Approval of Amendment to Special Withdrawal Liability Rules for Service Employees International Union Local 25 and Participating Employers Pension Trust, 71562-71564 [E5-6625]

Download as PDF 71562 Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / Notices for NRG Energy, Dr. William R. Hollaway at Skadden, Arps, Slate, Meagher & Flom LLP, 1440 New York Avenue, Washington, DC 20005 (tel: 202–371–7819; fax: 202–371–7939; email: whollawa@skadden.com); and counsel for Texas Genco, Mr. Nicholas S. Reynolds at Winston and Strawn, LLP, 1700 K Street, NW., Washington, DC 20006–3817 (tel: 202–282–5717; fax: 202–282–5100; e-mail: nreynolds@winston.com); the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555– 0001 (e-mail address for filings regarding license transfer cases only: OGCLT@NRC.gov); and the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, Attention: Rulemakings and Adjudications staff, in accordance with 10 CFR 2.302 and 2.305. The Commission will issue a notice or order granting or denying a hearing request or intervention petition, designating the issues for any hearing that will be held and designating the Presiding Officer. A notice granting a hearing will be published in the Federal Register and served on the parties to the hearing. As an alternative to requests for hearing and petitions to intervene, within 30 days from the date of publication of this notice, persons may submit written comments regarding the license transfer application, as provided for in 10 CFR 2.1305. The Commission will consider and, if appropriate, respond to these comments, but such comments will not otherwise constitute part of the decisional record. Comments should be submitted to the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, Attention: Rulemakings and Adjudications staff, and should cite the publication date and page number of this Federal Register notice. For further details with respect to this action, see the application dated October 14, 2005, available for public inspection at the Commission’s Public Document Room (PDR), located at One White Flint North, Public File Area O1 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible electronically from the Agencywide Documents Access and Management System’s (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, http://www.nrc.gov/reading-rm/ adams.html. Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS, should contact the NRC PDR Reference staff by telephone VerDate Aug<31>2005 20:13 Nov 28, 2005 Jkt 208001 at 1–800–397–4209, 301–415–4737, or by e-mail to pdr@nrc.gov. Dated at Rockville, Maryland this 21st day of November 2005. For The Nuclear Regulatory Commission. Mohan C. Thadani, Senior Project Manager, Plant Licensing Branch IV , Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. E5–6634 Filed 11–28–05; 8:45 am] BILLING CODE 7590–01–P PENSION BENEFIT GUARANTY CORPORATION Approval of Amendment to Special Withdrawal Liability Rules for Service Employees International Union Local 25 and Participating Employers Pension Trust Pension Benefit Guaranty Corporation. ACTION: Notice of approval. AGENCY: SUMMARY: The Service Employees International Union Local 25 and Participating Employers Pension Trust requested the Pension Benefit Guaranty Corporation (‘‘PBGC’’) to approve a plan amendment providing for special withdrawal liability rules for employers that maintain the Plan. PBGC published a Notice of Pendency of the Request for Approval of the amendment on July 6, 2005 (70 FR 38983) (‘‘Notice of Pendency’’). In accordance with the provisions of the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’), PBGC is now advising the public that the agency has approved the requested amendment. FOR FURTHER INFORMATION CONTACT: Frank Anderson, Attorney, Office of the Chief Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005–4026; Telephone 202–326–4020 (For TTY/ TDD users, call the Federal Relay Service toll-free at 1–800–877–8339 and ask to be connected to 202–326–4020). SUPPLEMENTARY INFORMATION: Background Under section 4201 of ERISA, an employer who completely or partially withdraws from a defined benefit multiemployer pension plan becomes liable for a proportional share of the plan’s unfunded vested benefits. The statute specifies that a ‘‘complete withdrawal’’ occurs whenever an employer either permanently (1) ceases to have an obligation to contribute to the plan, or (2) ceases all operations covered under the plan. See ERISA section PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 4203(a). Under the second test, therefore, an employer who closes or sells its operations will incur withdrawal liability. Under the first test, an employer who remains in business but who no longer has an obligation to contribute to the plan also is liable. The ‘‘partial withdrawal’’ provisions of sections 4205 and 4206 impose a lesser measure of liability upon employers who greatly reduce, but do not eliminate, the operations that generate contributions to the plan. The withdrawal liability provisions of ERISA are a critical factor in maintaining the solvency of these pension plans and reducing claims made