Disclosure to Participants

SUMMARY: The Pension Benefit Guaranty Corporation is amending its

regulations to implement a new notice requirement under section 4011 of

the Employee Retirement Income Security Act of 1974, as amended by the

Retirement Protection Act of 1994. Section 4011 requires plan

administrators of certain underfunded plans to provide notice to plan

participants and beneficiaries of the plan's funding status and the

limits on the PBGC's guarantee.

EFFECTIVE DATE: July 31, 1995.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General

Counsel, or Catherine B. Klion, Attorney, Office of the General

Counsel, PBGC, 1200 K Street NW., Washington, DC 20005-4026, 202-326-

4024 (202-326-4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION: On March 28, 1995, the PBGC published in the

Federal Register (60 FR 16026) a proposed rule implementing a new

notice requirement under section 4011 of ERISA, which was added by

section 775 of the Retirement Protection Act of 1994 (subtitle F of

title VII of the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108

Stat. 4809 (1994)). Under section 4011, plan administrators of certain

underfunded plans must provide notice to plan participants and

beneficiaries of the plan's funding status and the limits on the PBGC's

guarantee.

The proposed rule prescribes which plans are subject to the notice

requirement, who is entitled to receive the notice, and the time, form,

and manner of issuance of the notice. The proposed rule includes a

model notice plan administrators could use.

The PBGC received 14 comments from plan sponsors, organizations

representing participants and plan sponsors, and pension practitioners.

PBGC has made changes in the final regulation pursuant to these

comments.

Form of Notice

Some commenters questioned the rule limiting the items that could

be in the Participant Notice. Some objected to the rule that additional

information be in a document separate from the Participant Notice, and

others suggested specific information they thought should be permitted

to be part of the Participant Notice. The regulation (Sec. 2627.10(d))

allows a plan administrator to provide additional information with the

Participant Notice. To allow the additional information to be in the

same document as the Participant Notice would run counter to the

Congressional purpose of making the Participant Notice clear, concise,

and focused. The final rule does include in the Participant Notice some

of the specific information suggested by commenters.

Commenters thought that certain information required in the

Participant Notice might generate undue concerns about benefit

availability and suggested ways to revise the notice. Congress mandated

plan administrators to provide participants with information on

underfunding and PBGC guarantees. To see that this information is

provided without raising undue concerns, the PBGC has revised the model

notice and certain requirements of the rule.

Three commenters objected to the requirement that the Participant

Notice include information on funding waivers and missed contributions,

noting that the information is not specified in section 4011 and is

subject to other disclosure requirements. Information on funding

waivers and missed contributions is relevant to participants'

understanding of a plan's funding status.

One of these commenters suggested that these Participant Notice

disclosure requirements be coordinated with the other disclosure

requirements. The final rule clarifies and limits the Participant

Notice disclosure requirements relating to funding waivers and missed

contributions.

The final rule makes clear that minimum funding waivers that have

been fully repaid as of the end of the prior plan year are not required

to be included. A waiver will be treated as fully repaid before the end

of the statutory amortization period only where the employer has made

contributions in excess of the minimum funding requirements and the

resulting credit balance is precluded from being used to satisfy future

minimum funding requirements by a waiver condition or contractual

obligation.

The final rule limits the circumstances in which participants must

be informed of missed contributions to the type of circumstances in

which notice to participants is required under section 101(d) of ERISA.

For the Participant Notice, plan administrators must disclose missed

contributions if (1) the plan had a funding deficiency at the end of

any prior plan year (taking into account contributions made before the

Participant Notice is issued and within the eight-and-one-half month

grace period after the plan year), or (2) a quarterly contribution or

other payment was overdue for more than 60 days. The plan administrator

must inform participants if the missed payment has or has not been made

and (if made) the date of the payment. Missed contributions for prior

plan years that have previously been disclosed to participants must be

included only if the contributions still have not been paid.

