Assumptions Guidance

sfa-assumptions-guidance October 2023_final.pdf

Special Financial Assistance by PBGC

Assumptions Guidance

OMB: 1212-0074

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July 9, 2021
Updated July 11, 2022
Updated January 3, 2023
Updated July 27, 2023
Updated November 1, 2023
PBGC SFA 22-07

Special Financial Assistance Assumptions
Table of Contents

I. Introduc�on and background ...........................................................................................................................3
II. Changes to the Assump�ons Guidance …………………………………………................................................................5
III. Acceptable assump�on changes ......................................................................................................................6
A.

Adop�on of assump�ons not previously factored into pre-2021 cer�ﬁca�on of plan status ...................6
1.

CBU assump�on ...........................................................................................................................6

Administra�ve expense assump�on ............................................................................................6

Proposed change to mortality assump�on ……………………………………………………………………………………………8

Proposed change to mortality improvement projec�on scale ..................................................................8

Proposed change to new entrant proﬁle assump�on ...............................................................................8

Proposed change to contribu�on rate assump�on………………………………………………………………………………..9

Proposed change for “missing” terminated vested par�cipants ...............................................................9

IV. Generally acceptable assump�on changes .....................................................................................................11
A.

Proposed change to CBU assump�on ......................................................................................................11
1.

Assump�on for ﬁrst 10 years of projec�on period ....................................................................11

Assump�on for years more than 10 years in the future ............................................................12

Exclusion period .........................................................................................................................12

Examples ....................................................................................................................................12

Proposed change to mortality assump�on .............................................................................................15

Proposed change to assump�ons (other than the SFA interest rate and non-SFA interest rate) to reﬂect
signiﬁcant plan experience between the par�cipant census date and the SFA applica�on date.............15

Actuarial assump�ons used in approved applica�ons under the Mul�employer Pension Reform Act of
2014 (MPRA)…..........................................................................................................................................16

V. Generally not acceptable assump�on changes ..............................................................................................17
A.

Proposed change to CBU assump�on .....................................................................................................17

Proposed change to investment expense assump�on ............................................................................17

Proposed change to assump�ons (other than the interest rates) based on short-term plan
experience between the par�cipant census date and the SFA applica�on date ....................................17

VI. Addi�onal informa�on ..................................................................................................................................19
A.

Actuarial assump�ons for certain plans ................................................................................................. 19

Actuarial assump�ons for withdrawal liability payments ...................................................................... 19

Assump�on changes regarding “missing” terminated vested par�cipants ............................................ 20

D. Hard-to-Value assets for SFA applica�ons ...............................................................................................20
E.

Nonbinding guidance ..............................................................................................................................21

Department of Labor advisory ................................................................................................................21

G. Contact informa�on ................................................................................................................................21

I. Introduction and background
This guidance provides guidelines for changes to certain assumptions that plans may use for
purposes of determining the amount of special financial assistance (SFA). Plans may, but are not
required to, use the guidelines if they are reasonable for the plan.
This guidance is divided into four sections:
o
o
o
o

Acceptable assumption changes,
Generally acceptable assumption changes,
Generally not acceptable assumption changes, and
Additional information

Section 9704 of the American Rescue Plan (ARP) Act of 2021 (P.L. 117-2) added section 4262 to the
Employee Retirement Income Security Act of 1974 (ERISA), which authorizes PBGC to provide
special financial assistance (SFA) to eligible multiemployer plans. Certain multiemployer plans are
eligible to apply for SFA if they are in critical and declining or critical status; were approved to
suspend benefits under the Multiemployer Pension Reform Act of 2014 as of March 11, 2021; or
became insolvent after December 16, 2014, and have not terminated as of March 11, 2021.
On July 8, 2022, PBGC published a rule that, once effective on August 8, 2022, finalized PBGC’s
SFA regulation and replaced an interim final rule issued on July 9, 2021. The final rule made some
changes to the SFA regulation from the interim final rule.
The SFA regulation provides regulatory guidance to multiemployer plans on the requirements for
SFA applications and related restrictions and conditions. This document, providing guidance on
certain SFA assumptions, along with the SFA instructions for filing requirements and corresponding
templates, provide additional guidance to multiemployer plan practitioners on how to prepare and
file the required application information for SFA.
Section 4262(e) of ERISA generally looks to plan assumptions previously selected by the plan
actuary (original assumptions) for calculating the amount of SFA. Section 4262(e)(4) provides a
mechanism for a plan to propose changes to actuarial assumptions if it determines that the use of
one or more of its original assumptions (other than the interest rate) is unreasonable.
Under § 4262.5(c) of PBGC’s SFA regulation, a plan that proposes to change its original
assumptions is required to describe in its application why any original assumption is no longer
reasonable, assert that the plan proposes to use a changed assumption, and demonstrate in its
application why the changed assumption is reasonable.
PBGC will consider the plan’s changed assumption to be reasonable unless PBGC determines that
the assumption is unreasonable or determines that a plan’s changed assumptions are unreasonable
in the aggregate. This guidance explains, for certain changed assumptions, when PBGC might (or
might not) consider an assumption reasonable.
When a plan adopts an assumption that is needed to project cash flows beyond the period reflected
in the most recent certification of plan status before January 1, 2021 (pre-2021 certification of plan
status), PBGC considers this “extension” of an assumption to be an assumption change. Examples
of assumptions that should have extensions are contribution base units (CBUs), administrative
expenses, projection of the number of active participants, contribution rates, withdrawal liability
payments for currently withdrawn employers, and withdrawal liability payments for future
withdrawals.
To the extent a plan adopts such an extension of an assumption or proposes another change to an
assumption in accordance with § 4262.5(c) of PBGC’s SFA regulation, PBGC will accept the
3