on the multiemployer plan guaranty fund maintained by PBGC. Without withdrawal liability rules, an employer who participates in an underfunded multiemployer plan would have a powerful economic incentive to reduce expenses by withdrawing from the plan. Congress nevertheless allowed for the possibility that, in certain industries, the fact that particular employers go out of business (or cease operations in a specific geographic region) might not result in permanent damage to the pension plan’s contribution base. In the construction industry, for example, the work must necessarily take place at the construction site; if that work generates contributions to the pension plan, it does not much matter which employer does the work. Put another way, if a construction employer goes out of business, or stops operations in a geographic area, pension plan contributions will not diminish if a second employer who contributes to the plan fills the void. The plan’s contribution base is damaged, therefore, only if the employer stops contributing to the plan but continues to perform construction work in the jurisdiction of the collective bargaining agreement. This reasoning led Congress to adopt a special definition of the term ‘‘withdrawal’’ for construction industry plans. Section 4203(b)(2) of ERISA provides that a complete withdrawal occurs only if an employer ceases to have an obligation to contribute under a plan, but the employer nevertheless performs previously covered work in the jurisdiction of the collective bargaining agreement anytime within five years after the employer ceased its contributions.1 There is a parallel rule 1 Section 4203(c)(1) of ERISA applies a similar definition of complete withdrawal to the entertainment industry, except that the pertinent jurisdiction is the jurisdiction of the plan rather than the jurisdiction of the collective bargaining agreement. No plan has ever requested PBGC to E:\FR\FM\29NON1.SGM 29NON1 71563 Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / Notices for partial withdrawals from construction plans. Under section 4208(d)(1) of ERISA, ‘‘[a]n employer to whom section 4203(b) (relating to the building and construction industry) applies is liable for a partial withdrawal only if the employer’s obligation to contribute under the plan is continued for no more than an insubstantial portion of its work in the craft and area jurisdiction of the collective bargaining agreement of the type for which contributions are required.’’ Section 4203(f) of ERISA provides that PBGC may prescribe regulations under which plans that are not in the construction industry may be amended to use special withdrawal liability rules similar to those that apply to construction plans. Under the statute, the regulations ‘‘shall permit the use of special withdrawal liability rules * * * only in industries’’ that PBGC determines share the characteristics of the construction industry. In addition, each plan application must show that the special rule ‘‘will not pose a significant risk to the [PBGC] insurance system.’’ Section 4208(e)(3) of ERISA provides for parallel treatment of partial withdrawal liability rules. The regulation on Extension of Special Withdrawal Liability Rules (29 CFR part 4203), prescribes the procedures a multiemployer plan must follow to request PBGC approval of a plan amendment that establishes special complete or partial withdrawal liability rules. Under 29 CFR 4203.3(a), a complete withdrawal rule must be similar to the statutory provision that applies to construction industry plans under section 4203(b) of ERISA. Any special rule for partial withdrawals must be consistent with the construction industry partial withdrawal provisions. Each request for approval of a plan amendment establishing special withdrawal liability rules must provide PBGC with detailed financial and actuarial data about the plan. In addition, the applicant must provide PBGC with information about the effects of withdrawals on the plan’s contribution base. As a practical matter, the plan must show that the characteristics of employment and labor relations in its industry are sufficiently similar to those in the construction industry that use of the construction rule would be appropriate. Relevant factors include the mobility of the employees, the intermittent nature of the employment, the project-by-project nature of the work, extreme fluctuations in the level of an employer’s covered work under the plan, the existence of a consistent pattern of entry and withdrawal by employers, and the local nature of the work performed. PBGC will approve a special withdrawal liability rule only if a review of the record shows that: (1) The industry has characteristics that would make use of the special construction withdrawal rules appropriate; and (2) The adoption of the special rule would not aversely affect the plan. After review of the application and all public comments, PBGC may approve the amendment in the form proposed by the plan, approve the application subject to conditions or revisions, or deny the application. Request On July 6, 2005, PBGC published a notice