Detroit Carpenters’ Pension Plan Pension Recovery Program

ARPA: Relief Without Benefit Cuts

The American Rescue Plan Act (ARPA) includes a new Special Financial Assistance program that grants relief payments to pension plans like ours to ensure fund solvency over 30 years without requiring benefit cuts.

We applied for Special Financial Assistance under ARPA in 2024. The PBGC approved our application on October 7, 2024, and on November 7, 2024, we received $635,030,405.50 in funding and interest.

Special Financial Assistance (SFA) is vastly preferable to the dramatic MPRA benefit cuts that would have been required without SFA:

  1. It provides an immediate boost to our Pension Plan’s funding ratio while putting us on the path to becoming fully funded.
  2. ARPA is designed to ensure Plan solvency for over 30 years.
  3. ARPA avoids the painful benefit cuts that MPRA would require.
  4. ARPA would increase our Plan’s funding ratio from 33% to over 60% on the day assistance is provided to the Plan.
  5. Securing ARPA assistance results in projected fund solvency (well) beyond 2051. It gives us a solid opportunity to reach full funding based on reasonable actuarial assumptions.

Avoiding cuts when we have another option isn’t just good for current retirees; it is crucial to our ability to organize for growth. As much as ARPA’s financial assistance means itself, it gives us a stronger foundation to recruit and retain the members that will ultimately determine if the Pension Plan is healthy or not. More members and more work hours mean more participants and a healthier fund.

Improving the plan’s financial position will also help us organize and retain new contractors because they won’t be as fearful of getting stuck with the Plan’s unfunded liability.

Given all that, the Trustees withdrew the previously pending MPRA cuts application on August 30, 2021, applied for SFA at the earliest opportunity in 2024, and received approval for SFA in October, 2024. The plan received $635,030,405.50 in SFA funding and interest on November 7, 2024. 

What comes next? Our SFA funding will be held in segregated accounts from the rest of the Pension's assets, invested according to the requirements of the SFA program, and used to pay participant benefits. That frees up monthly contributions and earnings on legacy assets to be reinvested to support the long-term health of the plan. 

ARPA represents a once-in-a-lifetime opportunity to shore up our Pension Plan without negatively impacting our participants and is one we intend to take every advantage of.

We want to thank all of you for staying involved. We have often said the best way to move forward is to move forward together. Your continued engagement is as important as our continued commitment to transparency and communication.