The Department of Labor has sent investigative letters to several multiemployer pension plans that have received special financial assistance from the Pension Benefit Guaranty Corp. and had previously suspended benefits under a 2014 law, according to an attorney who works with such plans.
Investigators with the Labor Department's Employee Benefits Security Administration are seeking information on plan policies and procedures related to special financial assistance as well as the makeup payments to participants and beneficiaries who experienced suspension of their benefits as part of the Multiemployer Pension Reform Act of 2014, said Mary A. Petrovic, an associate with Morgan, Lewis & Bockius.
"The investigators seem very concerned with making sure benefits are restored up to the penny that is owed to each participant and beneficiary," said Ms. Petrovic, who previously worked in the PBGC's office of the general counsel. "Which isn't particularly surprising given the money that's on the table, but it can be an onerous process for plan administrators."
Created by the American Rescue Plan Act that Democrats passed in March 2021, the SFA Program is designed to shore up struggling multiemployer pension plans through 2051. To date, the PBGC has approved more than $53 billion in special financial assistance to plans that cover more than 768,000 workers, retirees and beneficiaries, including plans facing insolvency that previously suspended benefits under the MPRA.
"The DOL seems especially concerned about compliance," Ms. Petrovic said. "We haven't yet seen the imposition of penalties, although the threat is always there."
A Labor Department spokesman said in an email that EBSA does not comment on its investigative process. But he did note that in a 2021 statement the Labor Department said that it, in coordination with the Treasury Department, "has the responsibility to ensure, following receipt of SFA, that MPRA and insolvent plans reinstate suspended benefits going forward and pay participants in pay status an amount equal to previously suspended benefit payments (makeup payments)."
Ms. Petrovic said plans that have received special financial assistance should be especially careful in preserving documents and maintaining investment guideline policies. "Anything that the plan sponsor is already expected to do under the law, it should be doing and then it should add a second and third look for compliance with regard to SFA once that comes in the door," she said.
And more of these Labor Departments audits are likely, she added. "The investigations into these plans that receive SFA is only expected to grow over time," she said. "We don't assume that any plan is safe from audit."