soliciting public comment on a request on behalf of the Service Employees International Union Local 25 and Participating Employers Pension Trust (‘‘Plan’’) for approval of an amendment prescribing special withdrawal liability rules that, if approved by PBGC, would be effective as of September 30, 2002. PBGC received no comments on the notice. The plan is a multiemployer plan covering the commercial building cleaning and security industry in Chicago, Illinois. It is maintained pursuant to collective bargaining agreements with the Building Owners and Managers Association of Chicago and independent cleaning contractors. As of October 1, 2003, it had approximately 10,000 active participants and was paying approximately $14.4 million in benefits to 4,157 pensioners and survivors. The plan had 173 contributing employers as of October 1, 2002, and contributions for the year ending September 30, 2003, were $10.7 million. The number of contributing employers has remained stable from 1996–2002, with a small increase in 2001 when employees of independent contractors who clean Chicago public school and police stations became participants in the plan. Between 1996 and 2002, the number of active participants increased by almost 67%. Contributions have increased at a faster rate than benefit payments, with increases occurring as new groups were added to the plan; in 1997, benefits were 248% of contributions and in 2003 they were 134% of contributions. The contribution rate was $12 per employee per week from 1981 until 2003, when it was increased to $18 per employee per week. Since October 1, 2001, the monthly benefit has been $27 for each year of credited service after December 1, 1968, plus $10 per year of credited service before December 1, 1968. Total service is limited to 25 years. (In 1999, the rate was $25 and in 2000, it was $26.) In addition, the plan has increased the pensions of retirees by 4.87% in 1998 and by 1.00% in 2000. SUMMARY OF ACTUARIAL VALUATION RESULTS, 2000–2003 Valuation Date (October 1) Item 2003 Active participants ............................................................................................................ Retirees ............................................................................................................................ Monthly benefit accrual rate ............................................................................................ Max. monthly benefit ....................................................................................................... Contributions .................................................................................................................... Benefits (000) .................................................................................................................. Accrued liability (000) ...................................................................................................... Market value of assets (000) ........................................................................................... Net min. funding charge w/o credit bal. (000) ................................................................. Normal cost (000) ............................................................................................................ Unfunded accrued liability* (000) .................................................................................... Present value of vested benefits (000) ........................................................................... 2002 2001 2000 10,297 4,157 27 675 10,739 14,424 229,508 195,336 14,039 8,888 34,172 206,284 10,061 4,088 27 675 7,804 13,786 217,770 174,021 12,822 8,674 43,749 198,020 7,995 4,146 27 675 6,579 13,258 210,172 189,389 9,338 6,719 20,783 192,041 7,182 4,070 26 650 5,340 12,839 196,940 219,731 6,974 5,585 (22,791) 183,588 determine that it shares the characteristics of an entertainment plan. VerDate Aug<31>2005 20:13 Nov 28, 2005 Jkt 208001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 E:\FR\FM\29NON1.SGM 29NON1 71564 Federal Register / Vol. 70, No. 228 / Tuesday, November 29, 2005 / Notices SUMMARY OF ACTUARIAL VALUATION RESULTS, 2000–2003—Continued Valuation Date (October 1) Item 2003 Unfunded liability, vested benefits* (000) ........................................................................ Valuation interest rate (%) ............................................................................................... 2002 10,948 7.5 2001 23,999 7.5 2,652 7.5 2000 (36,143) 7.5 * Using market value of assets Decision on the Proposed Amendment The statute and the implementing regulation state that PBGC must make two factual determinations before it approves a request for an amendment that adopts a special withdrawal liability rule. ERISA section 4203(f); 29 CFR 4203.4(a). First, on the basis of a showing by the plan, PBGC must determine that the amendment will apply to an industry that has characteristics that would make use of the special rules appropriate. Second, PBGC must determine that the plan amendment will not pose a significant risk to the insurance system. PBGC’s discussion on each of those issues follows. After review of the record submitted by the Plan, and having received no public comments, PBGC has entered the following determinations. 