On June 16, 2026, the Pension Benefit Guaranty Corporation (PBGC) published a proposed rule introducing technical corrections and clarifications to its Special Financial Assistance (SFA) regulation, codified at 29 CFR part 4262. The proposal is directed at multiemployer pension plans that have received, or anticipate receiving, SFA, and it addresses several operational provisions that have generated questions since the program's implementation. Sponsors, trustees, and advisors to affected plans should evaluate the proposed changes carefully, as the amendments touch core aspects of how SFA funds may be invested and how related liabilities may be managed.
A central focus of the proposal is the clarification of which securities are permissible investments for SFA funds. The proposed amendments aim to refine the existing framework so that plan fiduciaries have clearer guidance on the categories of instruments in which SFA assets may be held. Plans currently structuring or reviewing their SFA investment policies should consider whether existing or contemplated allocations remain consistent with the clarified parameters set forth in the proposal.
The proposal also addresses the requirement that PBGC approve settlements of withdrawal liability claims involving plans that have received SFA. Trustees evaluating potential settlements with withdrawing employers should anticipate that the proposed clarifications may influence both the procedural pathway and the substantive standards applied by PBGC when reviewing such settlements. Engaging counsel early in the settlement process will remain important to ensure alignment with the agency's expectations.
In addition, the proposed rule would repeal the existing provision permitting plans to request reallocation of employer contributions attributable to health benefit costs. Plans that had considered availing themselves of this reallocation option, or that have included it in long-term planning assumptions, will need to revisit their projections and strategies if the repeal is finalized.
Comments on the proposed rule are due by August 17, 2026. Plan sponsors, trustees, and contributing employers may wish to consider whether to submit comments addressing the operational or financial implications of the proposed changes for their plans.
This update is provided for general informational purposes and does not constitute legal advice. Clients with multiemployer pension plans affected by these proposed amendments should seek tailored guidance regarding their specific circumstances.