In response to plan sponsor concerns, the Pension Benefit Guaranty Corporation (PBGC) announced a moratorium on the enforcement of ERISA Section 4062(e) cases through the end of 2014.

Under ERISA Section 4062(e), when a company ceases operations at a facility through a shut-down or sale and at least 20 percent of workers who are pension plan participants lose their jobs, the company is effectively treated as if it is subject to withdrawal liability. To protect the pensions of the laid-off workers, the PBGC is permitted as part of its enforcement authority to ask the company to increase the pension plan’s funding. The plan administrator is also required to report such liability to the PBGC. The PBGC is in the process of reevaluating the 4062(e) enforcement process, in light of commentary from the plan sponsor community regarding the appropriateness of 4062(e)’s requirements for financially-healthy plan sponsors.

The moratorium is effective from July 8, 2014 through December 31, 2014. The PBGC stated that companies should continue to report new Section 4062(e) events during the moratorium.