For example, assume that the last three quarterly payments for the

1995 calendar plan year (due July 15, 1995, October 15, 1995, and

January 15, 1996) were missed, but paid on September 15, 1996, along

with any remaining 1995 contributions needed to satisfy the minimum

funding standard. The Participant Notice for the 1995 plan year, issued

on November 15, 1995, would disclose the July 15 delinquency, but not

the October 15 or January 15 delinquencies (because neither would then

be overdue by more than 60 days). The Participant Notice for the 1996

plan year, issued on November 15, 1996, would not need to redisclose

the July 15 delinquency (since it has been paid), but would need to

disclose the October 15 and January 15 delinquencies unless they had

previously been disclosed to participants under Title I of ERISA.

The Department of Labor has advised PBGC that, in the absence of

final regulations implementing section 101(d) of ERISA (requiring

notice of failure to meet minimum funding standards), it will treat a

plan administrator that provides a Participant Notice as having

satisfied section 101(d) with respect to any missed contributions

identified in the Participant Notice.

The final regulation requires the Participant Notice to specify the

date as of which the Notice Funding Percentage is determined

(Sec. 2627.10(b)(2)). The PBGC expects many plans to determine the

Notice Funding Percentage using data from the prior plan year because

that will be the most current data available at the time the

Participant Notice is issued.

One commenter objected to the requirement that the Participant

Notice include, in addition to the name, address, and telephone number

of the plan administrator, the name, address and telephone number of an

individual who can answer questions about the plan's funding, pointing

out that communicating information on plan funding orally would be

burdensome and could lead to misunderstanding.

[[Page 34413]]

The final regulation eliminates the requirement that the plan

administrator be identified in all cases, and allows the Participant

Notice to identify any person(s) (including the plan administrator) who

will provide further information about the plan's funding. The

information need not be provided orally, and need not go beyond that

required to be given under Title I of ERISA.

One commenter suggested a minimum type size. Rather than specifying

a type size, the final regulation (Sec. 2627.10(a)) makes clear that

the Participant Notice not only has to be understandable, but also

readable (e.g., in a sufficiently large type size). The final

regulation (Sec. 2627.10(e)) also revises the foreign language

requirements to make clear that in lieu of providing a notice of

assistance in the applicable foreign language, plan administrators may

provide the Participant Notice itself in that language.

Model Notice

One commenter suggested that the PBGC subject the model notice to a

readability test. The model notice was subjected to readability tests

and focus group review by workers and retirees. Based on the results of

these reviews, the PBGC made changes to further simplify the model

notice.

Some commenters read the model notice as requiring information that

may not apply to particular plans and as limiting information on the

maximum guaranteed benefit to ages 55 and 65. The final regulation

revises the model notice so that plan administrators who wish to use it

may tailor it to fit particular plans. With respect to the maximum

guaranteed benefit, the final rule requires all plans to provide

information for age 65 (the age on which PBGC guarantees are based). A

plan that allows early retirement benefits must specify the maximum

guaranteed benefit for at least one early retirement age. A plan that

provides for normal retirement before age 65 must include the normal

retirement age.

Manner of Issuance

Commenters both supported and opposed the requirement that the

Participant Notice be in a separate document from the summary annual

report. Supporters expressed concern that the information in the

Participant Notice would be lost if combined with the summary annual

report, while those opposing the requirement suggested that combining

the two documents would be convenient or would reduce administrative

costs. The regulation (Sec. 2627.9) allows plans to issue the

Participant Notice with the summary annual report to minimize cost.

However, combining the two documents could obscure the information in

the Participant Notice. In making the disclosure provisions part of

Title IV of ERISA, Congress clearly signalled that information on

underfunding and PBGC guarantees not be entangled with other

information.

One commenter addressed the requirement that the Participant Notice

be issued by using measures reasonably calculated to ensure actual

receipt. The commenter suggested incorporating the Department of Labor

regulation on furnishing the summary annual report (29 CFR 2520.104b-

1(b)(1)) verbatim in the final Participant Notice regulation. The

examples specified in the DOL regulation, as well as any other methods

that DOL determines are acceptable under its regulation, are acceptable

for issuance of the Participant Notice. (Posting a notice of

availability of the Participant Notice at worksite locations is not an

acceptable method of issuance.) However, other methods of issuance may

be acceptable for the Participant Notice.

