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 International Association of Machinists Motor City Pension Plan (Machinists Motor City Plan). The plan, based in Troy, Michigan, covers 953 participants in the manufacturing industry.
On January 1, 2018, the Machinists Motor City Plan implemented a benefit suspension under the terms of the Multiemployer Pension Reform Act of 2014 (MPRA) in order to address the plan’s troubled financial condition at that time and its projected insolvency. The plan reduced benefits of about 840 plan participants. On average, affected participants’ benefits were reduced 45 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 $66 million in SFA, including interest to the expected date of payment to the plan.
“Without this Special Financial Assistance, these 953 machinists would not receive the retirement benefits they have earned through years of hard work,” said U.S. Secretary of Labor Marty Walsh, chair of the Pension Benefit Guaranty Corporation’s Board of Directors. “With funding from President Biden’s American Rescue Plan, these workers now have the assurance of the secure retirement they deserve.”
About the Special Financial Assistance Program
The SFA Program was enacted as part of the American Rescue Plan (ARP) Act of 2021. 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.
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.
As of December 22, 2022, PBGC has approved over $45.6 billion in SFA to plans covering over 552,000 workers, retirees, and beneficiaries.
The SFA Program operates under a final rule, published in the Federal Register on July 8, 2022, which became effective August 8, 2022.
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 Program is financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans. The Multiemployer Program is financed by insurance premiums. Special financial assistance for financially troubled multiemployer plans is financed by general taxpayer monies.