Tag: Special Financial Assistance

2021 Academy Legislative/Regulatory Review

Mary Pat Campbell

Link: https://www.actuary.org/sites/default/files/members/alerts/pdf/2022/2022-CP-1.pdf

Excerpt:

The American Academy of Actuaries presents this summary of select significant regulatory and
legislative developments in 2021 at the state, federal, and international levels of interest to the U.S.
actuarial profession as a service to its members.

Introduction

The Academy focused on key policy debates in 2021 regarding pensions and retirement, health, life,
and property and casualty insurance, and risk management and financial reporting.


Responding to the COVID-19 pandemic, addressing ever-changing cyber risk concerns, and analyzing
the implications and actuarial impacts of data science modeling continued to be a focus in 2021.


Practice councils monitored and responded to numerous legislative developments at the state, federal,
and international level. The Academy also increased its focus on the varied impacts of climate risk and
public policy initiatives related to racial equity and unfair discrimination in 2021.


The Academy continues to track the progress of legislative and regulatory developments on actuarially
relevant issues that have carried over into the 2022 calendar year.

Publication Date: 15 Feb 2022

Publication Site: American Academy of Actuaries

Teamsters Pension Applies for Bailout After $58 Million Legal Appeal Dismissed

Mary Pat Campbell

Link: https://www.ai-cio.com/news/teamsters-pension-applies-for-bailout-after-58-million-legal-appeal-dismissed/

Excerpt:

A Teamsters pension fund has applied to the Pension Benefit Guaranty Corporation for a bailout after a circuit court denied its appeal in a lawsuit seeking $58 million in withdrawal liabilities from C&S Wholesale Grocers Inc.

The New York State Teamsters Conference Pension and Retirement Fund, a multiemployer plan based in Syracuse, New York, has applied to PBGC for special financial assistance under the American Rescue Plan Act to improve its financial health and restore benefits previously suspended under the Multiemployer Pension Reform Act. The pension fund said the restoration of suspended benefits would be retroactive and prospective, which means participants would be repaid for benefits reduced previously, while also having benefits restored to pre-suspension levels.

Author(s): Michael Katz

Publication Date: 14 Feb 2022

Publication Site: ai-CIO

Education & Labor Committee Releases Multiemployer Pension Rescue Tracker

Mary Pat Campbell

Link:https://edlabor.house.gov/media/press-releases/education-and-labor-committee-releases-multiemployer-pension-rescue-tracker

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Excerpt:

Today, the House Committee on Education and Labor unveiled a new Multiemployer Pension Rescue Tracker to highlight the hard-earned pensions saved and businesses protected under Congressional Democrats’ and President Biden’s American Rescue Plan Act.  The multiemployer pension crisis – which was accelerated by the COVID-19 pandemic – threatened to strip more than a million retirees of the pensions they earned over a lifetime of work, jeopardized tens of thousands of businesses and endangered tens of thousands of jobs.

In response, the American Rescue Plan Act created a Special Financial Assistance (SFA) Program to avert the immediate crisis threatening the retirement security of American workers, retirees, and their families.  This solution was supported by a diverse group of stakeholders, including the AFL-CIO, AARP, the United States Chamber of Commerce, UPS and scores of other employers who participate in multiemployer plans.

….

To view the pension tracker, click here.

Author: Education and Labor Committee

Publication Date: 2 Feb 2022

Publication Site: House of Representatives

SFA Update – One New Billion Dollar Filer

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/02/04/sfa-update-one-new-billion-dollar-filer/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed one new plan applying – New York State Teamsters Conference Pension Plan out of Syracuse, NY which, when compared to the other applicants, is the second largest by participant count, asking for the third largest dollar amount amount ($1,035,864,068) and the second smallest as a percentage of unfunded liabilities (30.12%).

Author(s): John Bury

Publication Date: 4 Feb 2022

Publication Site: burypensions

PBGC Approves $100.5 Million Bailout of New Jersey Pension Plan

Mary Pat Campbell

Link:https://www.ai-cio.com/news/pbgc-approves-100-5-million-bailout-of-new-jersey-pension-plan/

Excerpt:

The Pension Benefit Guaranty Corporation (PBGC) has approved a $100.5 million bail out of the Local 408 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America Pension Plan. It is the fifth plan approved by the PBGC under the Special Financial Assistance (SFA) program, which was enacted under the American Rescue Plan Act of 2021 (ARP).

The Union, New Jersey-based plan, which covers over 1,000 participants in the transportation industry, was certified to be in critical and declining status in the plan year that began in 2020 and became insolvent last September. The plan was required by law to reduce its participants’ benefits to the PBGC guarantee level, which was approximately 60% below the benefits payable under the terms of the pension.

….

Struggling pension plans are required under the SFA program to demonstrate eligibility and to calculate the amount of assistance per ARP and PBGC guidelines. Funds provided under the program may be used only to pay plan benefits and administrative expenses, and plans receiving aid are also subject to certain terms, conditions, and reporting requirements.

