PBGC Announces 2014 Moratorium On ERISA Section 4062(e) Enforcement Actions

On July 8, 2014, the Pension Benefit Guaranty Corporation (PBGC) issued a press release announcing a moratorium on its enforcement of Employee Retirement Income Security Act of 1974(ERISA) Section 4062(e) through the end of 2014. In general, ERISA Section 4062(e) allows PBGC to require that employers financially guarantee pension obligations in the form of plan contributions or a bond or escrow amount based on a plan's unfunded termination liability when an employer with a pension plan shuts down operations at a facility and, as a result of the shutdown, more than 20 percent of the employer's employees who are plan participants incur a separation from employment.

PBGC had recently been quite aggressive in its enforcement actions under ERISA Section 4062(e). As a result, ordinary business decisions, like asset deals and other business decisions impacting less than a facility's full operations, were gaining PBGC's attention. PBGC believes that the moratorium will enable it to target future enforcement efforts to those cases where employee...