One commenter urged that the final regulation specify that posting

the Participant Notice on an electronic computer network does not

satisfy the notice requirement because few retirees, and even fewer

lower-income participants, have access to electronic mail. In certain

limited circumstances, issuance by electronic mail to employees may be

reasonably calculated to ensure actual receipt. However, issuance by

electronic mail to recipients who may not have access to or familiarity

with electronic mail or the ability to print out the notice easily

would not be acceptable.

Mergers, Consolidations, and Spin-offs

In the proposed rule, the PBGC invited comments on how the

Participant Notice requirement should apply where a plan has been

involved in a merger, consolidation, or spinoff transaction since the

prior plan year. No comments on this issue were received.

The final rule (Sec. 2627.6) requires plan administrators of plans

involved in those transactions to apply the requirements of section

4011 and of this regulation in a reasonable manner to accomplish the

statutory purpose of the Participant Notice. The PBGC may address what

is a reasonable means to accomplish the statutory purpose in future

guidance.

Miscellaneous Issues

Two commenters proposed that plans otherwise subject to the

Participant Notice requirement should be exempt if they represent a

minimal portion of the current liability of all of the contributing

sponsor's defined benefit plans. Another commenter suggested that all

small plans be exempt from the Participant Notice requirement.

Participants in these underfunded plans have the same need for the

information contained in the Participant Notice as do participants in

other underfunded plans.

The PBGC received several comments supporting or opposing the

requirement that the Participant Notice be issued to alternate payees

not in pay status and employee organizations representing participants

for purposes of collective bargaining. To ensure that the Participant

Notice serves its intended purpose of providing timely and useful

information to interested parties, the final rule retains the

requirement that the Participant Notice be issued to alternate payees

and unions. The regulation has been modified to make clear that an

alternate payee is entitled to receive the Participant Notice only if

an applicable qualified domestic relations order (as defined in section

206(d)(3) of ERISA) is on file with the plan.

One commenter wrote that the deadline for issuing the Participant

Notice should be no later than seven months after the end of the

preceding plan year so that participants will not have to wait as long

for the information. The rules seek to strike a balance between meeting

participants' need for timely information and minimizing burden on plan

administrators. To that end, the PBGC is retaining its proposed time

limit of two months after the deadline for filing the annual report for

the prior plan year to enable plans to distribute the Participant

Notice with the summary annual report. (The final rule specifies that

the plan administrator may change the date of issuance from one plan

year to the next, provided that the effect of any change is not to

avoid disclosing a minimum funding waiver under Sec. 2627.10(b)(5) or a

missed contribution under Sec. 2627.10(b)(6).)

That same commenter requested that the Department of Labor not

treat a plan administrator as having complied with the requirement to

disclose a plan's funding percentage in the summary annual report if

the plan administrator provides the Participant Notice under section

4011 (see 60 FR 16027). The Department of Labor advises PBGC that it

continues to believe that the duplicative reporting would impose an

unnecessary burden on plan administrators.

[[Page 34414]]

The PBGC expects most plan administrators to provide the

Participant Notice in compliance with this regulation. Any plan

administrator who does not comply with this regulation may be assessed

penalties under section 4071 of ERISA. If a plan administrator issues a

Participant Notice for the 1995 plan year that meets the requirements

of the proposed rule, the PBGC will not assess section 4071 penalties

based on a failure to comply with any different requirements in the

final rule.

E.O. 12866, the Regulatory Flexibility Act, and the Paperwork

Reduction Act

The PBGC has determined that this action is not a ``significant

regulatory action'' under the criteria set forth in Executive Order

12866 because the rule will not have an annual effect on the economy of

$100 million or more or adversely affect in a material way the economy,

a sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local, or tribal

governments or communities; create a serious inconsistency or otherwise

interfere with an action taken or planned by another agency; materially

alter the budgetary impact of entitlements, grants, user fees, or loan

programs or the rights and obligations of recipients thereof; or raise

novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in Executive Order

12866.

