The Pension Benefit Guaranty Corporation provided $182.6 million to a struggling carpenters’ union pension fund based in Monroe, Ohio, on Tuesday under the Special Financial Assistance Program.
The Southwest Ohio Regional Council of Carpenters Pension Plan covers 5,399 participants. In April 2019, it had to cut benefits for 4,300 participants by 18% under the Multiemployer Pension Reform Act. The SFA grant will permit the pension fund to stay solvent until 2051 and restore previous benefit cuts.
According to the fund’s 2020 funding notice, the plan was 59% funded in 2020. In 2022, the fund certified its critical status with the Department of Labor.
The SFA provision of the American Rescue Plan Act allows for PBGC funding for severely underfunded multiemployer pension plans. Funds that receive assistance must monitor the interest resulting from the grant money as separate from other sources of funding. The PBGC requires that at least two-thirds of the money it provides be invested in “high-quality fixed income investments.”
The Final Rule on Special Financial Assistance, issued in July 2022, states that the other third can be invested in “return-seeking investments,” such as stocks and stock funds.
Tags: PBGC