On July 8, 2014, the Pension Benefit Guaranty Corporation (PBGC) announced a moratorium on the enforcement of both open and new ERISA Section 4062(e) cases from July 8, 2014 through December 31, 2014. The goal of the moratorium is to allow the PBGC time to rework enforcement measures to ensure that its focus remains on at-risk pensions while being mindful of business concerns.

ERISA Section 4062(e) requires companies with defined benefit pension plans to notify the PBGC when they stop operations at a facility causing a substantial number of plan participants to lose their jobs. In the past, the PBGC typically required companies to provide additional plan contributions or a letter of credit guaranteeing future contributions to protect the plan.

In 2012, responding to business concerns, the PBGC started a program in which it decided not take any action to enforce ERISA Section 4062(e) liability against:

(See Legal Update, PBGC Announces Change to ERISA Section 4062(e) Enforcement Practices). To clarify the scope of these targeting efforts, in May, 2013, the PBGC also released enforcement guidelines (see Legal Update, PBGC Releases Enforcement Guidelines for ERISA Section 4062(e) Financial Assurance Program). However, many companies are still expressing concern about whether and how the PBGC implements these targeting efforts under ERISA Section 4062(e). The PBGC will use this moratorium to consider further targeting and to work with plan sponsors to minimize effects on necessary business activities.

The PBGC moratorium means that employers that have open ERISA Section 4062(e) cases or that may cease operations at a facility that could lead to liability under ERISA Section 4062(e) will not be required to provide additional funding to these plans under ERISA Section 4062(e) in 2014.

However, companies are still required to report new ERISA Section 4062(e) events during this moratorium, though the PBGC will not take enforcement action on these cases in 2014.