The Pension Benefit Guaranty Corp. set out information underfunded multiemployer plans must file to show they are eligible to receive special financial assistance.
The interim final rule, published Friday, notes requirements for applications and related restrictions and conditions in relation to the American Rescue Plan Act of 2021, which was signed into law by President Joe Biden on March 11.
According to the PBGC website, A multiemployer plan is eligible for special financial assistance if it satisfies one of four criteria:
- It has been in critical and declining status since 2020.
- It has had its benefits suspended as of March 11.
- It has a funding ratio below 40% and a ratio of active-to-inactive participants of less than 2 to 3 since 2020.
- It has been insolvent since December 16, 2014 but as of March 11 has not been terminated.
The interim final rule provides the formula that determines how much financial assistance PBGC will pay to an eligible plan and establishes the order of priority in filing and processing applications for such assistance.
In addition, the rule also specifies permissible investments for funds and establishes certain restrictions and conditions on plans that receive aid.
“The American Rescue Plan provides funding to severely underfunded pension plans that will ensure that over three million of America’s workers, retirees, and their families receive the pension benefits they earned through many years of hard work,” Gordon Hartogensis, PBGC director, said in a news release. “These benefits are critical to the economic security of so many retirees and their families.”
Under the law, an estimated $94 billion in assistance may be provided to eligible multiemployer plans that are severely underfunded.
The rule will be published in the Federal Register on July 12, after which PBGC will allow the public comment on the rule’s provisions for 30 days.