WASHINGTON, D.C. — The Pension Benefit Guaranty Corporation (PBGC) today announced a final rule amending the special financial assistance (SFA) regulation to add an exception process for certain withdrawal liability conditions that apply to a plan that receives SFA. The amendment is responsive to public comments received on the SFA final rule published on July 8, 2022.
Under the Employee Retirement Income Security Act of 1974, an employer that withdraws from an underfunded multiemployer plan may owe withdrawal liability to the plan. The amount owed represents the withdrawn employer’s share of the amount of the plan’s unfunded vested benefits. PBGC’s final rule implementing the SFA program included conditions on the interest rate and methodology SFA plans must use to calculate withdrawal liability.
Under this new rule, an exception would be available under narrow circumstances where application of the withdrawal liability conditions in the final rule would result in an increase in employer withdrawals. A plan may submit an exception request either before the plan’s initial SFA application is filed or before a revised application is filed.
The final rule is available for public inspection today at FederalRegister.gov and is scheduled for publication in the Federal Register on January 26, 2023. The final rule is effective January 26, 2023.
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 January 25, 2023, PBGC has approved over $45.7 billion in SFA to plans covering over 552,000 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 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.