The Pension Benefit Guaranty Corporation approved two Special Financial Assistance grants on Friday.
The first grant was for Teamsters Local 73, a Valley View, Ohio-based pension with 529 workers in the transportation industry. The pension received $7.5 million from the PBGC. The plan was previously projected to become insolvent in 2038, when it would have had to issue a 15% benefit cut to its participants.
According to Local 73’s most recent Form 5500, from the end of 2022, the fund had 59 active participants, 277 retired, and 107 who are entitled to benefits in the future. The fund was 59% funded.
The second grant was for the Mount Laurel, New Jersey-based United Food and Commercial Workers Local 152. The pension received $279.3 million. It was projected to become insolvent in 2029, when it would have to cut benefits by 25%. The plan covers 10,252 participants in the food service industry.
A Form 5500 was unavailable for Local 152.
The SFA 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.
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 can be invested in “return-seeking investments,” such as stocks and stock funds.