PBGC Special Financial Assistance for Multiemployer Plans Final Rule Released

The Pension Benefit Guaranty Corporation (PBGC) has released a final rule outlining terms for underfunded multiemployer plans seeking special financial assistance (SFA) under the American Rescue Plan (ARP) Act of 2021. ARP allows certain financially troubled multiemployer plans to apply for special financial assistance in accordance with rules developed by PBGC. The rule is scheduled to be published on July 8, 2022.

In a press release issued with the final rule, the PBGC noted the following changes from the interim final rule announced in July 2021:

• Allows plans to invest up to 33 percent of their SFA funds in return-seeking investments (e.g., publicly traded common stock and equity funds that invest primarily in public shares) with the remaining 67 percent restricted to high-quality fixed income investments
• Modifies the SFA calculation method to use separate interest rates for plans’ SFA and non-SFA assets and aligns the interest rates used to calculate SFA with reasonable expectations of investment returns on plans’ SFA assets
• Provides a different methodology for the calculation of SFA for plans that implemented benefit suspensions under the Multiemployer Pension Reform Act of 2014 (MPRA)