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 United Furniture Workers Pension Fund A (United Furniture Workers Fund A). The plan, based in Nashville, Tennessee, covers 8,434 participants in the manufacturing industry.
On September 1, 2017, the United Furniture Workers Fund A implemented a benefit suspension under the Multiemployer Pension Reform Act of 2014 (MPRA) and was partitioned into two plans. The MPRA suspension reduced participants’ benefits earned as of September 1, 2017, by the maximum amount allowed under MPRA. Benefits of about 2,800 plan participants were reduced, on average, by 13 percent.
PBGC’s approval of the SFA application rescinds the partition and enables the plan to restore all 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 $214.6 million in SFA, including interest to the expected date of payment to the plan.
“Special Financial Assistance, funded by the Biden-Harris administration’s American Rescue Plan, ensures the retirement these 8,434 manufacturing industry workers were promised is delivered,” said Assistant Secretary of Labor for Employee Benefits Security Administration Lisa M. Gomez. “Without this funding these workers would have faced diminished pension payments threatening the secure retirement that they worked many years to earn.”
In addition to the $214.6 million of SFA paid to the plan, PBGC’s Multiemployer Insurance Program will be repaid $50.8 million, which is the amount of the plan’s outstanding loans, including interest, for the financial assistance PBGC provided beginning in September 2017 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 (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 May 1, 2023, PBGC has approved nearly $47.4 billion in SFA to plans that cover nearly 574,000 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, and was amended effective January 26, 2023.
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.