The American Rescue Plan Act (ARPA), signed into law earlier this year, allows multiemployer plans that are in critical and declining status to get a lump sum of money to make benefit payments for the next 30 years, or through 2051.
In July, the Pension Benefit Guaranty Corporation (PBGC) issued an interim final rule that lays out the requirements for special financial assistance (SFA) applications and related restrictions and conditions. The agency is accepting applications before a final rule is published.
In a new SFA Q&A webpage, PBGC says if it issues a final rule that makes any changes affecting the amount of SFA for a plan, the changes will not reduce the amount of assistance payable to any plan that successfully submitted its initial application before the publication of the final rule. In addition, if the final rule includes changes that would result in a greater amount of SFA for plans that have already applied for or received the assistance before publication of the final rule, those plans will be able to receive the greater amount.
For plans that submit an initial application after PBGC publishes the final rule, the provisions of the final rule will be used to determine the amount of assistance those plans will receive, if any.
Since PBGC issued its interim final rule, the main concern among stakeholders has been that permissible investments for the funds will not earn the rate used for calculation of assistance payments, causing the SFA to be depleted before the 30 years it is intended to help plans pay out promised benefits.
However, some entities that have sent comments to PBGC, such as benefits and human resources (HR) consulting firm Segal and the National Coordinating Committee for Multiemployer Plans (NCCMP), expressed concern that the calculations used to determine SFA will result in many plans receiving nothing. Segal estimates 68 plans potentially will not receive any SFA, out of the more than 200 that will be eligible to apply.
With more than 100 comments expressing concern received by PBGC, though, experts are anticipating changes in the final rule.