DOL Publishes New Regulation Implementing Civil Penalties Against Pension Plan Administrators Pursuant to Pension Protection Act
On January 2, 2009, the Department of Labor (DOL) published a final regulation in the Federal Register that outlines the procedures for assessing civil penalties up to $1,000 per day against employee benefit administrators or sponsors who fail to disclose certain documents to participants, beneficiaries, employee representatives, and other employees as required by the Employee Retirement Income Security Act (ERISA), as amended by the Pension Protection Act of 2006 (PPA).
The PPA adds new disclosure requirements under sections 101(j), (k), (l), and 514(e)(3) of ERISA. For example, an administrator of a single-employer defined benefit pension plan must provide written notice of limitations on benefits and benefit accruals to participants and beneficiaries. Additionally, a plan administrator of a multiemployer pension plan must, upon written request, furnish certain documents – including a notice of potential withdrawal liability – to any plan participant, beneficiary, employee representative, or any employer that has an obligation to contribute to the plan. Finally, a plan administrator of a plan with an automatic contribution arrangement must provide to each applicable participant notice of their rights and obligations under such a plan. The PPA authorizes the DOL to assess civil penalties up to $1,000 per day for each violation.
The new rule sets forth how the maximum penalty amounts are computed, identifies the circumstances under which a penalty may be assessed, sets forth certain procedural rules for service and filing, and provides a plan administrator a means to contest an assessment by the DOL and to request an administrative hearing.
This rule takes effect March 3. For more information on the Pension Protection Act, see Littler’s ASAPs: Comprehensive Pension Reform Becomes Law: A Look At Changes Primarily Affecting Defined Contribution Plans and Comprehensive Pension Reform Becomes Law: A Look At Changes Primarily Affecting Defined Benefit Plans by J. René Toadvine and Kevin L. Wright.