Under section 605(b) of the Regulatory Flexibility Act, the PBGC

certifies that this rule will not have a significant economic impact on

a substantial number of small entities. Accordingly, as provided in

section 605 of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.),

sections 603 and 604 do not apply.

Small plans are exempt from the Participant Notice requirement for

the 1995 plan year. For subsequent plan years, neither the cost of

determining whether a plan is subject to the Participant Notice

requirement nor the cost of preparing and issuing the Participant

Notice is expected to be significant for a substantial number of small

entities. The regulation contains special rules designed to simplify

the Participant Notice requirement for small plans.

The Paperwork Reduction Act of 1995, which generally becomes

effective on October 1, 1995, will apply to the disclosure requirements

in this final rule. The PBGC intends in the near future to submit to

the Office of Management and Budget a request for approval of these

disclosure requirements and to publish in the Federal Register a notice

advising the public of its request.

List of Subjects in 29 CFR Part 2627

Employee benefit plans, Pension Insurance, Pensions.

For the reasons set forth above, the PBGC is amending subchapter

C, chapter XXVI of 29 CFR by adding a new part 2627 to read as follows:

Part 2627--DISCLOSURE TO PARTICIPANTS

Sec.

2627.1 Purpose and scope.

2627.2 Definitions.

2627.3 Notice requirement.

2627.4 Small plan rules.

2627.5 Exemption for new and newly-covered plans.

2627.6 Mergers, consolidations, and spinoffs.

2627.7 Persons entitled to notice.

2627.8 Time of notice.

2627.9 Manner of issuance of notice.

2627.10 Form of notice.

Appendix A to part 2627--Model participant notice.

Appendix B to part 2627--Table of maximum guaranteed benefits.

Authority: 29 U.S.C. 1302(b)(3), 1311.

Sec. 2627.1 Purpose and scope.

(a) Purpose. This part prescribes rules and procedures for

complying with the requirements of section 4011 of the Act.

(b) Scope. This part applies for any plan year beginning on or

after January 1, 1995, with respect to any single-employer plan that is

covered by section 4021 of the Act.

Sec. 2627.2 Definitions.

For purposes of this part:

Act means the Employee Retirement Income Security Act of 1974, as

amended.

Participant has the meaning in Sec. 2617.2 of this chapter.

Participant Notice means the notice required pursuant to section

4011 of the Act and this part.

Plan administrator means the administrator, as defined in section

4001(a)(1) of the Act.

Sec. 2627.3 Notice requirement.

(a) General. Except as otherwise provided in this part, the plan

administrator of a plan must provide a Participant Notice for a plan

year if--

(1) A variable rate premium is payable for the plan under section

4006(a)(3)(E) of the Act and part 2610 of this chapter for that plan

year; and

(2) The plan does not meet the Deficit Reduction Contribution

(``DRC'') Exception Test in paragraph (b) of this section (which may be

applied using the Small Plan DRC Exception Test rules in

Sec. 2627.4(b), where applicable) for that plan year or for the prior

plan year.

(b) DRC Exception Test--(1) Basic rule. A plan meets the DRC

Exception Test for a plan year if it is exempt from the requirements of

section 302(d) of the Act for that plan year by reason of section

302(d)(9), without regard to the small plan exemption in section

302(d)(6)(A).

(2) 1994 plan year. A plan satisfies the DRC Exception Test for the

1994 plan year if, for any two of the plan years beginning in 1992,

1993, and 1994 (whether or not consecutive), the plan satisfies any

requirement of section 302(d)(9)(D)(i) of the Act.

(c) Penalties for non-compliance. If a plan administrator fails to

provide a Participant Notice within the specified time limit or omits

material information from a Participant Notice, the PBGC may assess a

penalty under section 4071 of the Act of up to $1,000 a day for each

day that the failure continues.

Sec. 2627.4 Small plan rules.

