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 Carpenters Pension Trust Fund – Detroit & Vicinity (Detroit Carpenters Fund). The plan, based in Troy, Michigan, covers 22,576 participants in the construction industry.
The Detroit Carpenters Fund will receive approximately $635 million in special financial assistance, including interest to the expected date of payment to the plan. The plan was projected to become insolvent and run out of money in 2033. Without the SFA Program, the Detroit Carpenters Fund would have been required to reduce participants’ benefits to the PBGC guarantee level upon plan insolvency, which is roughly 70 percent below the benefits payable under the terms of the plan. That means, if not for the SFA Program, participants in the plan would have seen their monthly pension benefits reduced by roughly 70 percent. SFA will enable the plan to continue to pay retirement benefits without reduction for many years into the future.
The SFA Program was enacted as part of the American Rescue Plan (ARP) Act – signed by President Biden on March 11, 2021.
“Millions of people work for years, looking forward to the day when the promise of a secure, dignified retirement is kept,” said Acting Secretary of Labor Julie A. Su. “Today, the Biden-Harris administration is delivering on that promise for 22,576 carpenters by providing Special Financial Assistance to the Detroit Carpenters Fund, which ensures they can retire with the dignity they deserve and that the drastic reductions in benefits they were facing will be avoided.”
About the Special Financial Assistance Program
The SFA 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 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 October 17, 2024, PBGC has announced approval of about $68.6 billion in SFA to plans that cover about 1,179,000 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, and was amended effective January 26, 2023.
About PBGC
PBGC protects the retirement security of over 31 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 nearly 1.4 million participants and beneficiaries in failed single-employer 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 and investment income. Special financial assistance for financially troubled multiemployer plans is financed by general taxpayer monies.