SFA Plans Requesting 80% of Unfunded Liabilities

Participants in multiemployer plans about to go bankrupt are fearing that the ARP bailout, based on the methodology that the PBGC has established to get the money, will not be enough. In comparing the requests of the first four plans for assistance to what those plans report as unfunded liabilities on their 5500 forms, the participants are right.

The values in the 5500 filings are based on an interest rate of about 3% while the plans have to use 5.5% in their SFA requests which explains some of the difference but this bailout is supposed to keep the plans solvent until 2051 which means that it should take into account future shortfalls. If the lump sum bailout monies do not even get the plans to 100% funding and the plans do not get 5.5% on their investments, that is unlikely to happen.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: