March 15, 2024

In response to a request for guidance from the Teamsters Central States Pension Plan, the Department of Labor’s Employee Benefits Security Administration (EBSA) issued a “Statement of Enforcement Policy Regarding Return of Excess Special Financial Assistance Payments.” The Statement of Enforcement Policy makes clear that Central States needs to return $127 million in extra Special Financial Assistance (SFA) Program funds it received for dead participants and that the trustees of the plan will not face adverse legal consequences for doing so. Notably, the EBSA statement is written to apply broadly beyond Central States to any multiemployer plan that received “SFA payments...in amounts that exceeded what they should have received because of inaccuracies in plan census data that was used to prepare benefit projections needed to determine the amount of SFA to be paid to the plans as part of the SFA application process.” The letter goes on to say that the “[DOL] recognizes that plans do not have access to the Social Security Administration’s Full Death Master File, which the Pension Benefit Guaranty Corporation (PBGC) is in a unique position to use to cross-check participant data.” Any multiemployer plan that received an SFA payment before the PBGC changed is process for identifying dead participants needs to be aware of this new enforcement policy.

Importantly, the new Statement of Enforcement Policy also makes clear that repayment of SFA funds is not precluded by and does not violate “the requirement of ERISA Section 403(c)(1), which provides that plan assets must be held for ‘the exclusive purposes of providing benefits to participants….and defraying reasonable expenses of administering the plan,’ or the duties of prudence and loyalty as set forth in ERISA Sections 404(a)(1)(A) and (B).” DOL goes on to say it “has confirmed its understanding with the Department of the Treasury and the Internal Revenue Service” and that it “does not intend to take any enforcement action against a plan that repays excess SFA amounts based on inaccurate census information that is subsequently corrected through the PBGC’s use of the Death Master File.”

DOL included the caveat that its statement of enforcement policy “should not be read as suggesting that the plans failed to exercise proper care in connection with the applications for SFA, but rather that some of the applications were premised on inaccuracies in Census data that the PBGC is in a unique position to detect and for which the United States government has a bona fide restitution claim.” It goes on to say that “the PBGC will work with the plans to recalculate the[ir] SFA entitlement and the amount of the excess payments” and “that this process has already begun.”

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