1. What Is the Nature of the Industry? In determining whether an industry has the characteristics that would make an amendment to special rules appropriate, an important line of inquiry is the extent to which the Plan’s contribution base resembles that found in the construction industry. This threshold question requires consideration of the effect of employer withdrawals on the Plan’s contribution base. Work covered by this plan must be performed at the office building located in Chicago. Thus, the work is local in nature; it generally will continue to be covered by the Plan. An employer ceases contributing when work is outsourced, the contractor loses a cleaning or security contract with a building owner, bankruptcy, closeout of a business as a result of retirement, or business relocation. Over the past ten years, cessation of contributions by any individual employer has not had an adverse impact on the Plan’s contribution base. Most employers that have ceased to contribute have been replaced by another employer who begins contributing for the same work. 2. What Is the Exposure and Risk of Loss to PBGC and Participants? Exposure. The bargaining parties have increased benefits for active workers by just over 25% since 1999. For a VerDate Aug<31>2005 20:13 Nov 28, 2005 Jkt 208001 participant who retires with 25 years of service (the maximum) the monthly benefit has risen from $538 to $675. Thus, benefit liabilities will rise because recent retirees will have higher benefits. Risk of loss. The record shows that the Plan presented a low risk of loss to PBGC guaranty funds. The Plan’s active participant population is increasing. Plan assets increased from 1997 to 2000, and dipped slightly after that. While no longer fully funded for accrued or vested benefits, underfunding decreased in 2003. The Plan and the covered industry have unique characteristics that suggest that the Plan’s contribution base is likely to remain stable. Contributions to the Plan are made with respect to Chicago commercial office buildings. Consequently, the Plan’s contribution base is secure and the departure of one employer from the Plan is not likely to have an adverse effect on the contribution base so long as the number of buildings covered does not decline. Conclusion Based on the facts of this case and the representations and statements made in connection with the request for approval, PBGC has determined that the plan amendment modifying special withdrawal liability rules (1) will apply only to an industry that has characteristics that would make the use of special withdrawal liability rules appropriate, and (2) will not pose a significant risk to the insurance system. Therefore, PBGC hereby grants the Plan’s request for approval of a plan amendment modifying special withdrawal liability rules, as set forth herein. Should the Plan wish to amend these rules at any time, PBGC approval of the amendment will be required. Issued at Washington, DC, on this 17th day of November, 2005. Bradley D. Belt, Executive Director, Pension Benefit Guaranty Corporation. [FR Doc. E5–6625 Filed 11–28–05; 8:45 am] Frm 00106 Fmt 4703 [File No. 1–31816] Issuer Delisting; Notice of Application of Centennial Specialty Foods Corporation To Withdraw Its Common Stock, $.0001 Par Value, From Listing and Registration on the Boston Stock Exchange, Inc. November 22, 2005. On November 4, 2005, Centennial Specialty Foods Corporation, a Delaware corporation (‘‘Issuer’’), filed an application with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 12d2–2(d) thereunder,2 to withdraw its common stock, $.0001 par value (‘‘Security’’), from listing and registration on the Boston Stock Exchange, Inc. (‘‘BSE’’). On November 1, 2004, the Board of Directors (‘‘Board’’) of the Issuer approved resolutions on November 1, 2005 to withdraw the Security from listing on BSE. The Issuer stated that the following reason factored into the Board’s decision to withdraw the Security from BSE: (1) The Issuer was recently delisted from the Nasdaq Stock Market, and as a result, BSE suspended trading in the Security on October 26, 2005; (2) the Issuer does not believe it will be able to comply with BSE’s requirement to have an audit committee composed of at least three independent board members; and (3) in order to reduce costs, the Issuer expects to terminate its obligations to file reports with the Commission or otherwise be subjected to the Act through filing of Form 15 with the Commission. The Issuer stated in its application that it has complied with Rule 12d–2– 2(d) under the Act 3 by complying with all applicable laws in the State of Delaware, the state in which the Issuer is incorporated, and by providing BSE with the required documents governing the withdrawal of securities from listing and registration on BSE. The Issuer’s 1 15 U.S.C. 78l(d). CFR 240.12d2–2(d). 3 See id. 2 17 BILLING CODE 7708–01–P PO 00000 SECURITIES AND EXCHANGE COMMISSION Sfmt 4703 E:\FR\FM\29NON1.SGM 29NON1

