We are monitoring closely the application filings for Special Financial Assistance (SFA) under ARPA which began with Group 1 eligible plans in July 2021. Group 1 plans were those pension funds that were already insolvent or those that were forecast to become insolvent before March 2022. To date, 18 Group 1 plans have filed an application. I reached out to the PBGC to see if all the eligible plans in that Group had been filed and they let me know that they don’t have a complete list of all eligible plans and they only know in what Priority Group a pension system is once the application has been processed. However, my contact did estimate that roughly 80% of the Group 1 eligible plans have filed an application with the PBGC.
As a reminder, the ARPA legislation states:
APPLICATION DEADLINE.—Any application by a plan for special financial assistance under this section shall be submitted to the corporation (and, in the case of a plan to which section 432(k)(1)(D) of the Internal Revenue Code of 1986 applies, to the Secretary of the Treasury) no later than December 31, 2025, and any revised application for special financial assistance shall be submitted no later than December 31, 2026.
There is no penalty for filing an application after the next Priority Group begins but as the language specifies, new applications must be submitted by December 31, 2025. I’m sure that these plans have their reasons for not yet processing an application, but personally, I’d want to get the SFA as soon as possible and have it begin working for my plan and participants. More to come!