83 FR 50702 - Pendency for Request for Approval of Special Withdrawal Liability Rules: United Food and Commercial Workers International Union-Industry Pension Fund

PENSION BENEFIT GUARANTY CORPORATION

Federal Register Volume 83, Issue 195 (October 9, 2018)

This notice advises interested persons that the Pension Benefit Guaranty Corporation (``PBGC'') has received a request from the United Food and Commercial Workers International Union--Industry Pension Fund for approval of a plan amendment providing for special withdrawal liability rules. Under PBGC's regulation on Extension of Special Withdrawal Liability Rules, a multiemployer pension plan may, with PBGC approval, be amended to provide for special withdrawal liability rules similar to those that apply to the construction and entertainment industries. Such approval is granted only if PBGC determines that the rules apply to an industry with characteristics that make use of the special rules appropriate and that the rules will not pose a significant risk to the pension insurance system. Before granting an approval, PBGC's regulations require PBGC to give interested persons an opportunity to comment on the request. The purpose of this notice is to advise interested persons of the request and to solicit their views on it.

[Federal Register Volume 83, Number 195 (Tuesday, October 9, 2018)]
[Notices]
[Pages 50702-50704]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-21801]


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PENSION BENEFIT GUARANTY CORPORATION


Pendency for Request for Approval of Special Withdrawal Liability 
Rules: United Food and Commercial Workers International Union--Industry 
Pension Fund

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of pendency of request.

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SUMMARY: This notice advises interested persons that the Pension 
Benefit Guaranty Corporation (``PBGC'') has received a request from the 
United Food and Commercial Workers International Union--Industry 
Pension Fund for approval of a plan amendment providing for special 
withdrawal liability rules. Under PBGC's regulation on Extension of 
Special Withdrawal Liability Rules, a multiemployer pension plan may, 
with PBGC approval, be amended to provide for special withdrawal 
liability rules similar to those that apply to the construction and 
entertainment industries. Such approval is granted only if PBGC 
determines that the rules apply to an industry with characteristics 
that make use of the special rules appropriate and that the rules will 
not pose a significant risk to the pension insurance system. Before 
granting an approval, PBGC's regulations require PBGC to give 
interested persons an opportunity to comment on the request. The 
purpose of this notice is to advise interested persons of the request 
and to solicit their views on it.

DATES: Comments must be submitted on or before November 23, 2018.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Refer to the UFCW Industry 
Plan in the subject line.
     Mail or Hand Delivery: Regulatory Affairs Division, Office 
of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street NW, Washington, DC 20005-4026.
    All submissions received must include the agency's name (Pension 
Benefit Guaranty Corporation, or PBGC) and refer to the UFCW Industry 
Plan. All comments received will be posted without change to PBGC's 
website, http://www.pbgc.gov, including any personal information 
provided. Copies of comments may also be obtained by writing to 
Disclosure Division, Office of the General Counsel, Pension Benefit 
Guaranty Corporation, 1200 K Street NW, Washington, DC 20005-4026 or 
calling 202-326-4040 during normal business hours. (TTY users may call 
the Federal relay service toll-free at 1-800-877-8339 and ask to be 
connected to 202-326-4040.)

FOR FURTHER INFORMATION CONTACT: Bruce Perlin ([email protected]), 
202-326-4020, ext. 6818, or Elizabeth Coleman 
([email protected]), ext. 3661, Office of the General Counsel, 
Suite 340, 1200 K Street NW, Washington, DC 20005-4026; (TTY users may 
call the Federal relay service toll-free at 1-800-877-8339 and ask to 
be connected to 202-326-4020.)

SUPPLEMENTARY INFORMATION:

