The Pension Benefit Guaranty Corporation proposes to amend its regulation on benefits payable in terminated single employer plans, to “address a narrow but important issue” regarding the guarantee of benefits for participants serving in the military at the time their pension plan terminates.

Under the Uniformed Services Employment and Reemployment Rights Act, an individual who leaves his or her job to serve in the uniformed services is generally entitled to reemployment by his or her previous employer and, upon reemployment, to receive credit for benefits—including employee pension plan benefits—that would have accrued but for the employee’s absence due to the military service.

Under PBGC’s existing regulations, a benefit is guaranteed only if the participant satisfies the conditions for entitlement to the benefit on or before the plan’s termination date. The agency proposes to provide an exception to this rule for employees serving in the uniformed services as of the plan’s termination date, “consistent with USERRA’s statutory mandate to treat such persons, upon reemployment, as if they had never left the employ of their former employer,” the agency’s proposal states. The proposed rule provides that as long as a service member is reemployed within USERRA time limits, even if the reemployment occurs after the plan’s termination date, PBGC would treat the participant as having satisfied the reemployment condition as of the plan’s termination date.

“This would ensure that the pension benefits of reemployed service members, like those of other employees, would generally be guaranteed for periods up to the plan’s termination date,” PBGC says. Comments on the proposed rule change must be received by Sept. 28, 2009.