Pension Plan That Had Been Insolvent Since 2009 Rescued by PBGC

The Pension Benefit Guaranty Corporation granted special financial assistance funds to four struggling multiemployer plans in different industries this week: construction, transportation, manufacturing, and fishing.

In terms of construction, The Southern California, Arizona, Colorado and Southern Nevada Glaziers, Architectural Metal and Glass Workers Pension Plan received $436.6 million in assistance. The Covina, California-based plan had been insolvent since January 2009, when it had to cut benefits by 50%.

The PBGC funding will include back payments to the plan’s 3,606 participants. An additional $132.8 million will be paid to the PBGC itself to compensate it for unpaid loans extended to the plan.

According to the plan’s Form 5500 from 2015, the most recent available, it had 905 active participants, 1,548 currently receiving benefits, and 1,302 entitled to benefits in the future. It had a funding ratio of 3.3% at the end of 2015.

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In transportation, the Local 917 Pension plan received $22.1 million to prevent an insolvency that was expected in 2025. At that time, the plan would have had to cut benefits by an estimated 10%. The Floral Park, New York-based plan covers 1,653 participants in the transportation industry.

According to the plan’s Form 5500 from 2021, it had 132 active participants, 697 receiving benefits, and 640 entitled to benefits in the future. It had a funding ratio of 27.46% at the end of 2021.

The New Bedford Fishermen’s Pension Fund will receive $13.4 million to prevent an insolvency that was expected in 2024 when it would have had to cut benefits by 10%. The New Bedford, Massachusetts-based plan currently covers 445 participants in the fishing industry.

According to its Form 5500 from 2021, the plan had 0 active participants, 279 receiving benefits, and 36 entitled to future benefits. It had a funding ratio of 33.8% at the end of 2021.

Lastly, in manufacturing, the Pension Plan for Employees of United Furniture Workers of America and Related Organizations received $8.1 million to prevent an insolvency that was expected later this year. The Nashville, Tennessee-based plan covers 95 participants in the manufacturing industry.

According to its Form 5500 from 2021, it had 23 active participants, 59 receiving benefits and 8 entitled to future benefits. It was 20.43% funded.

Tags: Form 5500, PBGC, SFA

The Virginia Retirement System’s investment portfolio returned 6.1% net of fees for the fiscal year ending June 30, raising its asset value to approximately $105 billion from $101.2 billion one year earlier. The performance fell just shy of its benchmark’s return of 6.3% and the 6.75% assumed rate of return.

The pension fund reported a three-year return of 10.8%, a five-year return of 8.0% and a 10-year return of 8.2%. Those compare with its benchmark’s returns of 7.9%, 6.3% and 7.1%, respectively, over the same periods. Over the longer term, the VRS reported 15-year returns of 6.0%, 20-year returns of 7.7% and 25-year returns of 7.3%, although benchmark returns for those periods were not available.

Public equities was the top-performing asset class for the pension fund during fiscal 2023, returning 15.6%, but it missed its benchmark’s 16.7% return. It was followed by multi-asset public strategies, which returned 7.7% and beat its benchmark by 30 basis points. The VRS’ credit strategies program returned 5.7%, well off its benchmark’s 9.2% return, while private investment partnerships returned 1.9%, beating its benchmark’s 1.1% return.

Real assets returned 1.7%, while its benchmark lost 0.7%, and fixed-income investments returned 0.5%, beating its benchmark, which lost 0.7%. Private equity was the only asset class that did not produce returns during the fiscal year, losing 0.7%; however, it trounced its benchmark, which lost 7.3%.

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“Our disciplined strategy of maximizing returns while minimizing risk has resulted in a pattern of outperformance for the long term, exceeding the assumed rate of return for the three-, five- and 10-year periods,” CIO Andrew Junkin said in a release. “Against a backdrop of widely varying economic predictions, VRS investment professionals strategically managed the diversified portfolio to minimize losses and achieve a positive return with a lower level of risk.”

As of June 30, the VRS’ asset allocation was 33.0% public equity, up from 30.5% in 2022; 18.2% private equity, down from 18.8%; 13.6% credit strategies, down from 14.3%; 13.5% real assets, down from 14.9%; 12.8% fixed income, down from 13.1%; 3.5% multi-asset public strategies, down from 3.6%; 2.6% private investment partnerships, unchanged from last year; 1.9% cash, up from 1.0%, and 0.9% exposure management portfolio, down from 1.3%.