PBGC Issues $1.5B to Struggling Musicians’ Pension

The Pension Benefit Guaranty Corporation issued a $1.5 billion grant of special financial assistance funds to the American Federation of Musicians Plan on Monday, making it among the largest single grants issued to a multiemployer plan under the SFA program.

The plan covers 49,180 participants in the entertainment industry and is based in New York City. Without the assistance, the plan was expected to become insolvent in 2034, when it would have had to cut benefits by about 50%.

According to the plan’s Form 5500 from the end of 2022, it had $1.75 billion in assets under management. It also had 18,826 active participants, 15,921 retired participants receiving benefits, 14,026 separated participants entitled to future benefits and 2,558 deceased participants with beneficiaries. The plan was 30.59% funded.

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. The SFA Program has paid out about $61.9 billion in grants over the last two years.

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.