The Pension Benefit Guaranty Corporation has approved the Special Financial Assistance application from the Central States, Southeast & Southwest Areas Pension Plan. The Central States Plan is a multiemployer plan with 357,056 participants in various industries such as transportation, construction, and food processing.
The plan will receive $35.8 billion in assistance, the largest payout from the SFA program thus far. With this funding, according to the Department of Labor, the Central States Pension Fund estimates that it will now be able to pay full earned pension benefits to Teamsters employees through 2051.
The funding comes from the American Rescue Plan Act, which addressed the solvency of the PBGC’s Multiemployer Insurance Program, which had been projected to become insolvent in 2026, according to the PBGC.
The Central States, Southeast & Southwest Areas Pension Plan would have become insolvent sometime in 2025 or 2026, per competing dates released by the PBGC and a press release from the office of Senator Patty Murray, D-Washington, respectively. In either case, the plan would have had to reduce benefit payments to PBGC guarantee levels, which would have cut benefits to roughly 60% of the plan’s promised benefits to participants.
“Today, we averted a potential disaster for our economy, and saved hundreds of thousands of workers and retirees from a financial apocalypse,” said Murray in the press release.
The SFA provision of the American Rescue Plan Act allows for PBGC funding for severely underfunded multiemployer pension plans. 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 other third can be invested in “return-seeking investments,” such as stocks and stock funds, as of July.
Tags: Central States Pension Fund, Central States Southeast & Southwest Areas Pension Plan, Department of Labor, PBGC, Pension Benefit Guaranty Corporation, Senator Patty Murray, Special Financial Assistance, Teamsters