Skip to main content
U.S. flag

An official website of the United States government

This page has not been translated. Please go to PBGC.gov's Spanish home page for more information available in Spanish.

Esta página no ha sido traducida. Por favor vaya a la página principal del sitio de español de PBGC para ver información disponible en español.

American Rescue Plan Act FAQs

Updates for SFA Final Rule Coming Soon

A multiemployer plan is a pension plan created through an agreement between two or more unrelated employers and one or more unions. The employers are usually in the same or related industries. For example, multiemployer plans provide benefits for workers in industries such as transportation, construction, and hospitality.

Contact your union or plan administrator. You may also refer to your plan’s Annual Funding Notice or summary plan description.

The Special Financial Assistance (SFA) Program addresses the immediate crisis facing more than 250 severely underfunded multiemployer plans by providing eligible plans with special financial assistance to enable them to pay benefits at plan levels.

PBGC estimates that it will pay approximately $97 billion in special financial assistance to over 250 financially troubled plans that cover more than 3 million participants and beneficiaries.

The special financial assistance includes funds to reinstate previously reduced monthly benefits going forward, and for make-up payments that will restore previously reduced benefits of participants and beneficiaries.

The criteria for SFA eligibility are established under the statute and in PBGC’s SFA regulation. A multiemployer plan is eligible for special financial assistance if it satisfies one of the following criteria:

  •  The plan is in critical and declining status (running out of money) in any plan year beginning in 2020 through 2022;
  • A reduction of benefits has been approved for the plan under the Multiemployer Pension Reform Act of 2014 (MPRA) as of March 11, 2021;
  • In a plan year beginning in 2020 through 2022, the plan is in critical status, has a “modified funding percentage” (as defined by the law) of less than 40 percent, and has a ratio of active to inactive participants of less than two to three (the requirements do not have to be met for the same plan year); or
  • The plan became insolvent after December 16, 2014, and has remained insolvent and has not been terminated as of March 11, 2021.

A plan with a plan year beginning in 2020 through 2022 will not be ineligible for SFA solely because of a change in plan year made on or after March 11, 2021, in accordance with guidance issued by the Internal Revenue Service (IRS).  A plan sponsor should refer to IRS Revenue Procedure 87-27 to determine whether the change in plan year is automatically approved or a Form 5308 should be filed. 

Please contact your union or plan administrator for additional information.

IRS Form 5308, Request for Change in Plan/Trust Year

Yes. A plan that is in critical and declining status (running out of money) or critical status may become eligible for special financial assistance in the future if it meets special financial assistance eligibility requirements. (See eligibility requirements)

Yes. Any plan that is eligible under the criteria (See Question 3. How does the new law affect financially troubled multiemployer pension plans?) may apply for special financial assistance. If a plan receives special financial assistance, it will not be eligible for a new suspension of benefits under MPRA.

The amount of financial assistance provided to an eligible plan is the amount required for the plan to pay all benefits due through the last day of the plan year that ends in 2051, with no reduction in a participant’s or beneficiary’s accrued benefit as of March 11, 2021. If your plan has previously suspended or reduced your benefits, your plan will also receive the amount required to reinstate your suspended benefits and to provide make-up payments equal to the amount of your previously suspended benefits.

It depends on your plan’s situation and your situation. Your plan administrator can provide information specific to your situation.

  • If your plan is solvent, has not reduced benefits under a MPRA suspension of benefits, and remains solvent, your benefit will not be affected:
    • If you are already retired and receiving a pension, you will continue to receive the same amount.
    • If you have not yet started to receive your pension benefit, when you do, you will receive the full amount you earned under the terms of the plan.
  • If your benefits were reduced because of a MPRA benefit suspension:
    • Your full (pre-suspension) benefit will be reinstated for future benefit payments, and
    • If you are already retired and receiving benefits on the date special financial assistance is paid to the plan, you will also receive make-up payments (either a single lump-sum payment or equal monthly installment payments over 5 years as determined by your plan) to make up for any past reduction in your monthly benefits.
  • If your plan became insolvent after December 16, 2014, and, as a result, your benefit was reduced to the amount guaranteed by PBGC:
    • Your full (pre-insolvency) benefit will be reinstated for future benefit payments, and
    • If you are already retired and receiving benefits on the date special financial assistance is paid to the plan, you will also receive make-up payments either a single lump-sum payment or equal monthly installment payments over 5 years (as determined by your plan) to make up for any past reduction in your monthly benefits.

