WASHINGTON, D.C. — The Pension Benefit Guaranty Corporation (PBGC) announced today that $112.6 million has been paid in special financial assistance to the Local 138 Pension Plan (Local 138 Plan), a financially troubled multiemployer pension plan based in Baldwin, N.Y.
The Local 138 Plan, covering 1,723 participants in the transportation industry, is the first plan to receive funds under the Special Financial Assistance (SFA) Program. The plan had been projected to run out of money early this year.
Without the Special Financial Assistance Program, the Local 138 Plan would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 20 percent below the benefits payable under the terms of the plan. Special financial assistance will enable the plan to continue to pay retirees’ benefits without reduction for many years into the future.
“Today’s disbursement to the Local 138 Pension Plan is a historic achievement that is the culmination of years of efforts by employers, unions, retirees and advocates to secure the retirement benefits of over 250 multiemployer pension plans,” said U.S. Secretary of Labor Marty Walsh, chair of the Pension Benefit Guaranty Corporation Board of Directors. “Without Special Financial Assistance delivered by President Biden’s American Rescue Plan, this pension plan would have run out of money early this year diminishing the retirement benefits these union workers and retirees were promised in return for years of hard work.”
PBGC approved the plan’s application last month. For more details, see the press release regarding PBGC’s approval.
About the Special Financial Assistance Program
The SFA Program was enacted as part of the American Rescue Plan Act of 2021 (ARP). The program is expected to provide funding to over 250 severely underfunded multiemployer pension plans and will ensure that over three million of America’s workers, retirees, and their families receive the pension benefits they earned through many years of hard work.
The SFA Program requires plans to demonstrate eligibility for SFA and to calculate the amount of assistance pursuant to ARP and PBGC’s regulations. A plan may use the funds only to pay plan benefits and administrative expenses. SFA and earnings thereon must be segregated from other plan assets and plans are not obligated to repay SFA to PBGC. Plans receiving SFA are also subject to certain conditions and reporting requirements, including an annual statement documenting its compliance with the terms and conditions. PBGC is authorized to conduct periodic audits of multiemployer plans that receive SFA.
The SFA Program operates under an Interim Final Rule which was published in the Federal Register on July 12, 2021. The Interim Final Rule included a request for public comments, with an emphasis on feedback where any additional guidance may be needed. PBGC is currently reviewing those comments and may incorporate changes in the Final Rule in response to comments that PBGC received.
PBGC protects the retirement security of over 33 million American workers, retirees, and beneficiaries in both single-employer and multiemployer private sector pension plans. The agency’s two insurance programs are legally separate and operationally and financially independent. PBGC is directly responsible for the benefits of more than 1.5 million participants and beneficiaries in failed pension plans. The Single-Employer Insurance Program is financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans. The Multiemployer Insurance Program is financed by insurance premiums. Special financial assistance for financially troubled multiemployer plans is financed by general taxpayer money.