American Rescue Plan Act of 2021 ("ARPA")
We are pleased to share the PBGC News Release appearing below concerning approval of the Pension Fund’s application for a second Special Financial Assistance (SFA) Grant. In August 2022, the Pension Fund received the first grant of $715 million under the PBGC Interim Rule. The first grant was projected to keep the Pension Fund solvent until assets were to exhaust on December 31, 2051. The initial grant enabled the Pension Fund to restore suspended benefits and issue make-up payments for benefits suspended since 2019.
Last year, PBGC issued Final Rules which agreed with comments we submitted to the effect that plans which had implemented benefit suspensions under the Multiemployer Pension Reform Act of 2014 (MPRA) should be able to project increasing assets beyond 2052. This improvement was only available to plans which had suspended benefits under MPRA. The Pension Fund greatly benefited from the Final Rule and submitted a Supplemented Application for a second grant sufficient to project a path of steadily increasing funding percentages.
The Pension Fund has been advised by PBGC that it will receive an additional $279 million on August 7, 2023. This is an extremely positive development and a complete reversal of the situation facing participants as little as 5 years ago as its funding percentage was headed towards insolvency. Now, the funding percentage has dramatically improved and is on course to continue increasing.
In total, the Penson Fund will have received $994 million and has no obligation to repay the grant.
The PBGC News Release appears below:
PBGC Approves Supplemented SFA Application for Western Pennsylvania Teamsters Plan
FOR IMMEDIATE RELEASE
July 11, 2023
WASHINGTON, D.C - The Pension Benefit Guaranty Corporation (PBGC) announced today that it has approved the supplemented application submitted to the Special Financial Assistance (SFA) Program by the Western Pennsylvania Teamsters and Employers Pension Plan (Western Pennsylvania Teamsters Plan). The plan, based in Pittsburgh, Pennsylvania, covers 21,110 participants in the transportation industry.
Plans that applied for and received SFA under the interim final SFA rule issued in July 2021 are permitted to supplement their applications under the provisions of the final SFA rule issued in July 2022. The Western Pennsylvania Teamsters Plan will receive about $279.6 million in supplemented SFA, which is in addition to $715 million in SFA approved for the plan in July 2022 under the interim final rule. SFA will better ensure that the plan can continue to pay retirement benefits without reduction for many years into the future.
"For decades, many Americans have worked toward the promise of a well-earned retirement after a lifetime of hard work,” said Acting Secretary of Labor Julie Su. “Thanks to President Biden’s historic investment in America’s workers and retirees, these workers will get the full benefits they have earned, allowing them to retire with the dignity they deserve.”
About the Special Financial Assistance Program
The SFA Program was enacted as part of the American Rescue Plan (ARP) Act of 2021. The program provides funding to severely underfunded multiemployer pension plans and will ensure that millions of America’s workers, retirees, and their families receive the pension benefits they earned.
The SFA Program requires plans to demonstrate eligibility for SFA and to calculate the amount of assistance pursuant to ARP and PBGC’s regulations. SFA and earnings thereon must be segregated from other plan assets and may be used only to pay plan benefits and administrative expenses. Plans are not obligated to repay SFA to PBGC. Plans receiving SFA are also subject to certain terms, conditions and reporting requirements, including an annual statement documenting compliance with the terms and conditions. PBGC is authorized to conduct periodic audits of multiemployer plans that receive SFA.
As of July 11, 2023, PBGC has approved over $51 billion in SFA to plans that cover over 712,000 workers, retirees, and beneficiaries.
The SFA Program operates under a final rule, published in the Federal Register on July 8, 2022, which became effective August 8, 2022, and was amended effective January 26, 2023.
PPBGC protects the retirement security of over 33 million American workers, retirees, and beneficiaries in both single-employer and multiemployer private sector pension plans. The agency’s two insurance programs are legally separate and operationally and financially independent. PBGC is directly responsible for the benefits of more than 1.5 million participants and beneficiaries in failed pension plans. The Single-Employer Program is financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans. The Multiemployer Program is financed by insurance premiums. Special financial assistance for financially troubled multiemployer plans is financed by general taxpayer monies.