assumption changes provided the plan includes the information required by § 4262.5(c) in the
application and the plan’s demonstration shows the assumption is reasonable. If the changed
assumption meets one of the criteria described in Section III. A – F of this guidance regarding
acceptable assumption changes, it is sufficient to include a statement to that effect in order to meet
the requirements of § 4262.5(c)(1)(iii) instead of providing a detailed demonstration.
The amount of SFA requested is determined as of the plan’s “SFA measurement date.” Within
this document, except for a plan that filed its initial SFA application before August 8, 2022, when
the interim final rule was in effect, a plan’s SFA measurement date is defined in § 4262.2 of
PBGC’s SFA regulation as “the last day of the third calendar month immediately preceding the
date the plan’s initial application…was filed.” For example, if the plan’s initial application was
filed on March 15, 2023, its SFA measurement date would be December 31, 2022; if the plan’s
initial application was filed on July 1, 2023, its SFA measurement date would be April 30, 2023.
For a plan that submitted its initial SFA application under the interim final rule before August 8,
2022, its SFA measurement date is the last day of the calendar quarter immediately preceding
the date the plan’s initial application was filed.

II. Changes to the Assumptions Guidance
This document is an update to Special Financial Assistance Assumptions PBGC SFA 22-07
published on July 11, 2022, and updated on January 3, 2023. Below is a summary of the substantive
changes made to this guidance since January 3, 2023. In addition to those changes listed in
specific sections, this document has been modified to remove references to eligibility for SFA. This
document is intended to only provide nonbinding guidance with respect to assumptions utilized for
the determination of the SFA amount:
Section
VI.A.

Changes Made
Added footnote (new FN #1) to “1. Assumption for first 10 years of
projection period” In the case of applications reflecting experience during or
after the COVID period, the number of plan years reflected in the development
of the assumption may be non-consecutive. See Example #3 in this section.
Changed Example #3 to exclude comparison of 2019 CBUs to 2022 CBUs in
development of the geometric average, as this could result in an unreasonable
assumption given the 3-year experience period (2019-2022), which may include
CBU influences other than COVID-19.
Revised Example #4 to clarify PBGC’s analysis of experience between the SFA
measurement date and application filing date (or revised application filing date).

III. Acceptable assumption changes
If any changed assumption meets one of the criteria described in A – F of this section, the
requirements of § 4262.5(c)(1)(iii) to demonstrate that the changed assumption is reasonable are
not necessary; it is sufficient to include a statement to that effect instead of a detailed
demonstration.
In accordance with the SFA instructions for filing requirements and corresponding templates, a plan
is required to reflect any of the changed assumptions described in parts A. – E. but not F. of this
section in the “Baseline” details. The changed assumptions described in this section are not required
to be disclosed in the “Reconciliation” details. (For a description of Baseline and Reconciliation, see
the SFA instructions posted on PBGC’s website at www.pbgc.gov.)

A. Adoption of assumptions not previously factored into pre-2021 certification of plan
status
A plan’s certification of plan status generally does not utilize assumptions for projected CBUs or
plan-related administrative expenses more than 20 years in the future. In addition, before the
enactment of ARP, if a plan was projected to become insolvent in less than 20 years, the plan
generally did not utilize assumptions for projected CBUs or plan-related administrative expenses
for years after the projected insolvency date.
As such, as part of their SFA application, most plans will need to adopt a change in assumption
for the later years in the SFA projection period not factored into the pre-2021 certification of plan
status (the “post-certification projection years”).
PBGC will accept the following assumptions for post-certification projection years.
1. CBU assumption
Unless PBGC determines that the CBU assumption used for the plan years projected in the
pre-2021 certification of plan status is unreasonable, PBGC will accept a change in the CBU
assumption for the post-certification projection years if the number of assumed CBUs for
such years is the same or no less than the number assumed for the last full plan year for
which a CBU assumption was utilized in the pre-2021 certification.
Example #1. If the pre-2021 certification of plan status projected the plan to go insolvent
during the plan year beginning January 1, 2026, the last full plan year in which a CBU
assumption was utilized is the plan year beginning January 1, 2025. The assumed CBUs for
the 2025 plan year were 10,000. Unless PBGC determines that the CBU assumption used
for plan years through 2025 is unreasonable, PBGC will accept an extension of the CBU
assumption that assumes 10,000 CBUs in 2026 and future years.
Example #2. The pre-2021 certification of plan status projected a decrease of 2% per year in
CBUs over the 20 years covered by the projection resulting in 1,000 CBUs for year 20.
Unless PBGC determines that the CBU assumption that uses the same number of CBUs for
each projection year as were assumed in the pre-2021 certification of plan status is
unreasonable, PBGC will accept an extension of the CBU assumption that assumes 1,000
CBUs for years 21 – 30.
2. Administrative expense assumption
If PBGC determines that the administrative expense assumption used for the plan years in
6

