PBGC Makes First Special Financial Assistance Payment

The Pension Benefit Guaranty Corporation (PBGC) announced Jan. 18 that it has made its first special financial assistance (SFA) payment. 

The PBGC provided $112.6 million  in special financial assistance to the Local 138 Pension Plan (Local 138 Plan), a financially troubled multiemployer pension plan based in Baldwin, NY. That plan covers 1,723 participants in the transportation industry, 

The plan had been projected to run out of money early this year. Absent the SFA payment, it would have had to cut participants’ benefits to the PBGC guarantee levels; that would have resulted in payments approximately 20% below those under the plan terms.

The PBGC had announced Dec. 21 that it approved the Local 138 Plan’s application for help under the SFA program, the first such multiemployer plan application it had received.

On July 9 the PBGC said that it had issued an interim final rule implementing the SFA Program, which was created under the American Rescue Plan Act of 202, 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.