If your plan previously suspended benefits and receives special financial assistance, your plan is required to reinstate suspended monthly benefits going forward and to provide make-up payments to repay your previously suspended benefits. Your plan will determine the form that your make-up payments (to repay previously suspended benefits) will be paid, as either a single lump sum or in monthly installments over five years. A lump sum make-up payment must be within 3 months after special financial assistance is paid to the plan. Monthly installment payments must begin to be paid within 3 months after special financial assistance is paid to the plan. 

Based on its experience reviewing applications, PBGC made two minor changes to section B.5 of the instructions about information required to be filed related to a plan’s “zone certifications.”  

Filers are required to provide documentation supporting each certification.  The instructions state that information may be provided in an addendum or by reference to other submitted materials.  A sentence was added at the end of the first paragraph in section B.5 to clarify that filers should separately identify as “supplemental” all information included with the zone certification to comply with this requirement that was not part of the original zone certification.

PBGC also eliminated a documentation requirement to support a certification of critical and declining status.  A filer is required to provide a plan-year-by-plan-year projection demonstrating the plan year that the plan is projected to become insolvent and to identify cash-flow information for each of those years.  PBGC has determined that the breakdown of benefit payment information “separately identifying payments with respect to current retirees and beneficiaries, terminated vested participants not currently receiving benefits, currently active participants, and new entrants” is not needed to review that the plan is in critical and declining status.  Consequently, PBGC removed the required breakdown of benefit payments.

 

Some multiemployer plans utilize an actuarial assumption to exclude the liability for benefits of certain older terminated vested participants who have not yet applied for benefits from the measurement of plan liabilities in their actuarial valuations and zone status certifications. For example, some plans take the position that if a terminated vested participant has not applied for benefits by the time the participant reaches age 70, the liabilities for benefits of that participant should be excluded from the measurement of plan liabilities under the assumption that the participant will never apply for benefits. If a plan proposes a change in such an assumption in its application for SFA that has the effect of including the benefits for some or all of the previously excluded participants in the cash flow projections used to determine the amount of SFA, PBGC will assess the reasonableness of that assumption change as follows:

  1. In all such cases, PBGC will ask the applicant to provide the following information:
    1. A listing of the participants whose benefits were excluded from the measurement of liabilities in the most recent actuarial valuation that would be included in the determination of the amount of SFA under the proposed assumption change,
    2. A description of the efforts that the plan has made to locate such participants,
    3. Any applicable plan policies and procedures regarding identifying and locating missing or deceased participants, and
    4. Details of a recent death audit (generally not earlier than one year prior to the SFA measurement date) indicating that there is no readily available information to the effect that any such participants had passed away as of the SFA measurement date.
  2. The plan proposing such an assumption change may demonstrate the reasonableness of including the benefits of some or all of the previously excluded participants in the cash flow projection used to determine the amount of SFA in one of two ways:
    1. By providing an experience study indicating that it is reasonable to assume that such participants will eventually apply for benefits, or
    2. Alternatively, PBGC will accept a proposed assumption change provided that benefits for participants previously excluded who are older than age 85 on the SFA Measurement Date are excluded from the determination of SFA.

The Department of Labor advises that PBGC’s acceptance of such an assumption change to determine the amount of Special Financial Assistance has no effect on the obligations of plan fiduciaries to maintain complete and accurate records (to include updated addresses), conduct a prudent search for missing participants, communicate with participants and beneficiaries nearing or past retirement age, or to pay benefits when due under title I of ERISA. See Missing Participants – Best Practices at https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/retirement/missing-participants-guidance/best-practices-for-pension-plans.

This guidance represents PBGC’s current thinking on this topic. It does not create or confer any rights for or on any person or operate to bind the public. A plan can use an alternative approach if the approach satisfies the requirements of the applicable statutes and regulations.

Last Updated: October 18, 2022