PBGC Rescues Two Pensions Covering 25,000 People

The SFA funds used to restore the plans total more than $500M.

The Pension Benefit Guaranty Corporation issued special financial assistance grants to two more multiemployer pension funds that had been on the brink of insolvency. More than $500 million was granted to protect the pensions of nearly 25,000 participants.

The first plan, which accounts for most of the total money, was the CWA/ITU Negotiated Pension Plan, which represents 24,288 participants in the printing industry. The Mount Laurel, New Jersey, based plan received $545.6 million, among the largest amounts granted by PBGC under the SFA program.

The CWA/ITU plan was expected to become insolvent in 2029. At that point, the PBGC would have taken over the plan and issued a 15% benefit cut.

According to the plan’s Form 5500, it had 1,537 active participants, 11,263 retired, 3,469 beneficiaries of deceased participants, and 6,756 entitled to future benefits, by the end of 2022. The plan was 41.5% funded.

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The second plan was Teamsters Local 102, based in Cherry Hill, New Jersey. The plan received $12.4 million to cover its 508 participants in the transportation industry. The pension was expected to become insolvent in 2030 when it would have had to issue a 15% benefit cut.

At the end of 2022, the pension had 47 active participants, 200 retired, 36 beneficiaries of deceased participants, and 225 entitled to future benefits. The pension was 28.87% funded.

The SFA provision of the American Rescue Plan Act allows for PBGC funding for severely underfunded multiemployer pension plans. Grants are calculated to ensure plan solvency through 2051.

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.

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