(a) 1995 plan year exemption. A plan that is exempt from the

requirements of section 302(d) of the Act for the 1994 or 1995 plan

year by reason of section 302(d)(6)(A) is exempt from the Participant

Notice requirement for the 1995 plan year.

(b) Small Plan DRC Exception Test. In determining whether the

Participant Notice requirement applies for a plan year beginning after

1995, the plan administrator of a plan that is exempt from the

requirements of section 302(d) of the Act by reason of section

302(d)(6)(A) for the plan year being tested may use any one or more of

the following rules in determining whether the plan meets the DRC

Exception Test for that plan year:

(1) Use of Schedule B data. For any plan year for which the plan is

exempt from the requirements of section 302(d) of the Act by reason of

section 302(d)(6)(A), provided both of the following adjustments are

made--

(i) The market value of the plan's assets as of the beginning of

the plan year (as required to be reported on Form 5500, Schedule B) may

be substituted for the actuarial value of the plan's assets as of the

valuation date; and

(ii) The plan's current liability for all participants' total

benefits as of the beginning of the plan year (as required to be

reported on Form 5500, Schedule B) may be substituted for the plan's

current liability as of the valuation date.

(2) Pre-1995 plan year 90 percent test. A plan that is exempt from

the requirements of section 302(d) of the Act for a pre-1995 plan year

by reason

[[Page 34415]]

of section 302(d)(6)(A) satisfies the requirements of section

302(d)(9)(D)(i) for that pre-1995 plan year if the ratio of its assets

to its current liability for that plan year is at least 90 percent. For

this purpose, the plan's assets are valued without subtracting any

credit balance under section 302(b) of the Act, and its current

liability is determined using the highest interest rate allowable for

the plan year under section 302(d)(7)(C).

(3) Interest rate adjustment. If the interest rate used to

calculate current liability for a plan year is less than the highest

rate allowable for the plan year under section 302(d)(7)(C) of the Act,

the current liability may be reduced by one percent for each tenth of a

percentage point by which the highest rate exceeds the rate so used.

Sec. 2627.5 Exemption for new and newly-covered plans.

A plan (other than a plan resulting from a consolidation or

spinoff) is exempt from the Participant Notice requirement for the

first plan year for which the plan must pay premiums under part 2610 of

this chapter.

Sec. 2627.6 Mergers, consolidations, and spinoffs.

In the case of a plan involved in a merger, consolidation, or

spinoff transaction that becomes effective during a plan year, the plan

administrator shall apply the requirements of section 4011 of the Act

and of this part for that plan year in a reasonable manner to ensure

that the Participant Notice serves its statutory purpose.

Sec. 2627.7 Persons entitled to receive notice.

The plan administrator must provide the Participant Notice to each

person who is a participant, a beneficiary of a deceased participant,

an alternate payee under an applicable qualified domestic relations

order (as defined in section 206(d)(3) of the Act), or an employee

organization that represents any group of participants for purposes of

collective bargaining. To determine who is a person that must receive

the Participant Notice for a plan year, the plan administrator may

select any date during the period beginning with the last day of the

previous plan year and ending with the day on which the Participant

Notice for the plan year is due, provided that a change in the date

from one plan year to the next does not exclude a substantial number of

participants and beneficiaries.

Sec. 2627.8 Time of notice.

The plan administrator must issue the Participant Notice for a plan

year no later than two months after the deadline for filing the annual

report for the previous plan year (see Sec. 2520.104a-5(a)(2) of this

title). The plan administrator may change the date of issuance from one

plan year to the next, provided that the effect of any change is not to

avoid disclosing a minimum funding waiver under Sec. 2627.10(b)(5) or a

missed contribution under Sec. 2627.10(b)(6). When the President of the

United States declares that, under the Disaster Relief Act of 1974, as

amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists,

the PBGC may extend the due date for providing the Participant Notice

by up to 180 days.

Sec. 2627.9 Manner of issuance of notice.

The Participant Notice shall be issued by using measures reasonably

calculated to ensure actual receipt by the persons entitled to receive

it. It may be issued together with another document, such as the

summary annual report required under section 104(b)(3) of the Act for

the prior plan year, but must be in a separate document.

