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 Mid-Jersey Trucking Industry and Teamsters Local 701 Pension Plan (Teamsters 701 Plan). The plan, which is based in North Brunswick, New Jersey, covers 1,623 participants in the transportation industry.
On April 1, 2019, the Teamsters 701 Plan implemented a benefit suspension under the Multiemployer Pension Reform Act of 2014 (MPRA). The plan reduced benefits of about 500 participants. On average, affected participants’ benefits were reduced by 40 percent.
PBGC’s approval of the SFA application enables the plan to restore benefits suspended under the terms of MPRA and to make payments to retirees to cover prior benefit suspensions. SFA will enable the plan to pay retirement benefits without reduction for many years into the future. The plan will receive $142.2 million in SFA, including interest to the expected date of payment to the plan.
“The approval of the Special Financial Assistance to the Mid-Jersey Trucking Industry and Teamsters Local 701 Pension Plan today will guarantee full retirement benefits for these 1,623 transportation workers,” said U.S. Secretary of Labor Marty Walsh, chair of the Pension Benefit Guaranty Corporation Board of Directors. “Since 2019, 500 retirees have had their benefits reduced an average of 40%. Today’s action, made possible by the American Rescue Plan, will restore these workers’ hard earned retirement benefits.”
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 May 27, 2022, PBGC has approved over $6.5 billion to plans that cover over 125,000 workers and retirees.