The Pension Benefit Guaranty Corporation (PBGC) announced Dec. 21 that it has approved its first multiemployer plan application under the Special Financial Assistance (SFA) Program created by the American Rescue Plan Act of 2021 (ARP).
The PBGC on July 9 announced that it has issued an interim final rule implementing the SFA Program for financially troubled multiemployer pension plans. The program requires plans to demonstrate eligibility for special financial assistance and to calculate the amount of assistance under the ARP and the PBGC’s regulations. A plan:
- may use the funds only to pay plan benefits and administrative expenses;
- must provide an annual statement documenting its compliance with the attendant terms and conditions; and
- does not have to repay SFA funds to the PBGC.
The PBGC has the authority to conduct periodic audits of multiemployer plans that receive SFA.
SFA Program Applicants
So far, reports the PBGC, 20 eligible plans have submitted applications for SFA funds.
The Local 138 Pension Plan (Local 138) based in Baldwin, NY, which covers 1,723 participants in the transportation industry, had been projected to run out of money in 2022. It will receive $112.6 million in special financial assistance, including interest to the expected date of payment to the plan.
Without that assistance, Local 138 would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency—roughly 20% below the benefits payable under the terms of the plan.
“PBGC’s approval of the first application for special financial assistance is a major milestone in implementing the American Rescue Plan Act” said PBGC Director Gordon Hartogensis in a press release.
- Log in to post comments