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 Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund (GWU Local 610 Plan). The plan, based in San Juan, Puerto Rico, covers 2,624 participants in the hospitality industry.
The GWU Local 610 Plan became insolvent in June 2021. At that time, PBGC started providing financial assistance to the plan. For most GWU Local 610 Plan participants, PBGC’s guarantee fully covered benefits payable under the terms of the plan.
SFA will enable the plan to pay retirement benefits without reduction for many years into the future. The plan will receive $28.3 million in SFA, including interest to the expected date of payment to the plan.
This application was submitted and approved under provisions of PBGC’s interim final rule. PBGC’s final rule, published last month, became effective on August 8, 2022.
“President Biden’s American Rescue Plan will deliver Special Financial Assistance to the Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund that ensures these 2,624 hospitality 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 to the $28.3 million of SFA paid to the plan, PBGC’s Multiemployer Insurance Program will be repaid $2.8 million, which is the amount of the plan’s outstanding loans, including interest, for the financial assistance PBGC provided beginning in June 2021 and ending on the expected date of payment of SFA to the plan.
About the Special Financial Assistance Program
The SFA Program was enacted as part of the American Rescue Plan Act of 2021 (ARP). 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 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. 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.
The SFA Program currently operates under a final rule, published in the Federal Register on July 8, 2022, which became effective on August 8, 2022. Previously, the SFA Program operated under an interim final rule, published in the Federal Register on July 12, 2021.
As of August 30, 2022, PBGC has approved over $7.5 billion to plans that cover over 152,000 workers, retirees, and beneficiaries.
PBGC 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 Insurance Program is financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans. The Multiemployer Insurance Program is financed by insurance premiums. Special financial assistance for financially troubled multiemployer plans is financed by general taxpayer money.