WASHINGTON, D.C. — The Pension Benefit Guaranty Corporation (PBGC) announced today that it has approved the application submitted to the Special Financial Assistance (SFA) Program by the Central States, Southeast & Southwest Areas Pension Plan (Central States Plan). The application was submitted and approved under provisions of PBGC’s SFA final rule. The plan, based in Chicago, Illinois, covers 357,056 participants in a number of industries, including transportation, construction, food processing, and more.
The Central States Plan will receive approximately $35.8 billion in Special Financial Assistance, including interest to the expected date of SFA payment to the plan. The Central States Plan is the largest plan expected to receive SFA. The plan was projected to run out of money in 2025. Without the SFA Program, the Central States Plan would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 60% below the benefits payable under the terms of the plan. SFA will enable the plan to continue to pay retirement benefits without reduction for many years into the future.
“This Special Financial Assistance means over 350,000 workers and retirees, as well as their families, will receive the retirement they earned, that they were promised and that they deserve,” said Secretary of Labor Marty Walsh, who serves as Chair of the PBGC’s Board of Directors. “The impending insolvency of the Central States Plan spelled financial disaster for many. This is a pivotal event for the SFA program. Now, with federal financial assistance funded by the Biden-Harris administration’s American Rescue Plan, participants in the Central States Plan will have secure and dignified retirements for many years to come.”
About the Special Financial Assistance Program
The SFA Program was enacted as part of the American Rescue Plan (ARP) Act of 2021. The program provides funding to severely underfunded multiemployer pension plans and will ensure that millions of America’s workers, retirees and their families receive the pension benefits they earned.
The SFA Program requires plans to demonstrate eligibility for SFA and to calculate the amount of assistance pursuant to ARP and PBGC’s regulations. SFA and earnings thereon must be segregated from other plan assets and may be used only to pay plan benefits and administrative expenses. Plans are not obligated to repay SFA to PBGC. Plans receiving SFA are also subject to certain terms, conditions and reporting requirements, including an annual statement documenting compliance with the terms and conditions. PBGC is authorized to conduct periodic audits of multiemployer plans that receive SFA.
As of December 8, 2022, PBGC has approved over $45.3 billion to plans that cover over 550,000 workers, retirees, and beneficiaries.
The SFA Program operates under a final rule, published in the Federal Register on July 8, 2022, which became effective August 8, 2022.
About PBGC
PBGC protects the retirement security of over 33 million American workers, retirees, and beneficiaries in both single-employer and multiemployer private sector pension plans. The agency’s two insurance programs are legally separate and operationally and financially independent. PBGC is directly responsible for the benefits of more than 1.5 million participants and beneficiaries in failed pension plans. The Single-Employer Program is financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans. The Multiemployer Program is financed by insurance premiums. Special financial assistance for financially troubled multiemployer plans is financed by general taxpayer monies.