Last week, the Pension Benefit Guaranty Corporation provided supplemental assistance to four struggling pension plans through the Special Financial Assistance Program.
On Thursday, the PBGC provided a supplemental $438 million to the Syracuse, New York-based New York State Teamsters Conference Plan. In November 2022, the plan had been given $963.4 million. The plan covers 33,643 participants and became insolvent in October 2017, when it had to cut benefits by approximately 20%.
On Friday, the PBGC provided supplemental assistance to three smaller plans.
The first was the Teamsters Local 52 Plan, based in Valley View, Ohio, which covers 769 participants. The plan received $12.5 million on top of the $84.9 million it received in November 2022. The plan was projected to become insolvent this year. Senator Sherrod Brown, D-Ohio, who initially sponsored the legislation that became the SFA Program, said in a press release that the plan would have faced cuts of between 50% and 60% absent a bailout.
The PBGC also provided $16,800 to the Cement Masons Local 783 Pension Plan, based in Houston with 51 participants. The plan had previously received $4.5 million in April 2022 and had been insolvent since November 2016, when it cut benefits by 20%.
Lastly, the PBGC gave $47,100 to Cement Masons Local 681 Pension Plan, another cement workers’ plan from Houston, with 196 participants. The plan had previously received $16.1 million in April 2022. The plan became insolvent in August 2016, when it cut benefits by 15%.
The Special Financial Assistance 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 SFA, issued in July 2022, states that the other third can be invested in “return-seeking investments,” such as stocks and stock funds. The Final Rule also modified the formula for calculating assistance payments. Plans which applied under the interim rule can reapply for the assistance they would have received under the Final Rule.
Tags: American Rescue Plan, PBGC, SFA, Teamsters