The 18 Pension plans that received approval under MPRA to file for benefit relief have been slow to file their application for Special Financial Assistance (SFA). These plans were part of Priority Group 2 under the PBGC’s pecking order that permitted filing to begin on 1/1/22. To date, only Local 805 Pension and Retirement Plan has filed its application. Given that nearly 6 months have elapsed since the PBGC announced their “Interim Final Rules” in July 2021, one would think that applications would have been filed immediately upon the designated date. That clearly hasn’t been the case.
There is some speculation that more than one of these plans may not file for the SFA given the issues related to the legislation’s implementation and the likelihood that any SFA received would not be nearly sufficient to cover the prescribed 30-year time (until 2051) frame for the securing of benefits and expenses. These plans, using MPRA, have restructured their payouts to current beneficiaries and future retirees hoping to extend that life of the plan. A “reworking” of the benefits for plans that receive the SFA may create greater headaches than those that exist today. The truly sad part of this legislative failure is the expectation that benefits were to be restored to those participants who saw in many cases draconian cuts. A decision to not file for the SFA will be devastating news to the tens of thousands of plan participants that were celebrating the passage of ARPA last March.
My hope would be that any plan that has cut benefits under MPRA should gladly accept this grant from the Federal government to restore benefits. The SFA grant won’t likely cover more than 8-10 years of benefits, but it certainly buys time for future legislative efforts to bring effective change that actually accomplishes the intended action of protecting and preserving benefit payments for the next 30-years. These poor participants have gone above and beyond in their effort to help get legislation passed. It would be a slap in their face if a decision were made to forgo the receipt of this government largesse.
Is it safe to say two words, Class Action lawsuit. Which I’m starting to believe some embarrassing information may come out. Somebody is getting something that maybe they weren’t entitled to.
Hi Ray – Good morning. It is truly unfortunate that the intent of ARPA will likely not be realized. But as I’ve indicated, getting a grant from the Federal government still helps these struggling plans. Hopefully, it buys enough time until a TRUE solution can be achieved. Hang in there and don’t stop asking questions!! Russ
Too bad you don’t work for Pbgc. There’s a secrecy beyond comprehension. I guess it’s true, We shout out our strengths and whisper our weaknesses. Hopefully they’ll get things ironed out before the big boy is due, Central States in April, all by themselves. I still can’t imagine any fund turning down free money.
I agree with you, but if you’ve already endured the pain of cutting benefits and you believe that the strategy will preserve the plan for current and future retirees, you may not be inclined to reinstate benefits when the reconfigured plan may once again fail prematurely. Russ
I was pondering something today, when you negotiate a contract, you have a committee that will negotiate in behalf of the workers, workers vote on finished product. When the cuts happened, we were informed by letter every other week, in the end we voted yea or nay. With this process, we aren’t asked, informed, nothing. Wasn’t ERISA established to protect the rights of retirees?
Hi Ray – Yes, ERISA was established to protect participants in defined benefit pension plans. In this case, trustees of your plan working in conjunction with their actuaries, consultants, and legal representatives are tasked with determining the way forward regarding the legislation. Like you, I believe that any SFA received is manna from Heaven, but other factors may be weighing on their motivation or lack there of to file. I am not privy to these discussions. I wish that I were.
You ever wonder about the revised application process with Pbgc is, if like 707 you revise your application in November and it’s now January. It takes 2 months to look at 3 corrections. I wonder if someone in charge doesn’t want to see this program work for political reasons?
The legislation has been approved and the monies earmarked. I would hope (naively) that everyone’s effort is focused on providing the necessary SFA in a timely fashion. I don’t understand the review process or the internal PBGC resources currently working on this program. It doesn’t seem right that a resubmission should also have a 120-day turnaround. I wish that I had more insights to share – sorry.
See what happens Friday when the status of applications on Pbgc is updated. Richard Neal and Sherrod Brown and others have to be taking notice in what’s going on. I wonder why the head of the teamsters is not saying something or Labor Department, everybody was taking pictures, grinning from ear to ear when this process started. What happened?
I would hope that our Washington DC pension leadership is taking notice, but I just don’t know if that is the case. I have not seen any recent comments in the media regarding this legislation. The Financial Times had a scathing article before the holidays that discussed the legislations like failures, but I haven’t seen much from the “architects” behind the legislation. Participants need to be all over them.