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Federal Register / Vol. 86, No. 130 / Monday, July 12, 2021 / Rules and Regulations
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Department of the Treasury Treasury Department for a suspension of benefits under section 305e9 of ERISA to avoid insolvency. Generally, under this process, these plans may propose a reduction of benefits to no less than 110
percent of PBGCs guaranteed benefit amount if a plan is projected to become insolvent before paying all promised benefits when due. A plan may also request partition assistance from PBGC
under section 4233 of ERISA, which allows the plan to transfer responsibility for paying monthly guaranteed benefits for a portion of the plans participants and beneficiaries to a newly created successor plan that receives financial assistance from PBGC. When a partition is approved, the original plan has an ongoing obligation to pay and preserve benefits for all participants at levels above PBGCs guaranteed amounts.
MPRA also allows critical and declining plans that are likely to become insolvent to request financial assistance from PBGC upon merging with another multiemployer plan facilitated mergers under section 4231e of ERISA. Financial assistance to the merged plan may promote mergers with more viable plans and eliminate the need for benefit reductions.
In recent years, Congress considered a range of proposals to address the funding crisis in the multiemployer pension system, including proposals to expand PBGCs partition authority, loan programs, and broader reforms to stabilize multiemployer plans and extend the solvency of PBGCs multiemployer insurance program. In 2018, Congress created the Joint Select Committee on Solvency of Multiemployer Pension Plans to develop recommendations to address the problems in the multiemployer pension system. While the Committee did not issue recommendations before its term expired, it succeeded in creating a broader understanding of the issues and identifying potential reforms.
While not a permanent solution, Congress enacted, and the President signed into law on March 11, 2021, the American Rescue Plan ARP Act of 2021 Pub. L. 1172, to address the immediate crisis facing severely underfunded multiemployer plans and the solvency of PBGC, and to assist plans by providing funds to reinstate suspended benefits.
American Rescue Plan Act of 2021
Special Financial Assistance Program for Financially Troubled Multiemployer Plans ARP creates a program to enhance retirement security for millions of Americans by providing SFA to
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financially troubled multiemployer plans. The SFA program is expected to assist plans covering more than 3
million participants and beneficiaries, including the provision of funds to reinstate suspended monthly benefits going forward, and for make-up payments to restore previously suspended benefits of participants and beneficiaries. In turn, the SFA program improves the financial condition of PBGCs multiemployer insurance program. It is expected that over 100
plans that would have otherwise become insolvent during the next 15
years will instead forestall insolvency as a direct result of receiving SFA.
Section 9704 of ARP amends section 4005 of ERISA to establish an eighth fund for SFA from which PBGC will provide SFA to multiemployer plans under the program created by the addition of section 4262 of ERISA. The eighth fund will be credited with amounts from time to time as the Secretary of the Treasury, in conjunction with the Director of PBGC, determines appropriate, from the general fund of the Treasury Department. Transfers from the general fund to the eighth fund cannot occur after September 30, 2030.
New section 4262 of ERISA sets forth the requirements for SFA, including specifying which plans are eligible to apply, the cutoff date for applications, actuarial assumptions, determinations on applications, restrictions on the use of SFA, and that certain plans with suspended benefits 3 must reinstate those benefits and provide make-up payments to restore previously suspended benefits. Unlike the financial assistance provided under section 4261
of ERISA, which is in the form of a loan and provided in periodic payments, a plan receiving SFA under section 4262
has no obligation to repay SFA, and PBGC must pay SFA in the form of a single, lump sum payment.
Section 4262 of ERISA requires PBGC
to prescribe in regulations or other guidance the requirements for SFA
applications, including an alternate application for plans with an approved partition under section 4233 of ERISA.
PBGC also may prioritize applications during the first 2 years after March 11, 2021, prescribe how SFA funds are to be invested, and impose conditions on plans that receive SFA.
Although PBGCs rulemakings generally involve coordination and consultation with the other two agencies that have jurisdiction over pension plans the Treasury Department and the 3 Plans with suspended benefits pursuant to sections 305e9 and 4245a of ERISA.

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U.S. Department of Labor Department of Labor or Department, section 4262
of ERISA specifically provides for consultation with the Treasury Department particularly on SFA
applications involving a plans reinstatement of suspended benefits.4
The statute also provides for consultation with the Treasury Department with respect to a plan that proposes in its application to change assumptions, with respect to a plan that files an application under PBGC
regulations or guidance prioritizing certain applications, and on the conditions imposed on plans that receive SFA.5 This interim final rule is a result of that coordination and consultation, which will continue as the SFA program gets underway at PBGC
and plans begin to apply.
Listening Sessions and Request for Comment After ARP was enacted, interested parties requested to share their views with PBGC, and PBGC held listening sessions at their request.
Representatives of PBGCs Board of Directors the Secretaries of the Department of Labor, the Treasury Department, and the Department of Commerce also participated in these listening sessions. Most of the requesters provided letters or agendas outlining their concerns. In addition, other interested parties sent PBGC
letters communicating their views.
PBGC considered the views and concerns expressed, which helped to inform this interim final rule.
PBGC has included a request for public comment in this rulemaking and encourages all interested parties to submit their comments, suggestions, and views concerning the rules provisions. PBGC is particularly interested in feedback on where any additional guidance may be needed.
Overview and Section-by-Section Discussion of Regulation Overview and Purpose To implement section 4262 of ERISA, PBGC is adding a new part 4262 to its regulations, Special Financial Assistance by PBGC. The purpose of this new part is to prescribe rules governing applications for SFA and related requirements. Part 4262 provides guidance to multiemployer pension plan sponsors on eligibility, determining the amount of SFA, content of an application for SFA, the process of applying, PBGCs review of 4 See 5 See
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sections 4262k and 4262n of ERISA.
sections 4262m and 4262n of ERISA.

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