The Pension Benefit Guaranty Corporation (PBGC) announced its first approved facilitated merger under the Multiemployer Pension Reform Act of 2014 (MPRA).
The MPRA gave the PBGC the authority to facilitate plan mergers under certain conditions. If one or more of the plans in the merger is in critical and declining status and appears to become insolvent within 20 years, the agency can provide financial assistance for the merged plan(s) to remain solvent.
To help facilitate the merger of the Laborers International Union of North America 1000 Pension Fund (Local 1000 Plan) with the Laborers Local 235 Pension Fund (Local 235 Plan), PBGC will provide three annual installments of $8.9 million to the merged plan beginning this month.
The Local 235 Plan is a “green zone” plan covering over 1,100 participants. The Local 1000 Plan covers over 400 participants and was projected to become insolvent in 2026. PBGC expects that this merger will reduce the agency’s long-term loss with respect to the Local 1000 plan and will not affect participants and beneficiaries of the Local 235 Plan.Six months after the MPRA was passed, 66% of sponsors of multiemployer plans surveyed by the International Foundation of Employee Benefit Plans (IFEBP) said the law would be somewhat, very or extremely helpful. At the time, 5% of responding plan sponsors were considering merging with better-funded plans.
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