PBGC Approves $23.6M Grant to Midwestern Teamsters’ Pension Fund

The Pension Benefit Guaranty Corporation announced Wednesday that it will provide a $23.6 million special financial assistance grant to the Midwestern Teamsters Pension Fund.

The plan, based in Oak Brook, Illinois, covers 615 participants and beneficiaries and was projected to become insolvent in 2032 without the grant funding.

Without the funds from the Special Financial Assistance Program, the Midwestern Teamsters Plan would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency, roughly 20% less than the benefits payable under the terms of the plan, according to the PBGC’s announcement.

Another Teamsters union plan, the Central States, Southeast and Southwest Areas Pension Plan, in 2022, received one of the largest SFA grants at more than $35 billion, of which it this year repaid $127 million that it mistakenly received as a result of the inclusion of deceased participants in the pension fund’s initial SFA application.

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The SFA Program provision of the American Rescue Plan Act allows for PBGC funding for severely underfunded multiemployer pension plans. Grants are calculated to ensure plan solvency through 2051.

The SFA Program was enacted as part of the American Rescue Plan Act of 2021. As of October 23, 2024, the PBGC has announced approval of about $68.6 billion in special financial assistance to plans that cover more than 1.18 million workers, retirees and beneficiaries.

Pension funds that receive SFA funds 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.

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Tags: Carpenters Trust Fund, PBGC, Pension Benefit Guaranty Corporation, Special Finance Assistance Program

Norway’s sovereign wealth fund, the Government Pension Fund Global, reported a 4.4% return on investments for the quarter that ended September 30 to help raise its total asset value to 18.87 trillion kroner ($1.73 trillion), but it fell just shy of its benchmark’s 4.5% return.

The $76.5 billion investment gain was a sharp turnaround from last year’s third quarter when the pension giant’s portfolio lost 2.1% and shaved its total asset value by $34.3 billion to approximately $1.3 trillion. If the pension giant repeats the more than $400 billion gain in asset value it saw for the last year, it could be the first pension fund to crack the $2 trillion by the same time next year.

According to the GPFG, the third quarter investment return contributed 835 billion kroner to its total asset value. It also benefitted from the weakening of the krone during the quarter, which added 191 billion kroner to the pension fund, while another 99 billion kroner came from the Norwegian government.

“We had a positive return across all our investment areas,” Deputy CEO Trond Grande said in a statement. “Falling interest rates led to a broad rise in the stock market.”

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GPFG’s unlisted renewable energy infrastructure investments led the investment returns for the quarter, up 10.8%, followed by its equity investments’ 4.5% return. The GPFG’s fixed-income investments earned 4.2% for the quarter, while its investments in unlisted real estate lagged with a 0.8% return.

As of the end of September, the fund’s equity investments had a market value of approximately $1.23 trillion, while its fixed-income investments had a market value of $463.6 billion. The GPFG’s unlisted real estate investments made up $29.2 billion of the portfolio, while renewable energy infrastructure accounted for $2 billion.

The pension fund’s asset allocation at the end of the quarter was 71.4% equities, 26.8% fixed income, 1.7% unlisted real estate and 0.1% in renewable energy infrastructure investments. The 4.4% return for the third quarter followed a Q2 return of 2.12% and a Q1 return of 6.33%, while the fund reported a 10-year annualized return of 7.53%.