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 Freight Drivers and Helpers Local Union No. 557 Pension Plan (Freight Drivers Local 557 Plan). The application was submitted and approved under provisions of PBGC’s SFA interim final rule. The plan, based in Baltimore, Maryland, covers 2,273 participants in the transportation industry. The Freight Drivers Local 557 Plan will receive approximately $192.8 million in SFA, including interest to the expected date of payment to the plan.
The plan was projected to run out of money in 2023. Without the SFA Program, the Freight Drivers Local 557 Plan would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 35 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 Freight Drivers and Helpers Local Union No. 557 Pension Plan that ensures these 2,273 transportation 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 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. SFA applications submitted before that date reflect the provisions of the interim final rule, published in the Federal Register on July 12, 2021.
As of October 4, 2022, PBGC has approved over $7.7 billion to plans that cover over 154,000 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.