On July 23, 2014, the Senate Committee on Health, Education, Labor and Pensions unanimously approved S. 2511, a measure that aims to clarify the definition of "substantial cessation of operations" under Section 4062(e) of ERISA. According to a statement issued by the committee, "this legislation will bring clarity to the pension downsizing liability rules and will ensure that there is a workable mechanism to protect pension benefits when employers show symptoms of financial distress."
Under Section 4062(e), if more than 20% of an employer's total employees who participant in an employer-maintained pension plan are laid off because the employer ceases operations at a facility, the employer must notify the Pension Benefit Guaranty Corporation (PBGC) and face certain withdrawal liability. The committee-approved bill clarifies that "substantial cessation of operations" triggering liability occurs only when:
The bill is expected to advance to the Senate floor for a vote.
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