The Pension Benefit Guaranty Corporation on August 6th issued grants totaling about $90 million to two struggling multiemployer pension plans on Thursday.
One recipient is the Radio, Television and Recording Arts Pension Plan. The New York City-based plan covers 516 participants in the entertainment business and received $63 million from the PBGC. The plan was expected to become insolvent in 2027 when it would have had to issue a 75% benefits cut.
A recent Form 5500 was not available for review.
The other plan to receive a grant was the Maryland Race Track Employees Pension Plan, in Laurel, Maryland. The plan covers 1,407 participants in the service industry and received $26.8 million in assistance. It was in critical status.
According to its Form 5500, the plan was 32% funded at the end of 2022. It had 481 active participants, 452 receiving benefits and 383 entitled to benefits in the future.
The Special Financial Assistance provision of the American Rescue Plan Act allows for PBGC aid to severely underfunded multiemployer pension plans. Grants are calculated to ensure plan solvency through 2051.
Pension 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 may be invested in return-seeking investments, such as stocks and stock funds.