The Pension Benefit Guaranty Corporation (PBGC) insurance program is providing $192.8 million in funding to rescue the underfunded the Freight Drivers and Helpers Local Union No. 557 Pension Plan (the “Plan”).
The PBGC announced its approval of the Plan’s application for relief from the Special Financial Assistance (SFA) Program enacted as part of the American Rescue Plan Act of 2021 (ARP) to provide funding to severely underfunded multiemployer pension plans.
The SFA Program requires plans to demonstrate eligibility for SFA and to calculate the amount of assistance pursuant to ARP and PBGC’s regulations. SFA and earnings thereon must be segregated from other plan assets and may be used only to pay plan benefits and administrative expenses. Plans are not obligated to repay SFA to PBGC. Plans receiving SFA are also subject to certain terms, conditions and reporting requirements, including an annual statement documenting compliance with the terms and conditions. PBGC is authorized to conduct periodic audits of multiemployer plans that receive SFA.
Before the PBGC approved the rescue relief, the underfunded Plan was projected to run out of money in 2023. Without the SFA Program, the Plan would have been required to reduce benefits for its 2,273 transportation industry participants by roughly 35 percent below the benefits payable under the terms of the Plan to the PBGC guarantee levels upon plan insolvency.
SFA funding enables the plan to continue to pay retirement benefits without reduction by providing approximately $192.8 million in SFA, including interest to the expected date of payment to the Plan.
The SFA Program currently operates under a final rule, published in the Federal Register on July 8, 2022, which became effective on August 8, 2022. SFA applications submitted before that date reflect the provisions of the interim final rule, published in the Federal Register on July 12, 2021. The Plan’s application was made and approved under the interim rule.
As of October 4, 2022, PBGC has approved over $7.7 billion to plans that cover over 154,000 workers, retirees, and beneficiaries.
The SFA program only applies to multiemployer collectivelyt bargained pension plans. Insolvent single employer pension plan funding is covered under a separate PBGC insurance program. The programs or separately funded and administered.
Underfunded pension plans are plans with insufficient funds to meet projected benefit liabilities as calculated in accordance with PBGC rules. Underfunding can happen for various reasons including declines in investment performance, cessation or substantial declines in employer contributions resulting from employer shutdowns, changes in collectively bargained contributions, union decertifications that end contributions and others.
Employers contributing to multiemployer collectively bargained plans should carefully monitor funding and contribution levels as their liability under many multiemployer plans can rise based on collective bargaining or business changes in their own business or other contributing businesses as well as market forces.
Businesses experiencing business slowdowns, financial distress, union decertification elections, business sales or certain other transaction or various other business events and any business under common control or ownership with ot contemplating purchasing or investing in such businesses needs to consider the adequacy of the plan’s funding on an ongoing basis as well as the effect of the business transaction or event as changes can trigger accelerated liabilities, funding, notice and other obligations that can reach to affiliated and commonly controlled businesses and successors.
We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
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About the Author
Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefits Counsel repeatedly recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” by LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law and among the “Best Lawyers In Dallas” in “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for 30+ years of advising, representing and defending domestic and international public, closely held and government organizations on workforce, employee benefits, internal controls and governance, and other risk management, compliance and government relations concerns as well as her coaching, scholarship, training and legislative and public affairs advocacy on these and related areas.
Ms. Stamer helps health industry and other organizations and their management manage. Ms. Stamer’s legal and management consulting work throughout her nearly 30+ year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns. She also represents and defends clients in investigations, audits, enforcement actions and other dealings with the the Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and a multitude of federal, state, and locate agencies, state attorneys’ general and other federal and state agencies, public and private credentialing, licensing and accreditation bodies, as well as conducts and counsels clients on private litigation, employment and other services disputes, regulatory and public policy advocacy, training and discipline, enforcement and other strategic and operational concerns.
Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, expat and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Ms. Stamer also is deeply involved in helping to influence workforce, health care, pension, social security, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Ms. Stamer also shares her leadership through her extensive involvement in many professional, community and civic organizations. Currently, she serves as Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR and a representative for its Annual Agency Meeting with the EEOC, Chair of the ABA Intellectual Property Section Law Practice Management Committee, Vice Chair of the ABA International Section Life Sciences Committee, Chair-Elect of the ABA Tort & Insurance Section (TIPS) Medicine and Law Committee, RPTE Section Employee Benefits Committee Welfare Plan Chair, and in various other projects and capacities. She also previously has served as an ABA Joint Committee on Employee Benefits Council Representative, Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits & Other Compensation Group, the Society for Human Resources Management Region IV Board Chair and National Consultant’s Board Member; am Editorial Advisory Board Member and author for HR.com, Insurance ThoughtLeaders, BNA CD-Rolm, and Employee Benefits News; the Alliance for Healthcare Excellence Board President, Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, on the North Texas United Way Long Range Planning Committee Member, as a Board Member and Compliance Chair of the National Kidney Foundation of North Texas and many others.
Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. These include hundreds of highly regarded articles and workshops on health and other benefits, workforce, health care and insurance concerns.
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