Agencies

[Federal Register Volume 70, Number 228 (Tuesday, November 29, 2005)]
[Notices]
[Pages 71562-71564]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-6625]


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PENSION BENEFIT GUARANTY CORPORATION


Approval of Amendment to Special Withdrawal Liability Rules for 
Service Employees International Union Local 25 and Participating 
Employers Pension Trust

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of approval.

-----------------------------------------------------------------------

SUMMARY: The Service Employees International Union Local 25 and 
Participating Employers Pension Trust requested the Pension Benefit 
Guaranty Corporation (``PBGC'') to approve a plan amendment providing 
for special withdrawal liability rules for employers that maintain the 
Plan. PBGC published a Notice of Pendency of the Request for Approval 
of the amendment on July 6, 2005 (70 FR 38983) (``Notice of 
Pendency''). In accordance with the provisions of the Employee 
Retirement Income Security Act of 1974, as amended (``ERISA''), PBGC is 
now advising the public that the agency has approved the requested 
amendment.

FOR FURTHER INFORMATION CONTACT: Frank Anderson, Attorney, Office of 
the Chief Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, 
NW., Washington, DC 20005-4026; Telephone 202-326-4020 (For TTY/TDD 
users, call the Federal Relay Service toll-free at 1-800-877-8339 and 
ask to be connected to 202-326-4020).

SUPPLEMENTARY INFORMATION:

Background

    Under section 4201 of ERISA, an employer who completely or 
partially withdraws from a defined benefit multiemployer pension plan 
becomes liable for a proportional share of the plan's unfunded vested 
benefits. The statute specifies that a ``complete withdrawal'' occurs 
whenever an employer either permanently (1) ceases to have an 
obligation to contribute to the plan, or (2) ceases all operations 
covered under the plan. See ERISA section 4203(a). Under the second 
test, therefore, an employer who closes or sells its operations will 
incur withdrawal liability. Under the first test, an employer who 
remains in business but who no longer has an obligation to contribute 
to the plan also is liable. The ``partial withdrawal'' provisions of 
sections 4205 and 4206 impose a lesser measure of liability upon 
employers who greatly reduce, but do not eliminate, the operations that 
generate contributions to the plan. The withdrawal liability provisions 
of ERISA are a critical factor in maintaining the solvency of these 
pension plans and reducing claims made on the multiemployer plan 
guaranty fund maintained by PBGC. Without withdrawal liability rules, 
an employer who participates in an underfunded multiemployer plan would 
have a powerful economic incentive to reduce expenses by withdrawing 
from the plan.
    Congress nevertheless allowed for the possibility that, in certain 
industries, the fact that particular employers go out of business (or 
cease operations in a specific geographic region) might not result in 
permanent damage to the pension plan's contribution base. In the 
construction industry, for example, the work must necessarily take 
place at the construction site; if that work generates contributions to 
the pension plan, it does not much matter which employer does the work. 
Put another way, if a construction employer goes out of business, or 
stops operations in a geographic area, pension plan contributions will 
not diminish if a second employer who contributes to the plan fills the 
void. The plan's contribution base is damaged, therefore, only if the 
employer stops contributing to the plan but continues to perform 
construction work in the jurisdiction of the collective bargaining 
agreement.
    This reasoning led Congress to adopt a special definition of the 
term ``withdrawal'' for construction industry plans. Section 4203(b)(2) 
of ERISA provides that a complete withdrawal occurs only if an employer 
ceases to have an obligation to contribute under a plan, but the 
employer nevertheless performs previously covered work in the 
jurisdiction of the collective bargaining agreement anytime within five 
years after the employer ceased its contributions.\1\ There is a 
parallel rule

[[Page 71563]]

for partial withdrawals from construction plans. Under section 
4208(d)(1) of ERISA, ``[a]n employer to whom section 4203(b) (relating 
to the building and construction industry) applies is liable for a 
partial withdrawal only if the employer's obligation to contribute 
under the plan is continued for no more than an insubstantial portion 
of its work in the craft and area jurisdiction of the collective 
bargaining agreement of the type for which contributions are 
required.''
---------------------------------------------------------------------------

    \1\ Section 4203(c)(1) of ERISA applies a similar definition of 
complete withdrawal to the entertainment industry, except that the 
pertinent jurisdiction is the jurisdiction of the plan rather than 
the jurisdiction of the collective bargaining agreement. No plan has 
ever requested PBGC to determine that it shares the characteristics 
of an entertainment plan.
---------------------------------------------------------------------------