Sec. 2627.10 Form of notice.

(a) General. The Participant Notice (and any additional information

under paragraph (d) of this section) shall be readable and written in a

manner calculated to be understood by the average plan participant and

not to mislead recipients. The Model Participant Notice in the Appendix

to this part (when properly completed) is an example of a Participant

Notice meeting the requirements of this section.

(b) Content. The Participant Notice for a plan year shall include--

(1) Identifying information (the name of the plan and the

contributing sponsor, the employer identification number of the

contributing sponsor, the plan number, the date (at least the month and

year) on which the Participant Notice is issued, and the name, title,

address and telephone number of the person(s) who can provide

information about the plan's funding);

(2) A statement to the effect that the Participant Notice is

required by law;

(3) The Notice Funding Percentage for the plan year, determined in

accordance with paragraph (c) of this section, and the date as of which

the Notice Funding Percentage is determined;

(4) A statement to the effect that--

(i) To pay pension benefits, the employer is required to contribute

money to the plan over a period of years;

(ii) A plan's funding percentage does not take into consideration

the financial strength of the employer; and

(iii) The employer, by law, must pay for all pension benefits, but

benefits may be at risk if the employer faces a severe financial crisis

or is in bankruptcy;

(5) If, for any of the five plan years immediately preceding the

plan year, the plan has been granted a minimum funding waiver under

section 303 of the Act that has not (as of the end of the prior plan

year) been fully repaid, a statement identifying each such plan year

and an explanation of a minimum funding waiver;

(6) For any payment subject to the requirements of this paragraph,

a statement identifying the due date for the payment and noting that

the payment has or has not been made and (if made) the date of the

payment. Once participants have been notified (under this part or Title

I of the Act) of a missed contribution that is subject to the

requirements of this paragraph, the delinquency need not be reported in

a Participant Notice for a subsequent plan year if the missed

contribution has been paid in full by the time the subsequent

Participant Notice is issued. The payments subject to the requirements

of this paragraph are--

(i) Any minimum funding payment necessary to satisfy the minimum

funding standard under section 302(a) of the Act for any plan year

beginning on or after January 1, 1994, if not paid by the earlier of

the due date for that payment (the latest date allowed under section

302(c)(10)) or the date of issuance of the Participant Notice; and

(ii) An installment or other payment required by section 302 of the

Act for a plan year beginning on or after January 1, 1995, that was not

paid by the 60th day after the due date for that payment;

(7) A statement to the effect that if a plan terminates before all

pension benefits are fully funded, the PBGC pays most persons all

pension benefits, but some persons may lose certain benefits that are

not guaranteed;

(8) A summary of plan benefits guaranteed by the PBGC, with an

explanation of the limitations on such guarantee; and

(9) A statement that further information about the PBGC's guarantee

may be obtained by requesting the booklet ``Your Guaranteed Pension''

from Box YGP, Pueblo, Colorado 81009, along with the current price of

the booklet. The Participant Notice may include a statement that the

booklet may be obtained through electronic access to the Consumer

Information Center via

[[Page 34416]]

the World Wide Web at http://www.gsa.gov/staff/pa/cic/money.htm.

(c) Notice Funding Percentage--(1) General Rule. The Notice Funding

Percentage that must be included in the Participant Notice for a plan

year is the ``funded current liability percentage'' (as that term is

defined in section 302(d)(9)(C) of the Act) for that plan year or the

prior plan year.

(2) Small plans. A plan that is exempt from the requirements of

section 302(d) of the Act for a plan year by reason of section

302(d)(6)(A) may determine its funded current liability percentage for

that plan year using the Small Plan DRC Exception Test rules in

Sec. 2627.4(b).

(d) Additional information. The plan administrator may include with

the Participant Notice any information not described in paragraph (b)

of this section only if it is in a separate document.