Author(s): Michael Katz

Publication Date: 28 Jan 2022

Publication Site: ai-CIO

SFA Update – One New Filer

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/01/30/sfa-update-one-new-filer/

Graphic:

Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed one new plan applying – Iron Workers Local 17 Pension Fund out of Cleveland, Ohio – notable primarily for how little they are asking for – 22% of the unfunded liabilities reported on their latest 5500 filing. 

Author(s): John Bury

Publication Date: 30 Jan 2022

Publication Site: Burypensions

Second SFA Decision

Mary Pat Campbell

Link:https://burypensions.wordpress.com/2021/12/23/breaking-news-second-sfa-decision/

Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans has ruled on the third plan to apply for bailout money.

According to a PBGC press release:

The Pension Benefit Guaranty Corporation (PBGC) announced today that it has approved the plan application for the Idaho Signatory Employers-Laborers Pension Plan (Idaho Signatory) in Portland, Ore. The plan covers 682 participants in the construction industry and will receive $13.9 million in special financial assistance, including interest to the expected date of payment to the plan.

Author(s): John Bury

Publication Date: 23 Dec 2021

Publication Site: Burypensions

Joe Biden’s multiemployer pension plan rescue is turning into a political disaster

Mary Pat Campbell

Link: https://www.ft.com/content/2af3b859-3791-4c2e-bbdc-93d23dc4c6a3

Excerpt:

Union-friendly members of Congress and senators, in particular Sherrod Brown of Ohio, pushed the team of President Joe Biden to incorporate a relief plan for federally guaranteed pension plans that would provide (forgivable) 30-year federal loan along with other support.

The cost of the bailout was estimated by the Congressional Budget Office to be about $86bn, of which $82bn would be spent in 2022. If everything worked out, that would have been a good talking point for Democratic candidates during the midterm elections next year, especially in the hotly contested rust-belt states.

But rather than specify the actuarial details of how the rescue would work, the congressional sponsors and the administration left this job to the experts at the Pension Benefit Guaranty Corporation, a US government agency. They may regret that decision.

…..

Even before then, the unions and employers who act as trustees for the multiemployer funds are probably facing legal troubles if they accept bailout money. As the committee went on to point out: “Trustees of such [troubled] plans who decide to take SFA face the risk of litigation from active employees, while those trustees who elect not to seek SFA risk being sued by retirees.”

Author(s): John Dizard

Publication Date: 20 Dec 2021

Publication Site: Financial Times

SFA Update – Revisions

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/01/14/sfa-update-revisions/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans is updating again this weekend. No new applicants but the PBGC summary worksheets did have two plans withdrawing and reapplying which made me wonder if these revisions were looking for more or less money.

Author(s): John Bury

Publication Date: 14 Jan 2022

Publication Site: Burypensions

SFA Bailout Timeline

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2021/11/12/sfa-bailout-timeline/

Graphic:

Excerpt:

For those wondering when payments under the PBGC Special Financial Assistance program will be coming, the International Foundation of Employee Benefit Plans blog has some guidance.

…..

The Pension Benefit Guaranty Corporation (PBGC) and Treasury officials have delivered a new briefing on the special financial assistance (SFA) program for financially troubled multiemployer plans under the American Rescue Plan Act of 2021 (ARPA). During the briefing on July 22, 2021, PBGC officials walked through the e-filing process, application instructions, assumption changes and what to expect after submitting the application. A recording and slides of the briefing are available here.

….

During the 120-day window, plans must notify PBGC about any facts or data submitted in the application that are no longer accurate. By day 120, PBGC will make a determination to approve or deny the SFA application.

Author(s): John Bury

Publication Date: 12 Nov 2021

Publication Site: burypensions

SFA Application: Through the Forest and Into the Weeds

Mary Pat Campbell

Link:https://burypensions.wordpress.com/2021/10/25/sfa-application-through-the-forest-and-into-the-weeds/

Excerpt:

The Road Carriers Local 707 Pension Fund , which was the first plan to seek bailout money under the PBGC Special Financial Assistance (SFA) program for troubled multiemployer plans, has their 425-page application uploaded on the SFA website.

…..

412-425) SFA calculations which is a fairly simple spreadsheet calculating the present value of the liabilities of all current participants (pages 419-420) and coming up with one amount ($706,400,534) to cover all their liabilities through 2051. New entrants presumably will be covered by new negotiated contributions and, after 30 years though if any of the current participants survive until 2051 they will presumably need another bailout.

The problem PBGC has with this filing appears to be that an interest rate of 5.32% was used for valuing liabilities which happens to be 2% plus the first HATFA Segment Rate when it is the third PPA Segment Rate to which the 2% should have been added. Per the IRS website (scroll down a little to Funding Table 3), that rate would likely have been the April, 2021 rate of 3.52% which would have made 5.52% the rate to be used for valuing liabilities (thus lowering the liability value as the higher the interest rate the lower the value). The tricky part is that the PPA third Segment Rate has been going down and is now 3.34% as of October, 2021.

Author(s): John Bury

Publication Date: 25 Oct 2021

Publication Site: burypensions