    Section 4203(f) of ERISA provides that PBGC may prescribe 
regulations under which plans that are not in the construction industry 
may be amended to use special withdrawal liability rules similar to 
those that apply to construction plans. Under the statute, the 
regulations ``shall permit the use of special withdrawal liability 
rules * * * only in industries'' that PBGC determines share the 
characteristics of the construction industry. In addition, each plan 
application must show that the special rule ``will not pose a 
significant risk to the [PBGC] insurance system.'' Section 4208(e)(3) 
of ERISA provides for parallel treatment of partial withdrawal 
liability rules.
    The regulation on Extension of Special Withdrawal Liability Rules 
(29 CFR part 4203), prescribes the procedures a multiemployer plan must 
follow to request PBGC approval of a plan amendment that establishes 
special complete or partial withdrawal liability rules. Under 29 CFR 
4203.3(a), a complete withdrawal rule must be similar to the statutory 
provision that applies to construction industry plans under section 
4203(b) of ERISA. Any special rule for partial withdrawals must be 
consistent with the construction industry partial withdrawal 
provisions.
    Each request for approval of a plan amendment establishing special 
withdrawal liability rules must provide PBGC with detailed financial 
and actuarial data about the plan. In addition, the applicant must 
provide PBGC with information about the effects of withdrawals on the 
plan's contribution base. As a practical matter, the plan must show 
that the characteristics of employment and labor relations in its 
industry are sufficiently similar to those in the construction industry 
that use of the construction rule would be appropriate. Relevant 
factors include the mobility of the employees, the intermittent nature 
of the employment, the project-by-project nature of the work, extreme 
fluctuations in the level of an employer's covered work under the plan, 
the existence of a consistent pattern of entry and withdrawal by 
employers, and the local nature of the work performed. PBGC will 
approve a special withdrawal liability rule only if a review of the 
record shows that:
    (1) The industry has characteristics that would make use of the 
special construction withdrawal rules appropriate; and
    (2) The adoption of the special rule would not aversely affect the 
plan. After review of the application and all public comments, PBGC may 
approve the amendment in the form proposed by the plan, approve the 
application subject to conditions or revisions, or deny the 
application.

Request

    On July 6, 2005, PBGC published a notice soliciting public comment 
on a request on behalf of the Service Employees International Union 
Local 25 and Participating Employers Pension Trust (``Plan'') for 
approval of an amendment prescribing special withdrawal liability rules 
that, if approved by PBGC, would be effective as of September 30, 2002. 
PBGC received no comments on the notice.
    The plan is a multiemployer plan covering the commercial building 
cleaning and security industry in Chicago, Illinois. It is maintained 
pursuant to collective bargaining agreements with the Building Owners 
and Managers Association of Chicago and independent cleaning 
contractors. As of October 1, 2003, it had approximately 10,000 active 
participants and was paying approximately $14.4 million in benefits to 
4,157 pensioners and survivors.
    The plan had 173 contributing employers as of October 1, 2002, and 
contributions for the year ending September 30, 2003, were $10.7 
million. The number of contributing employers has remained stable from 
1996-2002, with a small increase in 2001 when employees of independent 
contractors who clean Chicago public school and police stations became 
participants in the plan. Between 1996 and 2002, the number of active 
participants increased by almost 67%.
    Contributions have increased at a faster rate than benefit 
payments, with increases occurring as new groups were added to the 
plan; in 1997, benefits were 248% of contributions and in 2003 they 
were 134% of contributions. The contribution rate was $12 per employee 
per week from 1981 until 2003, when it was increased to $18 per 
employee per week.
    Since October 1, 2001, the monthly benefit has been $27 for each 
year of credited service after December 1, 1968, plus $10 per year of 
credited service before December 1, 1968. Total service is limited to 
25 years. (In 1999, the rate was $25 and in 2000, it was $26.) In 
addition, the plan has increased the pensions of retirees by 4.87% in 
1998 and by 1.00% in 2000.

