SFA First Withdrawal

The PBGC Special Financial Assistance program for troubled multiemployer plans now has 19 applicants as the first plan to apply became the first to withdraw:

Road Carriers Local 707 Pension Plan08/13/2021WithdrawnPDF

Here is how Local 707 explained it in an email blast and what I think happened.

As discussed in the October 21st email update, the Pension Fund was required to withdraw our application for Special Financial Assistance.
Yesterday, after discussions with the PBGC the Pension Fund officially withdrew our application for Special Financial Assistance.
The Fund expects to resubmit our amended application in the next several weeks. The amended application uses the corrected IRS Rate table and with technical assistance from the PBGC the amended application allows us to increase the amount of Special Financial Assistance the Fund is requesting.
I understand participants are concerned about the reset of the 120 day timetable. Technically, the clock begins again but there is no reason to believe our application will take much additional time to be approved. The review of our application is not starting from scratch. Only the amended portions of our application need to be reviewed.
Even with this setback, we still expect to be the first Fund to be approved and our participants the first to receive the reinstatement of benefits. The PBGC confirmed their commitment to reviewing and approving our application as soon as possible.

Local 707 used the wrong rate for projecting earnings in their calculations. They should have used 5.38% instead of 5.32% as they started with the first HATFA segment rate instead of the third PPA segment rate as they were instructed to do. According to the table where those rates come from the October rate would yield 5.34% which, if they decided to go with the latest rate instead of what it was in August, would lower the $706 million they requested only slightly.

3 responses to this post.

  1. Posted by aon12345 on November 9, 2021 at 1:47 pm

    You should stay away from saying things like “what I think happened” thinking is not your strong point.

    The PBGC initially has a bad link to the rate tables to use and they accidentally linked to the lump sum interest rate table. The actuary used the 3rd segment rate from that table and the PBGC has apologized for the bad link and fixed the link in their templates.

    Stick to stating facts rather than making stuff up and posting it to make it appear you have a clue as to what is going on.

    Reply

  2. […] Special Financial Assistance program for troubled multiemployer plans as well as the first plan to withdraw their application, probably due to the use of 5.32% as the SFA Interest rate instead of 5.38%, have refiled and are […]

    Reply

  3. […] Special Financial Assistance program for troubled multiemployer plans as well as the first plan to withdraw their application, probably due to the use of 5.32% as the SFA Interest rate instead of 5.38%, have refiled and are […]

    Reply

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