Sec. 508. PBGC financial assistance
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Section 4261 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1431 ) is amended by adding at the end the following new subsection: The plan sponsor of a multiemployer plan— which is in critical and declining status (within the meaning of section 305(b)(6)) as of the date of the enactment of this subsection or during the 2-year period beginning on such date, or with respect to which a suspension of benefits has been approved under section 305(e)(9) as of such date; which, as of such date of enactment or during such period, is in critical status (within the meaning of section 305(b)(2)), has a modified funded percentage of less than 40 percent (as defined in section 504(a)(1) of the Rehabilitation for Multiemployer Pensions Act of 2020), and has a ratio of active to inactive participants which is less than 2 to 5; or which is insolvent for purposes of section 418E of the Internal Revenue Code of 1986 as of such date of enactment or during such period, if the plan became insolvent after December 16, 2014, and has not been terminated, and which is applying for a loan under section 504(a) of the Rehabilitation for Multiemployer Pensions Act of 2020 may also apply to the corporation for financial assistance under this subsection, by jointly submitting such applications in accordance with section 504(d)(2) of such Act.
The application for financial assistance under this subsection shall demonstrate, based on projections by the plan actuary, that after the receipt of the anticipated loan amount under section 4(a) of such Act, the plan will still become (or remain) insolvent within the 30-year period beginning on the date of the loan. In reviewing an application under paragraph (1), the corporation shall review the determinations and demonstrations submitted with the loan application under section 504(c) of the Rehabilitation for Multiemployer Pensions Act of 2020 and provide guidance regarding such determinations and demonstrations prior to approving any application for financial assistance under this subsection.
The corporation may deny any application if any such determinations or demonstrations (or any underlying assumptions) are clearly erroneous, or inconsistent with rules issued by the corporation, and the plan and the corporation are unable to reach agreement on such determinations or demonstrations. The corporation shall prescribe any such rules or guidance not later than August 31, 2020. In the case of a plan described in paragraph (1)(A) or (1)(B), the total financial assistance provided under this subsection shall be an amount equal to the smallest portion of the loan amount with respect to the plan under paragraph (1)(A) or (1)(B)(ii) of section 504(d) of the Rehabilitation for Multiemployer Pensions Act of 2020 (determined without regard to paragraph
(2)thereof) that, if provided as financial assistance under this subsection instead of a loan, would allow the plan to avoid the projected insolvency. In the case of a plan described in paragraph (1)(C), the financial assistance provided pursuant to such application under this subsection shall be the present value of the amount (determined by the plan actuary and submitted on the application) that, if such amount were paid by the corporation in combination with the loan and any other assistance being provided to the plan by the corporation at the time of the application, would enable the plan to emerge from insolvency and avoid any other insolvency projected under paragraph (1). Except as provided in subparagraph (B), if the corporation determines at the time of approval, or at the beginning of any plan year beginning thereafter, that the plan’s 5-year expenditure projection (determined without regard to loan payments described in clause (iii)(III)) exceeds the fair market value of the plan’s assets, the corporation shall (subject to the total amount of financial assistance approved under this subsection) provide such assistance in an amount equal to the lesser of— the amount by which the plan’s 5-year expenditure projection exceeds such fair market value; or the plan’s expected expenditures for the plan year. For purposes of this subparagraph, the term 5-year expenditure projection means, with respect to any plan for a plan year, an amount equal to 500 percent of the plan’s expected expenditures for the plan year. For purposes of this subparagraph, the term expected expenditures means, with respect to any plan for a plan year, an amount equal to the sum of— expected benefit payments for the plan year; expected administrative expense payments for the plan year; plus payments on the loan scheduled during the plan year pursuant to the terms of the loan under section 504(b) of the Rehabilitation for Multiemployer Pensions Act of 2020. For purposes of this subparagraph, in the case of any plan year during which a plan is approved for a loan under section 504 of such Act, but has not yet received the proceeds, such proceeds shall be included in determining the fair market value of the plan’s assets for the plan year. The preceding sentence shall not apply in the case of any plan that for the plan year beginning in 2015 was certified pursuant to section 305(b)(3) as being in critical and declining status, and had more than 300,000 participants. The financial assistance under this subsection shall be provided in a lump sum if the plan sponsor demonstrates in the application, and the corporation determines, that such a lump sum payment is necessary for the plan to avoid the insolvency to which the application relates. In the case of a plan described in paragraph (1)(C), such lump sum shall be provided not later than December 31, 2020. Subsections
(b)and
(c)shall apply to financial assistance under this subsection as if it were provided under subsection (a), except that the terms for repayment under subsection (b)(2) shall not require the financial assistance to be repaid before the date on which the loan under section 504(a) of the Rehabilitation for Multiemployer Pensions Act of 2020 is repaid in full. The corporation may forgo repayment of the financial assistance provided under this subsection if necessary to avoid any suspension of the accrued benefits of participants. . There is appropriated to the Director of the Pension Benefit Guaranty Corporation such sums as may be necessary for each fiscal year to provide the financial assistance described in section 4261(d) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1431(d) ) (as added by this section) (including necessary administrative and operating expenses relating to such assistance).
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Sec. 508
PBGC financial assistance
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