What the American Rescue Plan Act Means for Financially Troubled Multiemployer Pension Plans

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After years of debate on the topic of funding relief for multiemployer pension funds, Congress acted this week with the passage of the American Rescue Plan Act of 2021 (Rescue Plan)—likely one of the most significant pieces of legislation for multiemployer plans in recent history.

Much of the country was focused on the economic relief the bill would provide for Americans who have struggled during the pandemic, but the bill also included key pension appropriations. These measures were based on the Butch Lewis Emergency Pension Plan Relief Act of 2021, which had been reintroduced in different versions over the last six years but never gained traction in Congress. President Joe Biden signed the Rescue Plan on March 11, 2021.

What the American Rescue Plan Act Means for Financially Troubled Multiemployer Pension Plans

Here’s a high-level summary of some provisions for multiemployer defined benefit pension plan relief.

Special financial assistance.

The Rescue Plan would create a new program for eligible “critical and declining” status or insolvent plans under the Pension Benefit Guaranty Corporation (PBGC).

  • The Treasury Department would transfer federally funded cash payments to PBGC in the amount necessary to pay the costs of special financial assistance and administrative expenses to eligible plans upon PBGC approval of application.
  • PBGC will then provide a single lump-sum payment to an eligible plan in an amount equal to all accrued benefits, without reduction, through the last day of the plan year ending in 2051.
  • Plan participants and retirees would receive 100% of their earned pension benefits.
  • A plan receiving special financial assistance has no repayment obligations, and there is no cap on the transfer amount.


Plans that are eligible for special financial assistance are those that meet one of the following requirements:

  • Are in critical and declining status for a plan year beginning in 2020 through 2022
  • Have an approved suspension under the Multiemployer Pension Relief Act of 2014 (MPRA) as of March 11, 2021. (Note: The Treasury has approved benefit suspensions for 18 plans.)
  • Are certified by the plan actuary to be in critical status as of 2020 through 2022, have a modified funded percentage of less than 40% and have an active to inactive participant ratio of less than 2 to 3
  • Became insolvent after December 16, 2014 (the date MPRA was signed) and have remained insolvent but have not terminated as of March 11, 2021.

Application is required.

Applications must be submitted no later than December 31, 2025.

  • By July 8, 2021, PBGC is required to issue regulations or guidance detailing the requirements for the special financial assistance application and, upon approval of an application, to specify effective dates for transfer of the lump-sum payments to the plans.

Priority consideration during the first two years.

PBGC and Treasury may limit which plans can submit applications during the first two years following enactment to prioritize the most financially troubled plans. The legislation spells out that PBGC may prioritize plans that:

  • Are insolvent or likely to be insolvent within five years of enactment;
  • PBGC projects have a present value of financial assistance under ERISA that exceeds $1 billion if special financial assistance is not provided;
  • Have implemented a suspension of benefits under MPRA; or
  • PBGC determines appropriate to review based on other similar circumstances.

Suspended benefits must be reinstated to receive assistance.

For plans that reduced benefits under MPRA, PBGC is required to consult with Treasury regarding the proposed method for the plan sponsor to reinstate benefits that were suspended.

Restrictions on amounts received as special financial assistance.

The payment amounts (and earnings on those amounts) may be used by the multiemployer plan to make benefit payments and pay plan expenses. The amounts must be segregated from other plan assets and invested in investment-grade bonds or as otherwise permitted by PBGC.

Limitations on PBGC.

PBGC is not permitted to impose conditions related to any prospective reduction in plan benefits, plan governance, including the selection of, removal of, and terms of contracts with, trustees, actuaries, investment managers, and other service providers or any funding rules.

Conditions on plans receiving special financial assistance.

The Rescue Plan spells out that such plans:

  • Must continue to pay PBGC premiums
  • Will be deemed to be in critical status until 2051
  • Are not eligible to apply for a new suspension of benefits under MPRA
  • Will be subject to the current rules and PBGC guarantee for insolvent plans if they subsequently become insolvent.

[Upcoming Webcast: Impact of the American Rescue Plan Act on Multiemployer Pension Plans | March 23, 2021]


An eligible plan that receives special financial assistance must provide an annual estimate of each participating employer’s share of the plan’s unfunded vested benefits as of the end of each plan year ending after March 11, 2021, as determined after taking into account any special financial assistance received by the plan.

The disclosure must include a statement that, due to the special financial assistance provided, the plan will have sufficient resources to pay 100% of the plan’s benefit obligations until the last day of the plan year ending in 2051. The disclosure also must be provided to each labor organization representing participants employed by participating employers as well as PBGC and the Treasury Secretary.

Additional plan restrictions by new regulations.

PBGC and Treasury may create rules to put conditions on plans relating to increases in future accrual rates, retroactive benefit improvements, allocation of plan assets, reductions in employer contribution rates, diversion of contributions and expenses to other benefit plans, and withdrawal liability.

Premium increase.

PBGC Multiemployer Insurance Program premiums will increase to $52 per participant after December 31, 2030 (up from $31 in 2021).

Watch for more details on the American Rescue Plan Act and the impact on multiemployer pension plans.

Now that President Biden has signed the bill, the federal government will eventually spell out further details about the application for special financial assistance in regulations or guidance as well as restrictions on plans that receive payment. The Congressional Budget Office (CBO) projected that an average of 185 multiemployer plans will receive $86 billion in federally funded payments.

The International Foundation is following the law and will continue to alert members to any developments. Find updates on the Butch Lewis Act, MPRA and other pension news on our multiemployer pension reform resource page.

Jenny Lucey, CEBS
Manager, Reference/Research Services at the International Foundation

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5 thoughts on “What the American Rescue Plan Act Means for Financially Troubled Multiemployer Pension Plans

  1. Arthur Heath

    My life has changed for the better. Thank God

  2. William Ahern

    My question is as follows, I want to know if Local 807 of NYC will be assisted under this ruling. They are in critical and declined status now for some years. 2.When will they be able to apply.

  3. Paul lamariana

    Will New York Local 805 be covered under the rescue plan?

  4. bobby stukes

    thank god about time .

  5. manuel ramos

    if local 74 is covered under this plan . our pensions are under in critical status since 2009 and i am still working and getting pretty old . maybe i will have a future after all . local 74 is under seiu benefit funds

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