the pre-2021 certification of plan status (using the methodology from that certification) is
reasonable, then PBGC will accept a change in an administrative expense assumption for
the post-certification projection years if the rate of increase for administrative expenses for
such years is the same or no more than the increase assumed for the last full plan year in
the projection period used in the pre-2021 certification of plan status for which there was an
assumption utilized, further adjusted to reflect the PBGC premium increase under section
4006(a)(3)(A) of ERISA that goes into effect in 2031, subject to a cap determined as a
specified percentage (taken from the table below) of projected benefit payments for the
same year to which administrative expenses are being projected.
Cap on Projected Administrative Expenses
Annual Benefit Payments for the Last
as a Percentage of
Plan Year Ending On or Before the
Projected
Annual Benefit Payments
SFA Measurement Date
$100 million or more
6%
$50 million but less than $100
9%
million
$5 million but less than $50 million
12%
Less than $5 million
15%
While PBGC will not question the reasonableness of this acceptable extension of the
administrative expense assumption, the application should include sufficient supporting
information for PBGC to confirm that the assumed administrative expenses in the postcertification projection years have been calculated in a manner consistent with the above
methodology.
Example #1. In a plan’s pre-2021 certification of plan status, the plan was projected to
become insolvent in the plan year beginning January 1, 2027. For the pre-2021 certification
of plan status, administrative expenses were estimated as equal to the prior year’s actual
amount and assumed to increase by 2.0% per year through 2024, and to increase by 1.5%
per year in 2025 and 2026. There was no assumption utilized for administrative expenses for
years after 2027, and the last full plan year in the projections was 2026. Benefit payments for
the last plan year ending on or before the SFA measurement date are $75 million. For this
plan, if PBGC determines that the administrative expense assumption used for plan years
through 2026 (using the methodology from the pre-2021 certification of plan status) is
reasonable, then PBGC will accept an extension of the administrative expense assumption
under which assumed administrative expenses in the post-certification years are calculated
as follows:
o Calculate the assumed administrative expenses for each year, without application of the
cap, as follows:

− For years before 2027, assumed administrative expenses are determined in the
same manner as in the pre-2021 certification of plan status. If the plan applies for
SFA in 2022, the 2022 assumed administrative expenses are calculated as the actual
2021 amount increased by 2.0%. For 2023 through 2024, the assumed administrative
expenses are 2.0% higher than the prior year’s assumed administrative expenses.
The 2025 assumed administrative expenses are 1.5% higher than the 2024 assumed
administrative expenses, and 2026 assumed administrative expenses are 1.5%
higher than the 2025 assumed administrative expenses.

− For 2027 through 2030, 1.5% higher than the prior year’s assumed administrative
expenses,
− For 2031, 1.5% higher than the 2030 assumed administrative expenses plus the
amount needed to reflect the premium increase, and
− For years after 2031, 1.5% higher than the prior year’s assumed administrative
expenses.
o Apply the cap to the applicable post-certification projection years:
− For all years after 2026, the projected administrative expenses determined above
for each year are limited to 9% of the projected benefit payments for such year. The
cap is 9% because the annual benefit payments for the last plan year ending on or
before the SFA measurement date are between $50 and $100 million.
Example #2. A plan has annual benefit payments more than $100 million. The pre-2021
certification of plan status for the plan projected a 2.5% increase in administrative expenses
each year. For 2040, the last full plan year of the projection in the pre-2021 certification of
plan status, administrative expenses were equal to 7% of annual benefit payments. If PBGC
determines that the administrative expense assumption used for plan years through 2040
(using the methodology from the pre-2021 certification of plan status) is reasonable (even
though the amounts exceed the 6% of benefit payments threshold), PBGC will accept the
extension of the administrative expense assumption for 2041 through 2051 (the postcertification projection years) with the 6% cap from the above table applied.

B. Proposed change to mortality assumption
PBGC will accept a change to the plan’s healthy life mortality assumption if the plan adopts the
Pri-2012 amount-weighted, employee and non-disabled annuitant Blue Collar tables
(Pri2012(BC)) with a projection scale most recently published by the Retirement Plans
Experience Committee (RPEC) of the Society of Actuaries or any projection scale published by
the RPEC in the calendar year of the SFA measurement date (or any subsequent calendar year)
or in the two calendar years preceding the SFA measurement date.
PBGC will also accept a change to the plan’s disabled life mortality assumption if the plan adopts
the Pri-2012 amount-weighted Disabled Retiree table with a projection scale most recently
published by the RPEC or any projection scale published by the RPEC in the calendar year of
the SFA measurement date (or any subsequent calendar year) or in the two calendar years
preceding the SFA measurement date.

C. Proposed change to mortality improvement projection scale
PBGC will accept adoption of any mortality improvement projection scale most recently
published by the RPEC or any projection scale published by the RPEC in the calendar year of
the SFA measurement date (or any subsequent calendar year) or in the two calendar years
preceding the SFA measurement date.

D. Proposed change to new entrant profile assumption
PBGC will accept a change to the plan’s new entrant profile assumption if the distributions of
age, service, and gender are based on the characteristics of the new entrants and rehires to the
plan in the five plan years preceding the plan’s SFA measurement date (reflecting all new
entrants and rehires in those five plan years rather than only those remaining in service), and the
age bands used in the new entrant profile are no greater than 10 years.
While PBGC will not question the reasonableness of this acceptable assumption, the application
should include sufficient supporting information for PBGC to confirm that the assumed new
entrant profile is based on the methodology described above. Specifically, the application should
identify the new entrant profile assumption and should include the experience analysis
separately for each of the last five plan years.

E. Proposed change to contribution rate assumption
PBGC will accept a change to the plan’s contribution rate assumption if the assumption reflects
anticipated actual employer contribution rates for the current and succeeding plan years
consistent with the terms of one or more collective bargaining agreements or contribution
allocation arrangements agreed to prior to July 9, 2021, but a plan cannot reflect a substantial
contribution rate decrease negotiated after March 11, 2021, unless the plan provides the
demonstration noted in § 4262.4(f)(4).
Note that contribution rate increases agreed to on or after July 9, 2021, must be disregarded even
if they are agreed to before the SFA measurement date.
Example #1. The SFA measurement date for a plan is March 31, 2022. The collective bargaining
agreement (CBA) for contributing employer A was entered into before July 9, 2021, and expires
on March 31, 2024. The contribution rate under the CBA for employer A is $5.00 per base unit in
2022, $5.25 in 2023, and $5.50 in 2024. PBGC will accept $5.00 for 2022, $5.25 for 2023, and
$5.50 for 2024 and subsequent years.
Example #2. The SFA measurement date for a plan is March 31, 2022. The collective bargaining
agreement (CBA) for contributing employer B was entered into on or after July 9, 2021, and
expires on December 31, 2025. The contribution rate under this new CBA for employer B is $6.00
per base unit in 2023, $6.25 in 2024, and $6.50 in 2025. The contribution rate under the prior CBA
for employer B is $5.00 per base unit in 2020, $5.25 in 2021, and $5.50 in 2022. PBGC will accept
$5.50 for 2022 and subsequent years.

