Pension & Benefits News PBGC approves AAA’s updated alternative arbitration procedure
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Friday, January 10, 2020

PBGC approves AAA’s updated alternative arbitration procedure

By Pension and Benefits Editorial Staff

The Pension Benefit Guaranty Corporation (PBGC) has approved the American Arbitration Association’s (AAA’s) updated alternative arbitration procedure, pursuant to ERISA Sec. 4221 and PBGC Reg. Sec. 4221.14. The PBGC’s approval of the AAA’s alternative arbitration procedure is effective January 1, 2020.

The Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”) requires “any dispute” between an employer and a multiemployer pension plan concerning a withdrawal liability determination to be “resolved through arbitration.” As required under the MPPAA, the PBGC promulgated regulations covering default arbitration procedures. However, in lieu of the default procedures, under Reg. Sec. 4221.14, an arbitration may be conducted in accordance with an alternative arbitration procedure approved by the PBGC.

Under PBGC Reg. Sec. 4221.21(d), the PBGC will approve an application if it determines that the proposed procedures will be substantially fair to all parties involved in the arbitration of a withdrawal liability dispute, and that the sponsoring organization is neutral and able to carry out its role under the procedures.

In March 2016, the PBGC issued a notice of the AAA’s request for PBGC approval of the AAA’s updated alternative arbitration procedure that changed the administrative fee schedule and solicited public comments. The PBGC later offered the AAA the opportunity to respond to the submitted comments, and, on March 30, 2017, the AAA responded. The PBGC then issued a request for public comments on the response.

In response to the public comments and discussions between AAA and the PBGC, AAA submitted the proposed rules modifying the original updated alternative arbitration procedure, which revised the applicable fee schedule, added language regarding the apportionment of fees, and revised procedural rules related to the arbitrator selection process. The PBGC has determined that the changes made are consistent with the requirements of ERISA Sec. 4221 of ERISA and the regulatory requirements under PBGC Reg. Sec. 4221.14(d) in that they are fair to all parties involved in the arbitration of a withdrawal liability dispute, and AAA is neutral and able to carry out its role under the procedures. This approval will remain effective until revoked by the PBGC through a Federal Register notice, according to the PBGC.

Source: PBGC notice of approval, 84 FR 67484.

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