Background

    Section 4203(a) of the Employee Retirement Income Security Act of 
1974, as amended by the Multiemployer Pension Plan Amendments Act of 
1980 (ERISA), provides that a complete withdrawal from a multiemployer 
plan generally occurs when an employer permanently ceases to have an 
obligation to contribute under the plan or permanently ceases all 
covered operations under the plan. Under section 4205 of ERISA, a 
partial withdrawal generally occurs when an employer: (1) Reduces its 
contribution base units by seventy percent in each of three consecutive 
years; or (2) permanently ceases to have an obligation under one or 
more but fewer than all collective bargaining agreements under which 
the employer has been obligated to contribute under the plan, while 
continuing to perform work in the jurisdiction of the collective 
bargaining agreement of the type for which contributions were 
previously required or transfers such work to another location or to an 
entity or entities owned or controlled by the employer; or (3) 
permanently ceases to have an obligation to contribute under the plan 
for work performed at one or more but fewer than all of its facilities, 
while continuing to perform work at the facility of the type for which 
the obligation to contribute ceased.
    Although the general rules on complete and partial withdrawal 
identify events that normally result in a diminution of the plan's 
contribution base, Congress recognized that, in certain industries and 
under certain circumstances, a complete or partial cessation of the 
obligation to contribute normally does not weaken the plan's 
contribution base. For that reason, Congress established special 
withdrawal rules for the construction and entertainment industries.
    For construction industry plans and employers, section 4203(b)(2) 
of ERISA provides that a complete withdrawal occurs only if an employer 
ceases to have an obligation to contribute under a plan and the 
employer either continues to perform previously covered work in the 
jurisdiction of the collective bargaining agreement or resumes such 
work within 5 years without renewing the obligation to contribute at 
the time of resumption. In the case of a plan terminated by mass 
withdrawal (within the meaning of section 4041(A)(2) of ERISA), section 
4203(b)(3) provides that the 5-year restriction on an employer's 
resuming covered work is reduced to 3 years. Section 4203(c)(1) of 
ERISA applies the same special definition of complete withdrawal to the 
entertainment industry, except that the pertinent jurisdiction is the 
jurisdiction of the plan rather than the jurisdiction of the collective 
bargaining agreement. In contrast, the general definition of complete 
withdrawal in section 4203(a) of ERISA includes the permanent cessation 
of the obligation to contribute regardless of the continued activities 
of the withdrawn employer.
    Congress also established special partial withdrawal liability 
rules for the construction and entertainment industries. Under section 
4208(d)(1) of ERISA, ``[a]n employer to whom section 4203(b) (relating 
to the building and construction industry) applies is liable for a 
partial withdrawal only if the

[[Page 50703]]

employer's obligation to contribute under the plan is continued for no 
more than an insubstantial portion of its work in the craft and area 
jurisdiction of the collective bargaining agreement of the type for 
which contributions are required.'' Under section 4208(d)(2) of ERISA, 
``[a]n employer to whom Sec.  4203(c) (relating to the entertainment 
industry) applies shall have no liability for a partial withdrawal 
except under the conditions and to the extent prescribed by the [PBGC] 
by regulation.''
    Section 4203(f)(1) of ERISA provides that PBGC may prescribe 
regulations under which plans in other industries may be amended to 
provide for special withdrawal liability rules similar to the rules 
prescribed in section 4203(b) and (c) of ERISA. Section 4203(f)(2) of 
ERISA provides that such regulations shall permit the use of special 
withdrawal liability rules only in industries (or portions thereof) in 
which PBGC determines that the characteristics that would make use of 
such rules appropriate are clearly shown, and that the use of such 
rules will not pose a significant risk to the insurance system under 
Title IV of ERISA. Section 4208(e)(3) of ERISA provides that PBGC shall 
prescribe by regulation a procedure by which plans may be amended to 
adopt special partial withdrawal liability rules upon a finding by PBGC 
that the adoption of such rules is consistent with the purposes of 
Title IV of ERISA.
    PBGC's regulations on Extension of Special Withdrawal Liability 
Rules (29 CFR part 4203) prescribe procedures for a multiemployer plan 
to ask PBGC to approve a plan amendment that establishes special 
complete or partial withdrawal liability rules. The regulation may be 
accessed on PBGC's website (http://www.pbgc.gov). Section 4203.5(b) of 
the regulation requires PBGC to publish a notice of the pendency of a 
request for approval of special withdrawal liability rules in the 
Federal Register, and to provide interested parties with an opportunity 
to comment on the request.

