The Pension Benefit Guaranty Corporation provided supplemental Special Financial Assistance to four multiemployer pension plans last Friday, totaling approximately $26.7 million.
The Drivers Plan was projected to become insolvent this year, when benefits would be cut by 35% on average, down to PBGC minimum levels. The assistance will ensure that benefits are paid out in full. The plan has also been in critical status since 2009, when it was only 65.1% funded.
The second plan was the Sheet Metal Workers Local Pension Plan, based in Massillon, Ohio, with 1,649 participants. The PBGC granted it $9.9 million on top of the $28.8 million it received in October 2022. In May 2020, the plan had to cut benefits by 24% to 850 participants under the Multiemployer Plan Reform Act of 2014.
The Local 1482 Paint and Allied Products Manufacturers Retirement Fund, based in New York City with 152 participants, received $1.8 million in supplemental assistance on top of the $11.4 million it received in April 2022. The plan became insolvent in May 2019 and cut benefits by 35% to PBGC minimum levels.
The final plan receiving supplemental assistance Friday was the Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund, based in San Juan, Puerto Rico with 2,625 participants. It received $2.2 million on top of the $31.1 million it received in August 2022. The plan had become insolvent in June 2021.
Pension plans which applied for the PBGC Special Financial Assistance Program under the interim final rule, issued in July 2021, are allowed to reapply under the final rule, issued in July 2022, because it uses different assumptions in calculating assistance.
The SFA provision of the American Rescue Plan Act of 2021 allows for PBGC grants to 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 states that the other third can be invested in “return-seeking investments” such as stocks and stock funds.