F. Proposed change for “missing” terminated vested participants
Some multiemployer plans utilize an actuarial assumption to exclude the benefits and liabilities
for certain older terminated vested participants who have not yet applied for benefits from the
measurement of plan liabilities and benefit payment projections in their actuarial valuations and
certifications of plan status. For example, some plans take the position that if a terminated
vested participant has not applied for benefits by the time the participant reaches age 70, the
liabilities for benefits for that participant should be excluded from the measurement of plan
liabilities under the assumption that the participant will never apply for benefits.
If a plan that excluded all or a portion of benefits for certain terminated vested participants in its
pre-2021 certification of plan status proposes a change in assumptions that has the effect of
9

including benefits for some or all of the previously excluded participants, PBGC will accept such
a change provided that benefits for participants previously excluded who are older than age 85
on the SFA measurement date are excluded for purposes of determining the amount of SFA.
While PBGC will not question the reasonableness of this acceptable assumption change, the
application should include (as part of the supporting rationale and information for the assumption
change) the following information:
o

A description of the plan’s policies and procedures for locating missing participants as
well as the specific efforts that the plan has made to locate such participants, and

Details of a recent death audit (performed not earlier than one year prior to the SFA
measurement date) demonstrating that there is no readily available information indicating
that any such participants are deceased as of the SFA measurement date. Remove any
"'missing' terminated vested participants" that are known to be deceased after the census
data date and before the SFA measurement date. This requirement is only for this
assumption which is in contrast to Section B(9) of the General Instructions for
Multiemployer Plans Applying for Special Financial Assistance.

Unlike the approach for other acceptable assumption changes, the instructions for filing an SFA
application specifically require that the Baseline details (Template 5A) should not reflect this
assumption change, and instead this assumption change should be separately identified and
quantified in the Reconciliation details (Template 6A).
Also see section VI.C for additional guidance with respect to assumption changes regarding
“missing” terminated vested participants.

IV. Generally acceptable assumption changes
To the extent a plan proposes to change an assumption in accordance with § 4262.5(c) of PBGC’s
SFA regulation, PBGC will generally accept the assumption changes described in this section IV
provided the plan includes the information required by § 4262.5(c) (including information for
assumption changes described in the SFA filing instructions) in the application and the plan’s
demonstration shows the assumption is reasonable.
While PBGC expects that an assumption following these guidelines generally will be acceptable and
will require less explanation than an assumption that does not follow these guidelines, PBGC may
not accept the proposed changed assumption if significant facts and circumstances exist that render
the otherwise generally acceptable assumption change to be unreasonable. While the applicant
would not be able to rely on these guidelines under these circumstances, the applicant may still be
able to justify the change by supplying additional data or information demonstrating that the change
is reasonable. Please see the General Instructions for Multiemployer Plans Applying for Special
Financial Assistance, Section D(6)(b) for examples of supporting rationale and information for
different types of assumption changes.
In accordance with the SFA instructions for filing requirements and corresponding templates, a plan
is required to include any of the changed assumptions described in this section in the
“Reconciliation” details. The changed assumptions described in this section should not be included
in the “Baseline” details.

A. Proposed change to CBU assumption
The guidance in section IV.A. for a proposed change to the CBU assumption applies to the
aggregate total CBU assumption for the plan.
1. Assumption for first 10 years of projection period
In general, PBGC will look to the geometric average rate of change in actual CBUs over the
most recent 10 plan years preceding the SFA measurement date (excluding any plan year that
contains any part of the “COVID period” defined in section IV.A.3 below) as the basis for its
review. 1 If that average is:
o Greater than or equal to zero (i.e., on average, CBUs have been increasing or remaining
level), PBGC generally will accept a plan’s changed CBU assumption for the first 10 plan
years (the “10-Year Projection Period”) if assumed future CBUs for those 10 plan years
are no less than actual CBUs for the most recent plan year ending before the SFA
measurement date that does not include the COVID period.
o Less than zero (i.e., on average, CBUs have been decreasing), PBGC generally will
accept a plan’s changed CBU assumption for the first 10 plan years if CBUs for those 10
plan years are assumed to decline each year at that average rate, not to exceed a 3.0%
per year rate of decline.

In the case of applications reflecting experience during or after the COVID period, the number of plan years
reflected in the development of the assumption may be non-consecutive. For example, Example #3 in this
section shows how to account for 2020 and 2021 CBU data for purposes of calculating nine ratios (year-toyear changes) needed to determine the 10-year average decline.
1

