WASHINGTON, D.C. — The Pension Benefit Guaranty Corporation (PBGC) announced today that it has approved the application submitted to the Special Financial Assistance (SFA) Program by the Food Employers Labor Relations Association and United Food and Commercial Workers Pension Plan (FELRA Pension Plan). The FELRA Pension Plan, based in Landover, Maryland, covers 51,500 participants in the service industry. The plan will receive approximately $1.24 billion in special financial assistance, including interest to the expected date of payment to the plan.
The plan was projected to run out of money in 2022. Without the SFA Program, the FELRA Pension Plan would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 20 percent below the benefits payable under the terms of the plan. SFA will enable the plan to continue to pay retirement benefits without reduction for many years into the future.
“President Biden’s American Rescue Plan will deliver Special Financial Assistance to the Food Employers Labor Relations Association and United Food and Commercial Workers Pension Plan that ensures the more these 51,500 service industry 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.”
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 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.
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.
As of April 22, 2022, PBGC has approved over $2.3 billion to plans that cover nearly 18,000 workers and retirees.