                                Summary of Actuarial Valuation Results, 2000-2003
----------------------------------------------------------------------------------------------------------------
                                                                          Valuation Date (October 1)
                            Item                             ---------------------------------------------------
                                                                  2003         2002         2001         2000
----------------------------------------------------------------------------------------------------------------
Active participants.........................................       10,297       10,061        7,995        7,182
Retirees....................................................        4,157        4,088        4,146        4,070
Monthly benefit accrual rate................................           27           27           27           26
Max. monthly benefit........................................          675          675          675          650
Contributions...............................................       10,739        7,804        6,579        5,340
Benefits (000)..............................................       14,424       13,786       13,258       12,839
Accrued liability (000).....................................      229,508      217,770      210,172      196,940
Market value of assets (000)................................      195,336      174,021      189,389      219,731
Net min. funding charge w/o credit bal. (000)...............       14,039       12,822        9,338        6,974
Normal cost (000)...........................................        8,888        8,674        6,719        5,585
Unfunded accrued liability* (000)...........................       34,172       43,749       20,783     (22,791)
Present value of vested benefits (000)......................      206,284      198,020      192,041      183,588

[[Page 71564]]

 
Unfunded liability, vested benefits* (000)..................       10,948       23,999        2,652     (36,143)
Valuation interest rate (%).................................          7.5          7.5          7.5         7.5
----------------------------------------------------------------------------------------------------------------
* Using market value of assets

Decision on the Proposed Amendment

    The statute and the implementing regulation state that PBGC must 
make two factual determinations before it approves a request for an 
amendment that adopts a special withdrawal liability rule. ERISA 
section 4203(f); 29 CFR 4203.4(a). First, on the basis of a showing by 
the plan, PBGC must determine that the amendment will apply to an 
industry that has characteristics that would make use of the special 
rules appropriate. Second, PBGC must determine that the plan amendment 
will not pose a significant risk to the insurance system. PBGC's 
discussion on each of those issues follows. After review of the record 
submitted by the Plan, and having received no public comments, PBGC has 
entered the following determinations.

1. What Is the Nature of the Industry?

    In determining whether an industry has the characteristics that 
would make an amendment to special rules appropriate, an important line 
of inquiry is the extent to which the Plan's contribution base 
resembles that found in the construction industry. This threshold 
question requires consideration of the effect of employer withdrawals 
on the Plan's contribution base.
    Work covered by this plan must be performed at the office building 
located in Chicago. Thus, the work is local in nature; it generally 
will continue to be covered by the Plan. An employer ceases 
contributing when work is outsourced, the contractor loses a cleaning 
or security contract with a building owner, bankruptcy, closeout of a 
business as a result of retirement, or business relocation. Over the 
past ten years, cessation of contributions by any individual employer 
has not had an adverse impact on the Plan's contribution base. Most 
employers that have ceased to contribute have been replaced by another 
employer who begins contributing for the same work.

2. What Is the Exposure and Risk of Loss to PBGC and Participants?

    Exposure. The bargaining parties have increased benefits for active 
workers by just over 25% since 1999. For a participant who retires with 
25 years of service (the maximum) the monthly benefit has risen from 
$538 to $675. Thus, benefit liabilities will rise because recent 
retirees will have higher benefits.
    Risk of loss. The record shows that the Plan presented a low risk 
of loss to PBGC guaranty funds. The Plan's active participant 
population is increasing. Plan assets increased from 1997 to 2000, and 
dipped slightly after that. While no longer fully funded for accrued or 
vested benefits, underfunding decreased in 2003. The Plan and the 
covered industry have unique characteristics that suggest that the 
Plan's contribution base is likely to remain stable. Contributions to 
the Plan are made with respect to Chicago commercial office buildings. 
Consequently, the Plan's contribution base is secure and the departure 
of one employer from the Plan is not likely to have an adverse effect 
on the contribution base so long as the number of buildings covered 
does not decline.

Conclusion

    Based on the facts of this case and the representations and 
statements made in connection with the request for approval, PBGC has 
determined that the plan amendment modifying special withdrawal 
liability rules (1) will apply only to an industry that has 
characteristics that would make the use of special withdrawal liability 
rules appropriate, and (2) will not pose a significant risk to the 
insurance system. Therefore, PBGC hereby grants the Plan's request for 
approval of a plan amendment modifying special withdrawal liability 
rules, as set forth herein. Should the Plan wish to amend these rules 
at any time, PBGC approval of the amendment will be required.


    Issued at Washington, DC, on this 17th day of November, 2005.
Bradley D. Belt,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. E5-6625 Filed 11-28-05; 8:45 am]
BILLING CODE 7708-01-P