§1413 Partitions of Eligible Multiemployer Plans

Summary

The Pension Benefit Guaranty Corporation (PBGC) can order a partition that splits off part of a troubled multiemployer pension plan. A plan sponsor must apply for the partition and tell participants and beneficiaries about the application within 30 days. PBGC must decide on the application within 270 days after it is filed or completed. Only plans that meet specific tests can be split. The plan must be in “critical and declining” trouble, the sponsor must have tried all reasonable fixes (including maximum benefit suspensions if needed), PBGC must expect the split will lower PBGC’s long‑term losses and be needed for the plan to stay solvent, PBGC must certify to Congress that other obligations won’t be hurt, and the cost must come only from the fund for basic benefits. PBGC’s order moves the smallest amount of liabilities needed to keep the original plan solvent to a new successor plan. The original sponsor and administrator stay the same. If an employer withdraws within 10 years, withdrawal charges apply to both plans; after 10 years, they apply only to the original plan. The original plan pays each transferred participant the monthly difference between what the plan would have paid and the guaranteed basic amount. For 10 years after the split, the original plan also pays PBGC required premiums and pays PBGC any annual amount tied to benefit increases as described. PBGC must notify certain Congressional committees and affected people within 14 days of the partition order.