For this purpose, the initial CBU amount used to project CBUs is the actual amount of CBUs
for the most recent plan year ending before the SFA measurement date that does not include
the COVID period.
10-Year Projection Period: The assumption specified above applies to plan years through the
10th year subsequent to the most recent plan year ending before the SFA measurement date
that does not include the COVID period.
2. Assumption for years more than 10 years in the future
PBGC generally will accept a change to the plan’s CBU assumption for the period after the
10-Year Projection Period in section IV.A.1 above, if for each such plan year, the projected
CBUs increase by no more than 1.0% per year, remain constant, or decline by no more than
1.0% per year.
3. Exclusion period
For purposes of this guidance, the term “COVID period” means the period beginning on
March 1, 2020 and ending on December 31, 2021.
Data from the COVID period is excluded to take into account the period during which a plan’s
industry may have been affected by the COVID-19 pandemic and to avoid using data that
could skew the CBU assumption in either direction. The exclusion period begins March 1,
2020, the beginning of the presidentially declared national emergency 2 and ends December
31, 2021, which is a proxy for when many industries began to stabilize.
Providing a set exclusion period is intended to simplify the information needed to support the
changed CBU assumption. As explained above, plans may, but are not required to, use the
guidelines if they are reasonable for the plan. The COVID-19 pandemic has disparate
impacts for different industries (decreasing CBUs for some and increasing CBUs for others),
and some industries may not have returned to normal levels of activity by
December 31, 2021.
In such cases, plans can propose to adopt an alternative CBU assumption with detailed
explanations and supporting rationale and information, per § 4262.5(c) of PBGC’s SFA
regulation.
4. Example #1
Consider Plan X, a plan with a calendar plan year and with an SFA measurement date in
2022. For purposes of Plan X’s pre-2021 (plan year 2020) certification of plan status, 2019
CBUs were 810,000 and CBUs were assumed to decrease by 1.0% per year. Plan X
determines that the CBU assumption is no longer reasonable and proposes to change that
assumption as follows:
o 2022 CBUs (annualized) are assumed to be 4.43% 3 (1.5% per year for three years,
compounded geometrically) less than 2019 CBUs. In this example, the 810,000 CBUs for
2019 are reduced for three years (by multiplying each prior year CBU amount by 0.985)
resulting in 774,094 CBUs (annualized) for 2022, a reduction of 4.43% from the 2019
CBUs).

The Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19)
Outbreak was signed on March 13, 2020.
3 Change in CBUs between 2019 and 2022 is -4.43%, calculated as (1-.015)^3 – 1).
2

o CBUs for 2023 through 2029 (the remaining 7 years in the 10-Year Projection Period from
2019) are assumed to be 1.50% less than the amount assumed for the prior year.
o CBUs for 2030 through the plan year ending in 2051 are assumed to be 1.0% less than
the amount assumed for the prior year.
The CBU history for Plan X is shown in the following table. CBUs for 2020 and 2021 do not
factor into the calculation because those plan years contain part of the COVID period.
(A)

(B)

(C)

Plan
Year

Actual
CBUs

Ratio to prior
year

2010

930,000

2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

960,000
1.0323
950,000
0.9896
940,000
0.9895
950,000
1.0106
900,000
0.9474
860,000
0.9556
840,000
0.9767
820,000
0.9762
810,000
0.9878
COVID Period Exclusion
COVID Period Exclusion

The geometric average of the numbers in column
(C) is 0.9848. This average is determined by taking
the product of those numbers and raising it to the
1
/9 power. This equates to an average decrease of
1.52% per year [1.0000 - 0.9848 = .0152].
Because the proposed assumption provides for a
decrease (1.50%) during the 10-Year Projection
Period, a rate that is not greater than the average
decrease calculated above, PBGC will generally
accept the changed CBU assumption for this period
(for 2020 through 2029). In addition, because the
proposed CBU assumption for years after 2029
provides for a 1.0% decrease, PBGC will also
generally accept the changed CBU assumption for
the remainder of the SFA projection period.

Example #2. Consider Plan Y, a plan with a calendar plan year and with an SFA
measurement date in 2022. For purposes of Plan Y’s pre-2021 (plan year 2020)
certification of plan status, 2019 CBUs were 810,000 and CBUs were assumed to increase
by 2.0% per year. Plan Y determines that the CBU assumption is no longer reasonable and
proposes to change that assumption as follows:
o 2022 CBUs (annualized) are assumed to be 810,000, unchanged from the 2019 CBUs.
o CBUs for 2023 through 2029 (the remaining 7 years in the 10-Year Projection Period from
2019) are assumed to be the 810,000.
o CBUs for 2030 through the plan year ending in 2051 are assumed to be 1.0% less than
the amount assumed for the prior year.
CBUs for 2020 and 2021 do not factor into the calculation because those plan years contain
part of the COVID period. The geometric average of the change in actual CBUs from 2010
through 2019 is an average increase of 1.00% per year.
Because the proposed assumption provides for no increase or decrease during the 10-Year
Projection Period, PBGC will generally accept the changed CBU assumption for this period
(for 2020 through 2029). In addition, because the proposed CBU assumption for years after
2029 provides for a 1.0% decrease, PBGC will also generally accept the changed CBU
assumption for the remainder of the SFA projection period.
13

Example #3.
Assume the same information as shown in Example #1 for Plan X, but the plan’s SFA
measurement date is in 2024, and the actual CBUs for 2023 are 750,000. For purposes of
Plan X’s pre-2021 (plan year 2020) certification of plan status, 2019 CBUs were 810,000 and
CBUs were assumed to decrease by 1.0% per year. Plan X determines that the CBU
assumption used in the pre-2021 certification of plan status is no longer reasonable and
proposes to change that assumption as follows:
o 2024 CBUs (annualized) are assumed to be 2.25% less than 2023 CBUs. In this example,
the 750,000 CBUs for 2023 are multiplied by 0.9775 (1 - .0225) resulting in 2024 CBUs
(annualized) of 733,125.
o CBUs for 2025 through 2033 (the remaining 9 years in the 10-year period from 2023) are
assumed to be 2.25% less than the amount assumed for the prior year.
o CBUs for 2034 through the plan year ending in 2051 are assumed to be 1.0% less than
the amount assumed for the prior year.
The CBU history for Plan X is shown in the following table. CBUs for 2020 and 2021 do not
factor into the calculation because those plan years contain part of the COVID period.
(A)

