American Rescue Plan Act of 2021
Earlier today, the House passed the Senate’s version of the $1.9 trillion virus relief reconciliation bill by a vote of 220-211 that will be signed by the President. After several years of lobbying, we are thrilled with the inclusion of multiemployer funding reform that allows::
- Temporary delay of designation of multiemployer plans as in endangered, critical, or critical and declining status
- Temporary extension of the funding improvement and rehabilitation periods
- Extended amortization of losses
- A special financial assistance program for financially troubled multiemployer plans
As we have mentioned, there are still several multiemployer reforms (i.e., funding assumptions, withdrawal liability, and composite plans) that are still under consideration, but this legislation is a critical first step.
We are also pleased to see that the legislation includes single employer funding relief. The relief extends the amortization period from 7 to 15 years and stabilizes pension smoothing by expanding the interest rate corridor and making a permanent floor.
Because of Budget Reconciliation rules both of these provisions require budget offsets (or pay fors). The offset for multiemployer plans is an increase in multiemployer PBGC premiums to $52 per participant for plan years after December 31, 2030. The offset for single employer plans is an extension of the deduction limit under Code section 162(m) so that the $1 million salary deduction limit will apply to the top 10 highly compensated employees and officers.
Another victory in the package is that the legislation does not extend the emergency paid leave mandate to employers with more than 500 employees.
DOL Statement on ESG Investment Final Rule
Today the U.S. Department of Labor’s Employment Benefits Security Administration announced that it will not bring suits under recently published final rules on “Financial Factors in Selecting Plan Investments” and “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” pursuant to an enforcement policy statement.
Since the DOL has made clear that it will change the ESG rule, we believe that this statement is necessary to prevent plan sponsors from having to implement the changes of the current final rule knowing that there will be different changes coming soon. Even though the policy does not stop private litigation, it does indicate to plaintiffs’ attorneys that the DOL will not support such litigation and indicates to the courts that the DOL does not support the final rule.