On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law. The key provisions for multiemployer pension plans are outlined here and summarized in more detail in the link below.
Special Financial Assistance Program. ARPA creates and appropriates funding for a financial assistance program for distressed multiemployer plans. The program is expected to provide approximately $86 billion in relief to plans that meet the eligibility criteria. These plans include plans in critical and declining status, plans in critical status that meet certain other conditions, plans that previously suspended benefits, and a small group of plans that recently became insolvent. In general, the assistance is designed to ensure these plans can continue to meet their full benefit obligations for at least the next 30 years.
Funding Relief. ARPA also provides temporary funding relief for healthier plans similar to the relief that was provided in the wake of the Great Recession. This relief includes a zone status delay, funding improvement period and rehabilitation period extensions for plans in endangered/critical status, as well as expanded asset smoothing and funding standard account amortization extensions for certain COVID-19 related experience losses.
PBGC Premium Increases. ARPA also includes a modest increase in the per-participant PBGC premiums starting in 2031. The current per-participant premium of $31 for 2021 will increase each year with inflation until 2031 at which time it will increase to $52 per participant.
Notable Exclusions. Previous proposals included discount rate limitations, changes to funding rules other than those noted above, changes in the amount of benefits guaranteed by the PBGC, and provisions for composite plans. None of these provisions were included in ARPA.
A more detailed summary can be viewed below.