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 Bricklayers and Allied Craftsmen Local 7 Pension Plan (Bricklayers Local 7 Plan). The application was submitted and approved under provisions of PBGC’s SFA interim final rule. The plan, based in Akron, Ohio, covers 397 participants in the construction industry.
On October 1, 2020, the Bricklayers Local 7 Plan implemented a benefit suspension under the terms of the Multiemployer Pension Reform Act of 2014 (MPRA) and was partitioned into two plans. The MPRA suspension reduced participants’ benefits earned as of October 1, 2020, by the maximum amount allowed under MPRA. The plan reduced benefits of about 300 plan participants. On average, affected participants’ benefits were reduced by 55 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 $32.7 million in SFA, including interest to the expected date of payment to the plan.
“The Special Financial Assistance approved today means that these 397 construction workers and retirees will receive the full retirement benefits they earned,” said U.S. Secretary of Labor Marty Walsh, chair of the Pension Benefit Guaranty Corporation Board of Directors. “Since 2020, they have been receiving reduced pension payments through no fault of their own. Today’s action, made possible by President Biden’s American Rescue Plan, restores those benefits and delivers the secure retirement they were promised.”
In addition to the $32.7 million of SFA paid to the plan, PBGC’s Multiemployer Insurance Program will be repaid $1.4 million, which is the amount of the plan’s outstanding loans, including interest, for the financial assistance PBGC provided beginning in October 2020 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. 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 24, 2022, PBGC has approved over $7.8 billion to plans that cover nearly 157,000 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.