(e) Foreign languages. In the case of a plan that (as of the date

selected under Sec. 2627.7) covers the numbers or percentages specified

in Sec. 2520.104b-10(e) of this title of participants literate only in

the same non-English language, the plan administrator shall provide

those participants either--

(1) An English-language Participant Notice that prominently

displays a legend, in their common non-English language, offering them

assistance in that language, and clearly setting forth any procedures

participants must follow to obtain such assistance, or

(2) A Participant Notice in that language.

Appendix A to Part 2627--Model Participant Notice

The following is an example of a Participant Notice that satisfies

the requirements of Sec. 2627.10 when the required information is

filled in (subject to Secs. 2627.10(d)-(e), where applicable).

Notice to Participants of [Plan Name]

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 PERCENTAGE]

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 a

severe 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

A FUNDING 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 29 CFR 2627.10(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.

The maximum guaranteed benefit is [INSERT FROM TABLE IN

APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year

for a 65-year-old person in a plan that terminates in [INSERT

APPLICABLE YEAR].

The maximum benefit may be reduced for an individual

who is younger than age 65. For example, it is [INSERT FROM TABLE IN

APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year

for an individual who starts receiving benefits at age 55. [IN LIEU

OF AGE 55, YOU MAY SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE PLAN. 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 maximum benefit will also be reduced when a benefit

is provided for a survivor.

The PBGC does not guarantee certain types of benefits. [INCLUDE

THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE BENEFITS AVAILABLE

UNDER YOUR PLAN.]

The PBGC does not guarantee benefits for which you do

not have a vested right when a plan ends, usually because you have

not worked enough years for the company.

The PBGC does not guarantee benefits for which you have

not met all age, service, or other requirements at the time the plan

ends.

Benefit increases and new benefits that have been in

place for less than a year are not guaranteed. Those that have been

in place for less than 5 years are only partly guaranteed.

Early retirement payments that are greater than

payments at normal retirement age may not be guaranteed. For

example, a supplemental benefit that stops when you become eligible

for Social Security may not be guaranteed.

Benefits other than pension benefits, such as health

insurance, life insurance, death benefits, vacation pay, or

severance pay are not guaranteed.

The PBGC does not pay lump sums exceeding $3,500.

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 copy of ``Your Guaranteed Pension''

for $1.25 by writing to Box YGP, Pueblo, Colorado 81009.

[THE FOLLOWING SENTENCE MAY BE INCLUDED:]

``Your Guaranteed Pension'' is also available through electronic

access to the Consumer Information Center via the World Wide Web at

http://www.gsa.gov/staff/pa/cic/money.htm.

Issued: [INSERT AT LEAST MONTH AND YEAR]

Appendix B to Part 2627--Table of Maximum Guaranteed Benefits

----------------------------------------------------------------------------------------------------------------

The maximum guaranteed benefit for an individual starting to receive benefits at the age

listed below is the amount (monthly or annual) listed below:

If a plan -----------------------------------------------------------------------------------------------

terminates in-- Age 65 Age 62 Age 60 Age 55

-----------------------------------------------------------------------------------------------

Monthly Annual Monthly Annual Monthly Annual Monthly Annual

----------------------------------------------------------------------------------------------------------------

1995............ $2,573.86 $30,886.32 $2,033.35 $24,400.20 $1,673.01 $20,076.12 $1,158.24 $13,898.88

----------------------------------------------------------------------------------------------------------------

[[Page 34417]]

The maximum guaranteed benefit for an individual starting to

receive benefits at ages other than those listed above can be

determined by applying the PBGC's regulation on computation of

maximum guaranteeable benefits (29 CFR 2621.4).

Issued in Washington, DC, this 27th day of June, 1995.

Robert B. Reich,

Chairman, Board of Directors, Pension Benefit Guaranty Corporation.

Issued on the date set forth above pursuant to a resolution of

the Board of Directors authorizing its Chairman to issue this final

rule.

James J. Keightley,

Secretary, Board of Directors, Pension Benefit Guaranty Corporation.

[FR Doc. 95-16196 Filed 6-28-95; 8:45 am]

BILLING CODE 7708-01-P