PBGC Approves Bailouts for Five More Multiemployer Plans in May

The Pension Benefit Guaranty Corporation has approved applications submitted to the Special Financial Assistance Program by five more struggling multiemployer plans in May alone. The PBGC has now approved more than $6.2 billion in bailout funds to plans covering close to 120,000 workers and retirees.

The PBGC said it will provide $210.4 million in SFA funding to the Local 365 UAW Pension Fund Pension Plan of Englewood Cliffs, New Jersey, which covers 3,736 participants in the manufacturing industry.

The Local 365 UAW Plan became insolvent in December 2020, at which time the PBGC began providing the plan with financial assistance. As required by law, the plan reduced participants’ benefits to the PBGC guarantee levels, which were approximately 20% below the benefits payable under the terms of the plan.

The $210.4 million will allow the plan to restore all benefit reductions caused by its insolvency, and to make payments to retirees to cover previous benefit reductions.

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Additionally, the PBGC’s Multiemployer Insurance Program will be repaid $17.9 million, which is the amount of the plan’s outstanding loans, including interest, for the financial assistance PBGC provided since December 2020.

The PBGC is also giving $118.3 million to the New York City-based Local 805 Pension and Retirement Plan, which covers 2,003 participants in the transportation industry. The Local 805 Plan implemented a benefit suspension under the Multiemployer Pension Reform Act of 2014 on January 1, 2019, and was partitioned into two plans. The MPRA suspension reduced the participants’ benefits earned as of December 31, 2018, by the maximum amount allowed under the MPRA. The benefits of approximately 1,500 plan participants had been reduced by an average of 41%.

The SFA approval rescinds the partition and will enable the plan to restore all benefits suspended under the terms of the MPRA and to pay retirees to cover prior benefit suspensions. With the approval, the PBGC’s Multiemployer Insurance Program will be repaid the $17.8 million amount of the plan’s outstanding loans, including interest, for the financial assistance PBGC provided since the partition.

Meanwhile, the Mastic, New York-based Management-Labor Pension Plan Local 1730 ILA, also known as the Longshoremen Local 1730 Plan, is set to receive $59.1 million in SFA funding for its 478 participants in the transportation industry.

The Longshoremen Local 1730 became insolvent in November 2020, which is when the PBGC started providing it with financial assistance. The plan had reduced participants’ benefits to the PBGC guarantee levels, which were approximately half of the benefits payable under the terms of the plan. The fund will also repay $2.9 million to the PBGC’s Multiemployer Insurance Program for the financial assistance it has provided since the plan’s insolvency.

And the Iron Workers Local 17 Pension Fund of Cleveland, which covers 1,900 participants in the construction industry, has been approved to receive $48.9 million in bailout funds. The plan implemented a benefit suspension under the MPRA on February 1, 2017, which affected approximately 950 participants who, on average, saw their benefits cut by 30%.

The PBGC also approved $11.3 million in funding for the Carpenters Industrial Council of Eastern Pennsylvania Pension Plan, which is based in Ashland, Pennsylvania, and covers 242 participants in the construction industry.

The Carpenters Pension Plan has been receiving financial assistance from the PBGC since it became insolvent in October 2017, at which time the plan reduced participants’ benefits to roughly 5% below the benefits payable under the terms of the plan. As a result of the SFA approval, the Multiemployer Insurance Program will be reimbursed the $2.8 million in outstanding loans, including interest, that it had provided the plan since October 2017.

New York City-Based Multiemployer Plans Approved for PBGC Bailout

PBGC to Provide Nearly $700 Million to 3 Insolvent Multiemployer Plans

Tags: 805 Pension and Retirement Plan, Carpenters Industrial Council of Eastern Pennsylvania Pension Plan, Iron Workers Local 17 Pension Fund, Local 365 UAW Pension Fund Pension Plan, Longshoremen Local 1730 Plan, Management-Labor Pension Plan Local 1730 ILA, Multiemployer Insurance Program, PBGC, Pension Benefit Guaranty Corporation, SFA, Special Financial Assistance Program

The Canada Pension Plan Investment Board achieved a 6.8% gain in its portfolio for the fiscal year beginning April 1, 2021, and ending March 31, 2022, the fund reported Thursday.

The fund has $420 billion (C$539 billion) in assets under management, which is $42 billion more than last year’s figure of $387 billion (C$497 billion). Of the increase, $26.5 billion (C$34 billion) was due to investment returns while the other $6.2 billion (C$8 billion) came from transfers from the Canada Pension Plan.

In addition to its 6.8% investment returns over the past year, the pension fund reported 10.0% annualized returns over the past five years and 10.8% annualized returns over the past 10 years. John Graham, president and CEO of CPPIB, said in a press release that he is proud of the fund’s performance despite a difficult final quarter. For comparison, CPPIB’s returns over the 2021 calendar year were 13.8%. The fund reported its highest return ever in fiscal year 2021, at 20.4%.

“CPP Investments delivered solid returns in fiscal 2022 despite turbulent market conditions in the wake of Russia’s war on Ukraine, supply chain disruptions caused by the pandemic and rising inflation,” said Graham. “Our 10-year performance of nearly 11%, the same as it stood at the end of the last fiscal year, demonstrates the enduring growth of the Fund over the long haul on the one hand, with steady resilience during uncertain times on the other.”

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The Canadian dollar’s appreciation against the U.S. dollar was also a source of trouble for CPPIB this year. The fund estimates that foreign currency loss cost them $4 billion.

Private equity continued to be the most profitable asset class for CPPIB, returning 16.1% in the fiscal year that ended March 31, an increase from the prior fiscal year’s figure of 15.4% returns. Public equity performance declined, returning 9.0% through March 31 compared to the prior year’s 12.5%. Fixed income performed the worst of all asset classes, returning 1.4%, a decline from the prior year’s 2.2%.

The pension giant also highlighted some of its larger individual investments over the course of the year. Among CPPIB’s biggest equity investments listed was an $800 million investment in Indian e-commerce private entity FlipKart Group. The company competes with Amazon subsidiary Snapdeal in India to provide consumers with online shopping and delivery services. The company is currently valued at $37.6 billion, and there has been talk of it going public in the next few months. In addition, CPPIB invested $150 million in the National Stock Exchange of India, indicating that the pension fund is bullish on the country.

CPPIB also committed $600 million to Baring Asia Private Equity Fund VIII, a pan-Asian private equity firm that specializes in minority growth investments and controlled buyouts.

Among dispositions, CPPIB highlighted its decision to sell its 15% to 18% stake in its six Raffles City real estate projects in China. CPPIB reported that it expects to take home $620 million before closing adjustments on the investment.