cease for all participants) and only for the year
before the current year. The Form 5500 data are thus too little and too late for PBGC’s purposes.
Plan transfer data
PBGC’s plan transfer questions ask about transfers to and from other plans, as well as
transfer types (merger, consolidation, or spin-off), to save PBGC (and filers) the administrative
burden of determining why plans have failed to file when expected or have filed information
inexplicably different from the previous year. Form 5500 collects information about assets
and/or liabilities transferred from a plan to another plan (or plans) during the plan year, but not
data on transfer types. Plans must submit information to the Internal Revenue Service about
transfers to and from other plans on Form 5310-A, but only for non-de minimis transactions;
PBGC needs this information regardless of transaction size. Furthermore, Form 5310-A
information is not available to PBGC as promptly as PBGC needs it.
Final filing data
Form 5500 collects general information on whether a plan was terminated in a standard or
distress termination; whether PBGC became trustee of a plan; and whether a plan is covered by

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PBGC. However, the Form 5500 data often do not adequately explain why filings have ceased
in cases where plans merge out of existence. In addition, terminated or merged plans often do
not submit a final Form 5500, especially when the final plan year is short. Thus, these sources of
information on plan disappearances do not adequately satisfy PBGC’s need to know why plans
have stopped filing.
5. Reducing the burden on small entities. Small plans use prior-year data to compute the
VRP, which means that the VRP and Form 5500 due dates for the same year are aligned. (The
flat-rate premium is based on more recent data — the participant count — but the participant
count is relatively easy to determine.) First-year filings for most small plans are simplified by a
first-year exemption from the VRP.
In addition to the inflation-adjusted cap that applies to all VRP filers, another (generally
lower) cap applies to the VRP of certain plans of small employers (those with 25 or fewer
employees). Plans that both qualify for the small-employer VRP cap and pay the full amount of
the cap do not need to determine or report UVBs.
6. Consequence of reduced collection. Since the information collected is essential to
proper administration of PBGC’s insurance programs, including auditing of premium filings, and
to estimate PBGC’s future capability to provide guaranteed benefits, 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.
PBGC allows a plan to make an estimated VRP filing and then reconcile the estimated
premium at a later date without a late premium payment penalty. This practice accommodates

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unusual circumstances that could make an accurate VRP filing by the due date inconvenient. In
infrequent cases, therefore, a plan may make two filings for a year, rather than one.
7. Special circumstances. PBGC requires plan administrators to retain information
necessary to support premium filings for six years. The six-year period corresponds to the record
retention requirement of Title I of ERISA and is needed to ensure that records are available
during the statutory limitations period within which PBGC may bring an action to collect
premiums.
In unusual circumstances, PBGC may require submission of information in less than 30
days in connection with an audit. This would accommodate a situation where PBGC finds that
its interests may be prejudiced by a delay in the receipt of information, such as where collection
of unpaid premiums (or 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. On January 24, 2018 (at 83 FR 3369), PBGC published a notice of its
intention to request OMB approval of this collection of information, soliciting public comment.
No comments were received.
9. Payment to respondents. PBGC provides no payments or gifts to respondents in
connection with this collection of information.
10. Confidentiality. Confidentiality of information is that afforded by the Freedom of
Information Act and the Privacy Act. PBGC’s rules that provide and restrict access to its records
are set forth in 29 CFR Part 4901.

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11. Sensitive questions. This collection of information does not call for submission of
information of a personal nature.
12. Hour burden on the public. The burden estimates for this information collection are
based on inquiries about filing burden directed to fewer than ten premium filers. PBGC asked
each filer how much time was spent by employees of the filer in preparing and submitting the
filing and what the estimated monetary equivalent of that time was — that is, the cost to the filer
to have its employees do the work. The results were averaged. PBGC estimates that it will
receive 23,700 premium filings per year from 23,700 plan administrators. Averaging the
information obtained from filers, PBGC estimates that the annual hour burden of this collection
of information is 10,439 hours with a cost equivalence of $1,185,000.
13. Cost burden on the public. Averaging the information obtained from filers, PBGC
estimates that the annual cost burden of this collection of information is $16,392,500.
14. Costs to the Federal government. PBGC estimates that the annual cost to the Federal
Government of processing this collection of information will be about $12,000,000 in contractor
costs.
15. Change in burden. PBGC previously estimated the burden on the public by using
estimates of PBGC staff members of the time required to do one filing and of the percentage of
work done in-house or contracted out. The estimated time to do one filing was multiplied by the
in-house percentage to arrive at the hour burden and was multiplied by the contracted-out
percentage to arrive at the assumed consultant time. The consultant time was then multiplied by
an assumed per-hour charge to arrive at the dollar burden. The hour burden was multiplied by a
different assumed per-hour cost to arrive at the cost equivalent of the hour burden. This

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approach was very complex but ultimately reflected PBGC staff estimates rather than actual filer
experience.
PBGC has switched to using “experience-based” burden where possible. (For new
collections, there is no filer experience to use. In some cases, PBGC is unsuccessful in getting
data from filers.) Experience-based burden uses actual filer experience — of time and money
spent and of the cost of time — to arrive at estimated burden figures. The information on filer
experience is gathered by contacting nine or fewer filers. The resultant burden figures may be
higher or lower than PBGC’s previous estimated figures — sometimes much higher or lower —
and may fluctuate as time goes by and more filer reports are available. The change in the
estimated annual burden of this collection of information is attributable to the adoption of
experience-based burden estimation.
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.

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