By: Russ Kamp, Managing Director, Ryan ALM, Inc.
I’m pleased to report that the PBGC yesterday announced that another pension system’s SFA application has been approved. Teamsters Local 641 Pension Plan, which originally filed for the SFA on September 9, 2021, only to have to withdraw and resubmit another application on December 1st, will receive $503.9 million. The plan, based in Union, New Jersey, covers 3,610 participants in the transportation industry.
According to the PBGC’s press release, “Local 641 Plan became insolvent in March 2021. At that time, PBGC started providing financial assistance to the plan. As required by law, the Local 641 Plan reduced participants’ benefits to the PBGC guarantee levels, which was roughly 55 percent (my emphasis) below the benefits payable under the terms of the plan. PBGC’s approval of the SFA application enables the plan to restore all benefit reductions caused by the plan’s insolvency and to make payments to retirees to cover prior benefit reductions.” This development is sure to put a smile on the faces of the 3,610 participants who have been forced to “live” with a benefit that was roughly half of that with which they were entitled.
In other SFA news, there have been NO additional applications filed since March 16th, only two applications were filed last month, and only three have been submitted since January. That pace is comparable to the number of plans that have received SFA approval from the PBGC which stands at three since January 24th. At this point, not all of the eligible Priority Group 1 and 2 plans have filed the SFA application. Priority Group 3 plans (plans with >350,000 participants) are eligible beginning today (4/1) and that’s no April Fool’s joke. Perhaps we’ll get the Final, Final Rules from the PBGC before Priority Group 4 candidates are slated to file beginning on 7/1/22.