On July 8, 2022, the Pension Benefit Guaranty Corporation (PBGC) published a final ruling to implement changes to the Special Financial Assistance (SFA) Program for financially troubled multiemployer pension plans under the American Rescue Plan Act of 2021 (ARPA) which became effective on August 8, 2022. There is a thirty (30) day public comment period solely on the new phase-in condition for withdrawal liability starting from the Final Rule publication date.

The ARPA which provided cash payments from the PBGC to eligible plans were intended to be in the amount necessary for the plans to pay benefits and administrative expenses through the plan year ending in 2051. The PBGC released an interim final rule (the “IFR”) on July 2021, which provided various details on the SFA program, including how the SFA amount would be calculated for an eligible plan. However, there were a number of questions raised by the PBGC’s release of the IFR, including whether the assumptions and conditions established by the IFR would provide enough SFA for all eligible plans to remain solvent through the last day of the plan year ending in 2051. In response to these queries on PBGC’s interim final rule and to endeavor to better protect the pensions earned by the working and retired employees covered by multiemployer plans eligible for assistance, the PBGC’s final rule made several changes to the IFR. Most notably, the final rule attempted to address the concerns that some plans would not receive adequate SFA to remain solvent through 2051and that plans that previously implemented benefit suspensions under the Multiemployer Pension Reform Act of 2014 (“MPRA”) would be negatively affected if they sought ARPA relief as a result of their MPRA suspensions being rescinded.

The following are some of the highlights of the key changes made by the PBGC in the final rule:


The final rule addressed this issue by calculating SFA Assets using two different interest rate assumptions: one for SFA assets and another for non-SFA assets. This is a significant development because the interest rates are used to calculate the total SFA amount. Under the IFR, plans were required to use the same interest rate assumption for both SFA and non-SFA assets. This did not take into account that the IFR also required SFA and non-SFA assets to be segregated, with SFA assets limited to more conservative investments. Thus, using the same interest rate assumption for both pools of assets was not an accurate way for plans to project actual expected investment returns. This also meant that the SFA could fall short of the amount the plan would need to pay all benefits due through the plan year ending 2051. With the final rule, plans should receive more in financial aid in most instances. For the SFA assets, the interest rate is the lesser of a) the rate used by the plan for zone certification status before January 1, 2021 and b) the average of the three funding segment rates plus 67 basis points. For Non-SFA assets, the interest rate is the lesser of a) the rate used by the plan for zone certification status before January 1, 2021 and b) the third segment funding rate plus 200 basis points.

For plans whose applications are approved on or before August 8, 2022, the Final Rule date, a supplemental application must be filed with the PBGC to take advantage of the two different interest rate assumptions. If an application is still pending as of August 8, 2022, then the plan will need to withdraw the application, revise and refile.


Under the IFR, 100% of SFA assets were required to be invested in investment grade fixed income securities. The final rule allows plans to invest up to 33% of SFA assets in return seeking investments like publicly traded common stock, U.S. dollar denominated common stock , equity funds that invest primarily in public shares and certain debt instruments of domestic issuers that are not investment-grade bonds, with the remaining 67% restricted to investment grade fixed income securities. This development adds an important element in the investment of SFA assets, and it could considerably increase the likelihood that plans will be able to avoid insolvency through 2051. However, for plans receiving SFA amounts before August 8, 2022, the investment restrictions under the IFR will continue to apply unless a supplemental application is filed with the PBGC.


The final rule amended the methodology for determining the SFA amount for plans that suspended benefits under the Multiemployer Pension Reform Act of 2014 (“MPRA”). Under the IFR, a single method was used to calculate SFA amounts for plans that suspended benefits under the MPRA and non-MPRA plans. Under the MPRA, benefit suspensions were approved if plans could demonstrate that such suspensions would enable the plan to avoid insolvency indefinitely. To qualify for SFA, MPRA plans must permanently reinstate any suspended benefits. However, under the IFR, an MPRA plan would only receive amounts necessary to avoid insolvency through 2051. Thus, under the IFR, MPRA plans were faced with the problem of either keeping any benefit suspensions in place to avoid insolvency indefinitely, or receiving SFA, reinstating benefits, and risking failure in the future.

