The IBT Local 863 retirement plan received a $334 million grant from the Pension Benefit Guaranty Corporation Thursday. The pension fund is the latest multiemployer plan to receive a grant through the Special Financial Assistance Program.
The Mountainside, New Jersey-based plan, which covers 2,487 participants in the transportation industry, was expected to become insolvent in 2024. At that point, it would have had to cut benefits by 75%.
According to the pension fund’s Form 5500 from 2021, the plan had 1,934 active participants, 0 receiving benefits and 716 entitled to benefits in the future. The plan had a total of $70 million in assets at that time.
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 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.