The Pension Benefit Guaranty Corporation (PBGC) has finalized guidance on mergers and transfers between multiemployer plans. Mergers of multiemployer plans, PBGC says, will help protect the benefits earned by workers and retirees and extend the solvency of troubled plans.
“Although we have limited resources to address the anticipated insolvencies of multiemployer plans, facilitated mergers under this final rule could help preserve retirement benefits for workers and retirees in some struggling multiemployer plans,” says PBGC Director Tom Reeder. “Merged plans may save money from lower administration and investment expenses and provide greater stability by expanding the base of employers that contribute to the plan.”
PBGC says it will publish a final rule on multiemployer plan mergers and transfers in the Federal Register on September 14.
The Multiemployer Pension Reform Act (MPRA) of 2014 gave PBGC the authority to facilitate plan mergers under certain conditions. If one or more of the plans in the merger is in critical and declining status that appears they would become insolvent in 20 years, PBGC can provide financial assistance for the merged plan to remain solvent.
Under MPRA, the financial assistance PBGC provides to facilitate a merger cannot impair its ability to meet its existing financial assistance obligations to other multiemployer plans.