The Pension Benefit Guaranty Corporation (PBGC) posted a new Special Financial Assistance (SFA) program frequently asked question (FAQ) that provides guidance for multiemployer plans that receive SFA. The new SFA FAQ explains what type of derivative exposure, outside of permissible fund vehicles, are permissible in portfolios of SFAs and provides examples. Specifically, the FAQ notes that plans generally should not invest SFA assets in derivatives and explains that SFA regulations address permissible exposure to derivatives outside of fund vehicles. The SFA regulations state that “permissible investments must not be supplemented by, and permissible fund vehicles cannot include derivatives or otherwise be leveraged in a way that could increase the risk of the permissible investment beyond the risk associated with the market value of the un-leveraged permissible investment.” In addition to the new SFA FAQ, PBGC also has posted an updated FAQ on examples of permissible investment grade fixed income (IGFI) securities to clarify when fixed-to-float securities are permissible IGFI securities.
SWACCA helped to include the SFA program in the American Rescue Plan Act at the height of the COVID-19 pandemic and was actively engaged in the deliberations over the regulations that implemented the program. There are several plans in which SWACCA contractors participate that have received SFA program funding, including the Southwest Ohio Carpenters Plan, the Marine Carpenters Fund in California, and the Detroit Carpenters Pension Trust Fund.