(B)

Plan
Year

Actual
CBUs

2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023

(C)

Ratio to prior
year
960,000
N/A
950,000
0.9896
940,000
0.9895
950,000
1.0106
900,000
0.9474
860,000
0.9556
840,000
0.9767
820,000
0.9762
810,000
0.9878
COVID Period Exclusion
COVID Period Exclusion
780,000
N/A
750,000
0.9615

The geometric average of the numbers in column
(C) is 0.9770. This average is determined by taking
the product of those numbers and raising it to the
1
/9 power. This equates to an average decrease of
2.30% per year [1.0000 - 0.9770 = .0230].
Because the proposed assumption provides for a
decrease (2.25%) during the 10-Year Projection
Period, a rate that is not greater than the average
decrease calculated above, PBGC will generally
accept the changed CBU assumption during the
10-Year Projection Period (for 2024 through 2033).
In addition, because the proposed CBU assumption
for years after 2033 provides for a 1.0% decrease,
PBGC will also generally accept the changed CBU
assumption for the remainder of the SFA projection
period.

Example #4.
Assume the same information as shown in Example #3 for Plan X. In early 2024, prior to
applying for SFA, a new contributing employer joins the plan and is expected to increase the
plan’s 2024 CBUs and 2024 contributions by 50%. Plan X proposes to use the same CBU
assumptions as shown in Example #3.
PBGC preliminarily confirms that the proposed CBU assumption follows the guidelines for a
generally acceptable CBU assumption change. However, the addition of the new contributing
employer is reasonably expected to increase aggregate 2024 CBUs by 50% which has not
been reflected in the proposed CBU assumption. Based on a reasonable consideration of this
14

relevant fact, PBGC found the proposed assumption change to be unreasonable because it
significantly understates the expected future CBUs. Note, however, that all relevant facts will
be considered in the assessment of any proposed assumption change. 4 Accordingly, the
proposed assumption change described above could be considered reasonable if, for
example, in addition to a new employer joining the plan there were significant withdrawals that
are expected to reduce 2024 CBUs.

Proposed change to mortality assumption
PBGC generally will accept a change to the plan’s mortality assumption if the plan’s proposed
mortality assumption is a modified version of the Pri-2012 amount-weighted Blue Collar table
(Pri-2012(BC)) reflecting the plan’s fully credible or partially credible mortality experience, with a
projection scale most recently published by the Retirement Plans Experience Committee of the
Society of Actuaries or any projection scale published by RPEC in the calendar year of the SFA
measurement date (or any subsequent calendar year) or in the two calendar years preceding the
SFA measurement date. 26 CFR 1.430(h)(3)-2 for single-employer plans should be used as a
framework to develop the modified plan-specific mortality table.
For this purpose, references to requesting approval from the Commissioner in 26 CFR
1.430(h)(3)-2(b) are not relevant. References to applicability to all plans in a controlled group in
26 CFR 1.430(h)(3)-2(c)(1) and newly affiliated plans in 26 CFR 1.430(h)(3)-2(f)(2) are also not
relevant.
References in 26 CFR 1.430(h)(3)-2 to the prescribed mortality tables under section 430(h)(3)(C)
of the Internal Revenue Code should be replaced with references to Pri-2012(BC).
References in 26 CFR 1.430(h)(3)-2 to mortality improvement rates should be replaced with
references to any projection scale published by the RPEC in the calendar year of the SFA
measurement date (or any subsequent calendar year) or in the two calendar years preceding the
SFA measurement date.

C. Proposed change to assumptions (other than the SFA interest rate and non-SFA
interest rate) to reflect significant plan experience between the participant census
date and the SFA application date
PBGC generally will accept a change to a plan’s assumptions (other than the interest rates) if the
plan’s proposed assumption is made due to a significant change in plan experience that has
occurred after the participant census date and before the date the application for SFA is filed (or
for a revised application, the date the revised application is filed). However, no such change may
be proposed in a plan’s supplemented application filed under § 4262.4(g)(6) of PBGC’s SFA
regulation.
Example
Plan Y’s plan year is the calendar year. The plan is in critical and declining status for the 2020
plan year. The plan files its initial SFA application in March 2025. Its SFA measurement date is
December 31, 2024 (the last day of the third calendar month immediately preceding the date the
PBGC may request actual CBU experience for periods prior to the application filing date (or revised application
filing date). If the actual CBUs are significantly higher or lower than the projected CBU assumption used in the
development of the plan’s SFA amount, the plan should provide additional support for the reasonability of the
CBU projection or make appropriate adjustments.

plan’s initial application for special financial assistance was filed), and the plan’s participant
census data is as of January 1, 2024, since this is the participant census data used to prepare
the plan’s actuarial valuation report for the plan year (2024) that includes the plan’s SFA
measurement date.
In the pre-2021 certification of plan status, the level of CBUs is assumed to decrease by 1% per
year, and no current contributing employers are assumed to withdraw from the plan.
On January 31, 2025, the plan’s largest contributing employer, who contributed 20% of the total
employer contributions in 2024, withdraws from the plan. The plan determines that its original
assumptions (from its pre-2021 certification of plan status) are no longer reasonable, and makes
the following changes to the assumptions used to determine the requested amount of SFA:
•
•
•
•
•
•

Reduces the assumed CBUs for 2025 by 20% from the CBUs previously projected for 2025,
Adjusts its average contribution rate, as needed 5,
Reflects the expected projected withdrawal liability payments (reflecting if appropriate a
reasonable allowance for amounts considered uncollectible) from the withdrawing employer
in its SFA projections,
Changes its turnover and retirement assumptions to reflect the termination or retirement of
the employees of the withdrawing employer on January 31, 2025,
Changes its turnover and retirement assumptions for continuing active participants, as
needed5,
Changes its new entrant profile, as needed.5

The plan must provide supporting rationale for why the identified plan experience is significant.
The plan must also provide supporting rationale, data, and information on why using each of the
original assumptions is no longer reasonable, and why the proposed assumptions are
reasonable.

