WASHINGTON, D.C. — The Pension Benefit Guaranty Corporation (PBGC) announced today that it has approved the Special Financial Assistance (SFA) application submitted by the Road Carriers Local 707 Pension Plan (Local 707 Plan). The Local 707 Plan, based in Hempstead, New York, covers 3,804 participants in the transportation industry.
The Local 707 Plan became insolvent in 2017. At that time, PBGC started providing financial assistance to the plan. As required by law, the Local 707 Plan reduced participants’ benefits to the PBGC guarantee levels. Those benefit reductions affected over 90 percent of retirees. Forty-four percent of the Local 707 Plan retirees and beneficiaries had benefit reductions of more than 50 percent.
PBGC’s approval of the SFA application enables the plan to restore all benefit reductions caused by the plan’s insolvency and to make payments to retirees to cover prior benefit reductions. SFA will enable the plan to pay retirees’ benefits without reduction for many years into the future. The plan will receive $726.6 million in SFA, including interest to the expected date of payment to the plan.
“President Biden’s American Rescue Plan will provide Special Financial Assistance to the Road Carriers Local 707 Pension Plan that ensures the 3,804 transportation workers and retirees covered by this plan will receive the retirement benefits they have earned,” said U.S. Secretary of Labor Marty Walsh, chair of the Pension Benefit Guaranty Corporation Board of Directors. “This assistance will deliver the secure retirement these workers were promised in return for many years of hard work.”
In addition, PBGC’s Multiemployer Insurance Program will be repaid $86.6 million, which is the amount of the plan’s outstanding loans for the financial assistance PBGC provided beginning in 2017.
About the Special Financial Assistance Program
The SFA Program was enacted as part of the American Rescue Plan Act of 2021 (ARP). The program is expected to provide funding to over 250 severely underfunded multiemployer pension plans and will ensure that over three million of America’s workers, retirees, and their families receive the pension benefits they earned through many years of hard work.
The SFA Program requires plans to demonstrate eligibility for SFA and to calculate the amount of assistance pursuant to ARP and PBGC’s regulations. A plan may use the funds only to pay plan benefits and administrative expenses. SFA and earnings thereon must be segregated from other plan assets and plans are not obligated to repay SFA to PBGC. Plans receiving SFA are also subject to certain conditions and reporting requirements, including an annual statement documenting its compliance with such conditions. PBGC is authorized to conduct periodic audits of multiemployer plans that receive SFA.
The SFA Program operates under an Interim Final Rule which was published in the Federal Register on July 12, 2021. The Interim Final Rule included a request for public comments, with an emphasis on feedback where any additional guidance may be needed. PBGC is currently reviewing those comments and may incorporate changes in the Final Rule in response to comments that PBGC received.