PBGC Amends Special Financial Assistance Regulation to Add a Withdrawal Liability Condition Exception

On January 26, 2023, the Pension Benefit Guarantee Corporation (PBGC) issued a final rule providing a withdrawal liability condition exception for certain multiemployer pension plans that access special financial assistance (SFA). As background, the American Rescue Plan Act (ARPA) authorized PBGC to provide SFA to multiemployer pension plans that are in critical and declining or critical status, were approved to suspend benefits under the Multiemployer Pension Reform Act of 2014, or became insolvent after December 16, 2014, but have not been terminated. The changes in this rule were made after the PBGC received comments concerning the SFA final rule.

Under ERISA, employers that withdraw from underfunded multiemployer plans would generally owe withdrawal liability, which represents that employer’s share of unfunded vested benefits. The SFA final rule included rules on how plans must go about calculating withdrawal liability. This final rule provides an exception process whereby withdrawing plan sponsors may request an exception from withdrawal liability conditions if they can show that the exception won’t increase the risk of loss to the plan or the expected employer withdrawals. The final rule indicates that a plan may submit an exception request before the SFA application is filed or before a revised application is filed.

Employer plan sponsors that are a part of a multiemployer plan that took advantage of the SFA should be aware of this new exception to the withdrawal liability conditions and work with their service provider to comply with all PBGC requirements.

Special Financial Assistance by PBGC – Withdrawal Liability Condition Exception »