D. Actuarial assumptions used in approved applications under the Multiemployer
Pension Reform Act of 2014 (MPRA)
PBGC will generally accept a change from the assumption used in the pre-2021 certification of
plan status to an assumption used in a plan’s approved MPRA application (including projected
CBUs) if the plan includes the information required under § 4262.5(c) of PBGC’s SFA regulation
in the application and the demonstration provided by the plan shows the assumption is
reasonable for the purpose of determining the amount of SFA.

Changes to assumptions should be made if the plan determines that the assumption used is no longer
reasonable based on an analysis that reflects the remaining contributing employers.
5

V. Generally not acceptable assumption changes
A. Proposed change to CBU assumption
PBGC generally will not accept a change to the plan’s CBU assumption if:
o The changed assumption includes year-to-year changes that are not adequately supported
by the plan’s historical data, or
o The change is based on speculative changes in industry trends not supported by data.

Given the difficulty of projecting industry trends over a 30-year period for any industry, it is
important that the CBU assumption be supported by historical data and informed by recent
trends.
Speculative industry transformations unsupported by data are not appropriate. For this purpose,
PBGC considers “speculative industry transformations” to mean transformations where little to
no transformation has yet occurred, transformations that are in their infancy, or transformations
that anticipate future adoption of new technologies. For example, PBGC generally will not accept
a CBU assumption that anticipates extreme automation of an industry (e.g., self-driving trucks
replacing all human truck drivers).
A speculative industry transformation does not include a projected transformation that is a
reasonable extension of current technology and trends. For example, a gradual transformation
that replaces grocery store cashiers with self-checkouts.
The CBU guidelines in this document in sections III.A.1, IV.A and V.A will help to streamline the
application review process and serve to ensure plans are treated consistently within a given
industry or union.

B. Proposed change to investment expense assumption
PBGC generally will not accept a change to the plan’s investment expense assumption that is
based on a methodology for identifying which classes of expenses are included in the projected
administrative expenses in the deterministic projection used to determine the requested SFA that
is different from the methodology used in the projections used in the pre-2021 certification of
plan status.
For example, PBGC generally will not accept a change from an implicit investment expense
assumption (where expenses are net of the assumed interest rate) to an explicit amount of
investment expenses. Similarly, PBGC generally will not accept a change from an assumption of
no investment expenses paid directly from plan assets to an explicit amount of assumed
investment expenses.

C. Proposed change to assumptions (other than the interest rates) based on shortterm plan experience between the participant census date and the SFA application
date
PBGC generally will not accept a change to a plan’s assumption if the plan’s proposed
assumption is made to reflect short-term plan experience (other than significant plan experience
as described in section IV.C) that has occurred between the participant census date and the
date the application for SFA is filed (or for a revised application, the date the revised application
17

is filed). In addition, no changes to assumptions or methods are allowed which reflect plan
investment experience after the SFA measurement date.
For example, PBGC generally will not accept a change to the plan’s mortality assumption to
reflect the actual mortality experience that occurred after the plan’s participant census date.

VI. Additional information
A. Actuarial assumptions for certain plans
The description of the actuarial assumptions to be used in the determination of the amount of
SFA under section 4262(e)(2) of ERISA refer to the assumptions used in the plan’s most recently
completed certification of plan status before January 1, 2021. PBGC is aware of certifications of
plan status for some plans in which not all of the actuarial assumptions needed to complete an
application for SFA are specifically documented.
For assumptions not identified or referenced in the pre-2021 certification of plan status, PBGC
will accept the actuarial assumptions actually used to determine the plan’s status to the extent
such actuarial assumptions were communicated in writing by the plan’s actuary to the plan
sponsor, trustee, plan fiduciary other than the trustee, plan’s counsel, plan’s independent
qualified public accountant, or to their representative no later than 90 days after the due date of
the pre-2021 certification of plan status. To use such actuarial assumptions, the applicant should
provide a copy of the communication containing the actuarial assumptions and a statement
signed under penalty of perjury by the recipient of the communication authenticating the
communication and the date of receipt.
For assumptions not identified or referenced in the pre-2021 certification of plan status or
evidenced by a contemporaneous written communication as described above, PBGC will
consider the actuarial assumptions documented in the Form 5500 Schedule MB filed for the plan
year ending immediately before the pre-2021 certification of plan status was certified to be the
same as those used for the pre-2021 certification of plan status.
For example, the pre-2021 certification of plan status for a plan using a calendar plan year was
issued on March 29, 2020. The pre-2021 certification of plan status did not document any
actuarial assumptions used in the certification and there was no contemporaneous written
communication of those actuarial assumptions by the plan’s actuary. In these circumstances, an
application for SFA should be based on the actuarial assumptions documented in the plan’s
2019 Form 5500 Schedule MB.
If the Form 5500 Schedule MB to Form 5500 does not include all of the assumptions that are
needed to determine the amount of SFA (such as a projection of contribution base units,
contribution rates, withdrawal liability payments, new entrant profile and/or administrative
expenses), then the plan actuary should select assumptions that represent their best estimate of
future experience as of the valuation date on the Schedule MB and should include detailed
explanations and supporting rationale and information as to why these assumptions are
reasonable. These assumptions will be treated as changed assumptions for all purposes of
PBGC’s review, except that these changed assumptions are included in the “Baseline” details.
Plans may propose to change the assumptions determined in any of the above ways for
purposes of the determination of SFA amount only if the plan includes the information required
by § 4262.5(c) in the application and the plan’s demonstration shows the assumption is
reasonable.

