Two More Struggling Union Plans Receive PBGC Assistance
The plans combine to cover more than 10,000 participants, and their aggregate PBGC assistance adds up to more than $700 million.
Two defined benefit pension plans, the Graphic Arts Industry Joint Pension Plan and the Teamsters Local 617 Pension Plan, received supplemental Special Financial Assistance grants from the Pension Benefit Guaranty Corporation.
The Graphic Arts Plan covers 9,854 participants and is based in Washington, D.C. It initially received $440 million in April and will receive another $82.2 million in supplemental assistance. Without any assistance, the fund was expected to be insolvent by the end of 2022 and would pay out approximately 85% of the benefits promised by the terms of the plan.
The Teamsters Local 617 Plan is based in Ridgefield, New Jersey, and has 891 participants. In April, it received $155.8 million in assistance, and it will now receive another $31.1 million in supplemental assistance. The plan became insolvent in March 2020, and the benefit levels were cut to PBGC guarantee levels, 65% below promised levels.
The PBGC updated the SFA program in July, allowing qualifying pension plans to reapply for additional funding.
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 other third can be invested in “return-seeking investments,” such as stocks and stock funds, as of July.