To address this issue, the final rule allows an MRPA plan to apply for the greater of the following: a) the SFA amount for non-MPRA plans, b) the amount sufficient to ensure that the plan will project increasing assets at the end of the 2051 plan year; or c) the present value of reinstated benefits, including both make-up payments for previously suspended benefits, as well as payments of the reinstated portion of the benefits expected to be paid through 2051.


The final rule enhances a “phase-in” feature intended to ensure that SFA funds are not used to subsidize employer withdrawals. Under the IFR, all of the SFA received by a plan was immediately treated as plan assets for withdrawal liability calculations. The final rule modifies this approach by phasing-in the treatment of SFA of a plan asset over time. The phase-in period begins the first plan year in which the plan receives SFA and extends through the end of the plan year in which the plan expects SFA to be exhausted. To determine the amount of SFA assets excluded each year, the plan multiplies the total amount of SFA by a fraction, the numerator of which is the number of years remaining in the phase-in period, and the denominator is the total number or years in the phase-in period. The phased recognition of SFA assets does not apply to plans that received SFA funds under the terms of the IFR unless a supplemental application is filed. If the plan files a supplemental application, the phased recognition applies to withdrawals occurring on or after the date the plan files the supplemental application. The PBGC is seeking public comments solely for this new condition of determining withdrawal liability, there is a thirty (30) day public comment period starting on July 8, 2022, the date of publication of the Final Rule in the Federal Register.


The IFR contained a number of restrictions and conditions, including PBGC approval, that apply when a plan that receives SFA merges with another plan. The Final Rule, however, removes restrictions on prospective benefit increases, allocation of assets, and allocation of expenses. The PBGC explained that such conditions would “unduly impede beneficial mergers.” In addition, a merged plan may apply for a waiver of certain other restrictions.


PBGC generally maintained the other conditions it imposed on plans that receive SFA. However, the final rule made a few changes to the conditions. For example, with respect to the prohibition on benefit increases, it added a process pursuant to which a plan may request approval from PBGC to increase benefits if 10 years have passed since the end of the plan year in which SFA was paid and the plan will avoid insolvency notwithstanding the benefit increase.

While the PBGC was initially hesitant to permit reallocation of contributions between SFA plans and other employee benefit plans, the Department of Labor suggested that there may be circumstances that would justify good faith reallocations of income or expenses between plans in situations like health benefit cost increases due to legislative changes. Addressing this narrow circumstance, the Final Rule now permits an SFA plan to apply to the PBGC for permission to temporarily reallocate to a health plan up to 10% of the contribution rate negotiated on or before March 11, 2021. The SFA plan must demonstrate that the reallocation of contributions is necessary to address an increase in healthcare costs required by a change in Federal law, and that the reallocation does not increase the risk of insolvency for the SFA plan. Plans can begin applying five years after receiving SFA, and reallocation of contributions relating to any single change in Federal law can last for no more than five years, with a limit of ten years cumulatively for all reallocation requests.


The final rule maintained the IFR’s priority and metering process. However, it also added a new process that allowed plans that file after March 11, 2023 and before the end of 2025.  To provide filers with more flexibility, the Final Rule redefines the “SFA measurement date” as the last day of the third calendar month preceding the plan’s initial application date. Previously under the IFR, the SFA measurement date was defined as the last day of the calendar quarter preceding the plan’s initial application date. In addition, the Final Rule creates a mechanism to permit plans in priority groups 5, 6, and any additional priority groups established by the PBGC, to file a “lock-in application.” A lock-in application allows the plan to freeze its base data (i.e., SFA measurement date, census data, non-SFA interest rate assumption, and SFA interest rate assumption) when it is unable to file an application because the PBGC has temporarily closed the filing window. Eligible plans may file lock-in applications after March 11, 2023, and on or before December 31, 2025.

The final rule is effective August 8, 2022, and will generally apply to both new SFA applications and previously submitted SFA applications if the plan submits a supplemental application. The final rule contains several other changes and nuances that require further review. While the final rule is available for public inspection at, plans, employers, and other interested parties should consult with counsel regarding these details.