B. Actuarial assumptions for withdrawal liability payments
When projecting future receipt of employer withdrawal liability payments for purposes of
determining the amount of SFA, the plan’s actuary should consider reflecting a reasonable
allowance for amounts considered uncollectible.
19

C. Assumption changes regarding “missing” terminated vested participants
Section III.F. provides background and identifies a change in assumptions with respect to
“missing” terminated vested participants that PBGC will accept as reasonable.
If a plan proposes a change in such assumptions other than the acceptable assumption change
described in section III.F, PBGC will assess the reasonableness of the proposed change
regarding the inclusion of certain previously excluded terminated vested participants by assessing
the information and supporting rationale and analysis provided by the plan. The plan should
provide experience data that supports that it is reasonable to assume that the participants now
included for determining the amount of SFA will eventually apply for benefits.
In addition to experience data and rationale described above, the SFA application should include
the following information:
o

o
o

A listing (including relevant data items such as current age or date of birth, gender,
assumed payment age or date, benefit amount at normal retirement date, benefit amount
at assumed payment age or date, lump sum retroactive benefit payment as of SFA
measurement date if applicable) of the participants whose benefits were excluded from the
measurement of liabilities in the most recent actuarial valuation that would be included in
the determination of the amount of SFA,
A description of the plan’s policies and procedures for locating missing participants as well
as the specific efforts that the plan has made to locate such participants, and
Details of a recent death audit (performed not earlier than one year prior to the SFA
measurement date) demonstrating that there is no readily available information indicating
that any such participants are deceased as of the SFA measurement date. Remove any
"'missing' terminated vested participants" that are known to be deceased after the census
data date and before the SFA measurement date. This requirement is only for this
assumption which is in contrast to Section B(9) of the General Instructions for
Multiemployer Plans Applying for Special Financial Assistance.

D. Hard-to-Value assets for SFA applications

Hard-to-value assets, such as private equity, hedge funds, or real estate are required to be
measured on the SFA measurement date. Whenever possible, applicants on behalf of plans
applying for SFA should request values of hard-to-value assets from the plan’s fund managers.
The use of good-faith estimates provided by fund managers as of the SFA measurement date
will be treated as “acceptable” assumptions, as that term is used in PBGC’s published SFA
Assumptions Guidance on www.pbgc.gov. Documentation of the estimated values provided by
fund managers may be requested by PBGC during the review of the SFA application.

If an applicant has made a good faith effort to obtain estimated values as of the SFA
measurement date from the fund managers, but the fund manager cannot or will not provide such
an estimate, then applicants should make reasonable estimates of the value of these assets as of
the SFA measurement date. Possible approaches for an applicant to use in making estimates
include:
1. Adjusting the last value reported by the fund manager for the period between the reporting
date and the SFA measurement date based on the change in investment indices that reflect
the same investment characteristics as the relevant plan holding. For example, hard-to-value
assets that resemble equities could be adjusted with the change in an appropriate total return
public market equity index.
2. For hard-to-value assets for which method #1 above is not appropriate, any reasonable
method accompanied by a clear description and supportive rationale could be used.
20

3. For hard-to-value assets for which no reasonable method of adjustment can be determined,
an annualized rate of return equal to the non-SFA interest rate limit used in the application
may be used. This type of adjustment should be accompanied by an explanation of why the
previous adjustment methods are not appropriate.
In general, valuing the investment at the last value either reported by the fund manager or used in a
plan audit will not be considered reasonable if that value was determined more than one month
prior to the SFA measurement date.

E. Nonbinding guidance
This guidance represents PBGC’s current thinking on this topic. It does not create or confer any
rights for or on any person or operate to bind the public. A plan can use an alternative approach if
the approach satisfies the requirements of the applicable statutes and regulations.

F. Department of Labor advisory
With respect to assumption changes regarding “missing” terminated vested participants (see
sections III.F and VI.C), the Department of Labor advises that PBGC’s acceptance of such an
assumption change to determine the amount of Special Financial Assistance has no effect on
the obligations of plan fiduciaries to maintain complete and accurate records (to include updated
addresses), conduct a prudent search for missing participants, communicate with participants
and beneficiaries nearing or past retirement age, or to pay benefits when due under title I of
ERISA. See Missing Participants – Best Practices at
https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-andcompliance/retirement/missing-participants-guidance/best-practices-for-pension-plans.

G. Contact information
For questions about this guidance, please email the general Multiemployer Program Division
mailbox at multiemployerprogram@pbgc.gov, and include as the subject “Special Financial
Assistance Question from (Plan Name).”
For comments on this guidance, please submit your comments, including your contact
information, to the General Counsel at GuidanceComments@pbgc.gov, and include as the
subject “Special Financial Assistance Comment from (Plan Name).”
A plan sponsor may request an informal pre-application consultation to discuss a plan’s potential
application for SFA. At a pre-application consultation, PBGC staff members cannot offer binding
decisions on such topics as a plan’s eligibility for SFA or the amount of SFA to which it might be
entitled. However, staff members can provide overviews of the SFA program and the application
process and offer helpful tips. To request a pre-application consultation, send an email to the
general Multiemployer Program Division mailbox at multiemployerprogram@pbgc.gov, with the
subject “Special Financial Assistance Consultation Request from (Plan Name).” You may send
other questions about the SFA program to this email address as well, with the subject “Special
Financial Assistance Question from (Plan Name).”

File Type	application/pdf
File Title	SFA Assumptions Guidance
Author	Melissa Rifkin
File Modified	2023-11-01
File Created	2023-10-30