The Pension Benefit Guaranty Corporation announced Thursday it will provide Special Financial Assistance to two union pension plans: the Alaska Ironworkers Pension Plan and the Plasterers Local 82 Pension Fund.
The Plasterers Local 82 Pension Fund is based in Portland, Oregon, and has 317 participants. It applied in September 2022 for $20.07 million more than three years after cutting benefits to 250 participants by 25% in February 2019 under the Multiemployer Pension Reform Act of 2014. On Thursday, this amount was approved, plus interest from the date of the application, making the final amount $20.50 million.
The Alaska Ironworkers Pension Plan, based in Anchorage, has 744 participants. In July 2018, the plan cut benefits by 26.5% under the MPRA. The PBGC granted it $53.5 million in SFA funds.
The Alaska Ironworkers Pension Plan submitted a comment letter on the final rule on SFA assistance in August 2021. The letter noted that the PBGC calculates its SFA grants in order to keep a plan solvent through 2051 and prioritizes restoring lost benefits and saving plans that are in imminent risk of insolvency. The letter suggests that this strategy merely kicks the can down the road and that some plans may opt for MPRA benefit reductions in the name of indefinite solvency, rather than take a bailout which anticipates insolvency 30 years down the road.
The Plasterers Local plan could not be reached for comment.
The 2051 solvency is still used by the PBGC in its calculus for SFA relief, and the Alaska Ironworkers Pension Plan grant would have used this method. The Alaska Ironworkers Pension Plan did not return a request for comment.
The SFA provision of the American Rescue Plan Act allows for PBGC funding for severely underfunded multiemployer pension plans. 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.