The Request

    PBGC received a request from the United Food and Commercial Workers 
International Union--Industry Pension Fund (the ``Plan''), for approval 
of a plan amendment providing for special withdrawal liability rules. 
The Plan provided supplemental information in response to a request 
from PBGC. PBGC's summary of the actuarial reports provided by the Plan 
may be accessed on PBGC's website (http://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html). A copy of the Plan's submission 
can be requested from the PBGC Disclosure Officer. The fax number is 
202-326-4042. It may also be obtained by writing the Disclosure 
Officer, PBGC, 1200 K Street NW, Suite 11101, Washington, DC 20005.
    In summary, the Plan is a multiemployer pension plan jointly 
maintained by Local Unions affiliated with the United Food and 
Commercial Workers International Union (``UFCW'') and employers 
signatory to collective bargaining agreements with the UFCW. The Plan 
covers unionized employees who work predominantly in the retail food 
industry. The Plan's proposed amendment would be effective for 
withdrawals occurring under ERISA section 4205(a)(1) during the 3-year 
testing period ending June 30, 2014, or any subsequent plan year and 
for any withdrawals occurring under sections 4203 and 4205(a)(2) of 
ERISA on or after July 1, 2013. Thus, the proposed amendment is 
intended to apply to cessations of the obligation to contribute that 
have already occurred. Plans may adopt this retroactive relief as a 
discretionary provision under ERISA section 4203.3(b)(2). There are two 
employers that may be eligible for relief from withdrawal liability 
under the proposed amendment if it is approved.
    The proposed amendment would create special withdrawal liability 
rules for employers contributing to the Plan for work performed under a 
contract or subcontract for services to federal government agencies 
(``Employer''). The Plan's submission represents that the industry for 
which the rule is requested has characteristics similar to those of the 
construction industry. According to the Plan, the principal similarity 
is that when an Employer loses a government contract, or subcontract, 
it usually does so through the competitive bidding process, and the 
applicable federal government agency typically contracts with a 
successor Employer that is obligated to contribute to the Plan at the 
same or substantially the same rate for the same employees. The Plan 
believes the proposed amendment may induce potential new employers to 
bid on work at a government facility and agree to continue making 
contributions to the Plan when they otherwise may avoid seeking a 
contribution obligation to the Plan to avoid potential withdrawal 
liability.
    Under the proposed amendment, the special withdrawal liability 
rules would apply to an Employer that ceases to have a contribution 
obligation to the Plan because it loses a governmental contract to a 
successor Employer (``Successor Employer''), if all the following 
conditions are met for the 5 plan years immediately following the year 
the Employer lost the contract.
    A complete withdrawal will not occur if an Employer loses all its 
governmental contracts to a Successor Employer, so long as: (1) 
Substantially all the employees for which the Employer was obligated to 
contribute to the Plan continue to perform covered work with a 
Successor Employer; (2) for each of the next 5 plan years the Successor 
Employer has an obligation to contribute at the same or a higher 
contribution rate to the Plan; (3) for each of the next 5 plan years 
the Successor Employer contributes substantially the same contribution 
base units as did the initial Employer in the plan year immediately 
prior to the year it lost the contract; and (4) the Employer posts a 
bond or establishes an escrow account equal to the lesser of the 
present value of its withdrawal liability or 5 years of installment 
payments of its withdrawal liability. The Employer will have 
experienced a complete withdrawal if within the 5 plan years following 
the year the Employer lost the contract, the Successor Employer's 
contract terminates, and no subsequent Successor Employer assumes the 
contribution obligations and conditions, or if the Successor Employer 
fails to meet the contribution conditions.
    A partial withdrawal will not occur if an Employer loses one or 
more, but less than all, of its governmental contracts to a Successor 
Employer, or if it loses all its governmental contracts but continues 
to have a contribution obligation to the Plan under a collective 
bargaining agreement, so long as: (1) For each of the next 5 plan years 
the Successor Employer has an obligation to contribute at the same or a 
higher contribution rate to the Plan; (2) for each of the next 5 plan 
years the Successor Employer contributes substantially the same 
contribution base units as did the initial Employer in the plan year 
immediately prior to the year it lost the contract; and (3) the 
Employer posts a bond or establishes an escrow account equal to the 
lesser of the present value of its partial withdrawal liability or 5 
years of installment payments of its withdrawal liability. The Employer 
will have experienced a partial withdrawal if within the 5 plan years 
following the year the Employer lost the contract, the Successor 
Employer's contract terminates, and no subsequent Successor Employer 
assumes the contribution obligations and conditions, or if the 
Successor Employer fails to meet the contribution conditions.

[[Page 50704]]

    Alternatively, the proposed amendment provides that an Employer 
that loses a governmental contract to a Successor Employer will not 
experience a complete or partial withdrawal if the Successor Employer 
assumes the Employer's contribution history under the affected 
contract(s) for the plan year in which the contract is lost and the 5 
immediately preceding plan years. Lastly, the Plan's trustees may waive 
or reduce the bond or escrow requirement if the Employer demonstrates 
that doing so would not significantly increase the risk of financial 
loss to the Plan. The Plan's request includes the actuarial data on 
which the Plan relies to support its contention that the amendment will 
not pose a significant risk to the insurance system under Title IV of 
ERISA.

Comments

    All interested persons are invited to submit written comments on 
the pending exemption request. All comments will be made part of the 
administrative record.

William Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2018-21801 Filed 10-5-18; 8:45 am]
 BILLING CODE 7709-02-P