The Pension Benefit Guaranty Corporation (PBGC) stated on Tuesday that it has approved the application tendered to the Special Financial Assistance (SFA) Program by the Teamsters Local Union No.52 Pension Plan (Teamsters Local 52 Plan). The application was tendered and approved under provisions of PBGC’s SFA interim final rule. The plan, based in Valley View, Ohio encompasses 769 participants in the transportation industry.
The Teamsters Local 52 Plan will obtain nearly $84.9 million in special financial assistance, including interest to the anticipated time of payment to the plan. In 2023, the plan was anticipated to be strapped for cash. Devoid of the SFA Program, the Teamsters Local 52 Plan would have stayed essential to decrease participants’ benefits to the PBGC guarantee levels upon plan insolvency, which is approximately 60 percent lower than the benefits payable under the provisions of the plan. SFA will facilitate the plan to continue to pay retirement benefits without a decrease for several years into the future.
These 769 transportation workers worked with the assurance of a pension when they retired. Now, the Biden-Harris administration has fulfilled that assurance, said Marty Walsh, U.S. Secretary of Labor, chair of the Pension Benefit Guaranty Corporation Board of Directors.
Under President Biden’s American Rescue Plan, the Teamsters Local Union No.52 Pension Fund will obtain Special Financial Assistance to deliver the pensions that these workers have earned, added Walsh.
About the Special Financial Assistance (SFA) Program
The SFA Program was authorized as part of the American Rescue Plan (ARP) Act of 2021. The program offers funding to acutely underfunded multiemployer pension plans and will guarantee that millions of America’s workers, retirees, and their families receive the pension benefits they earned through several ages of intense work.
The SFA Program requires plans to assess the amount of assistance under ARP and PBGC’s regulations to determine eligibility for SFA. SFA and earnings thereupon must be segregated from other plan assets and may be applied only to pay administrative expenses and plan benefits. Plans are not required to repay SFA to PBGC. Plans in receipt of SFA are also subject to specific terms, conditions, and reporting obligations, including an annual statement detailing following the terms and conditions. PBGC is authorized to carry out periodic audits of multiemployer plans that receive SFA.
At present, the SFA Program operates under a final rule, published in the Federal Register on July 08, 2022, which came to be effective on August 08, 2022. SFA applications submitted before that date indicate the provisions of the interim final rule, issued in the Federal Register on July 12, 2021.
As of November 22, 2022, PBGC has approved approximately $8.9 billion for plans that cover more than 191,000 workers, retirees, and beneficiaries.
About PBGC
PBGC protects the retirement security of more than 33 million American workers, retirees, and beneficiaries in both single-employer and multi-employer private sector pension plans. The agency’s two insurance programs are lawfully separate and financially and operationally independent. PBGC is directly accountable for the benefits of over 1.5 million participants and beneficiaries in unsuccessful pension plans. The Single-Employer Program is backed by investment income, insurance premiums, and assets and recoveries from unsuccessful single-employer plans. The Multiemployer Program is backed by insurance premiums. Special financial assistance for financially distressed multiemployer plans is funded by general taxpayer assets.