Category: Multiemployer pensions

BIDEN PROMISES NEARLY $36 BILLION FOR NATIONAL PENSION BAILOUTS

Mary Pat Campbell

Link: https://www.illinoispolicy.org/biden-promises-nearly-36-billion-for-national-pension-bailouts/

Excerpt:

The Biden administration promised nearly $36 billion to stabilize pension plans for Teamsters nationwide after forecasts predicted the system’s default by 2026. Union members would have seen their retirement benefits slashed by 60% if the system defaulted.

President Joe Biden announced Dec. 8 the federal government will use nearly $36 billion to stabilize failing Teamsters union pension plans nationwide, preventing severe benefits cuts for more than 350,000 union workers.

….

Illinois is home to more than 20 Teamster’s chapters and the nation’s worst pension debt, estimated at nearly $140 billion by state authorities in 2022. Private investor services projected that debt as high as $313 billion, using more realistic assumptions on returns.

In September these state pension funds had just 47 cents for every dollar in promised pension benefits.

Springfield lawmakers cannot routinely rely on federal authorities to bail out overly generous and underfunded state and local pensions. Illinois public servants deserve to receive the retirements they’ve been promised in full – not the 40% that would remain after default.

Author(s): Patrick Andriesen

Publication Date: 12 Dec 2022

Publication Site: Illinois Policy Institute

DID YOU KNOW NFL PLAYERS EARN A PENSION? (REPOST)

Mary Pat Campbell

Link: https://protectpensions.org/2022/09/07/know-nfl-players-earn-pension-repost/

Excerpt:

In honor of the NFL season officially starting tomorrow, NPPC is re-sharing this blog originally posted on February 8, 2016, and written by Tyler Bond.

Last night the Denver Broncos won Super Bowl 50. For Denver’s starting quarterback Peyton Manning, this was almost certainly his last game before retirement. Once Manning enters retirement, there is one thing he can count on: his defined benefit pension.

NFL players participate in the Bert Bell/Pete Rozelle NFL Player Retirement Plan. NFL players are fully vested in the plan after three years on active roster or injured reserve status. The benefit amount is then based on the number of credited seasons played. In 2014 the average annual NFL player’s pension benefit was $43,000.

The NFL pension plan was funded at 55.9 percent in April 2014. This is a low funding ratio, but there’s a good reason for it. Following the lock-out in 2011 and the negotiation of a new collective bargaining agreement (CBA), the NFL Players’ Association fought for an increase in pension benefits for retired players. This took the plan down to a funded status of 48 percent in 2013, but the NFL has agreed to commit $620 million over ten years to reach full funding by 2021. The latest available data indicates the plan is funded at 89 percent as of 2018. 

Author(s): Tyler Bond, reposted by ARIEL MCCONNELL

Publication Date: 7 Sept 2022

Publication Site: National Public Pension Coalition

Biden announces $36 billion in federal aid for struggling Central States Teamsters plan

Mary Pat Campbell

Link: https://www.pionline.com/pension-funds/president-joe-biden-announces-36-billion-federal-aid-struggling-central-states

Excerpt:

President Joe Biden on Thursday announced that the Pension Benefit Guaranty Corp. has approved $36 billion in federal assistance to shore up a massive union multiemployer pension plan facing steep cuts.

Teamsters Central States, Southeast & Southwest Areas Pension Fund, Chicago, will receive the funds under the Special Financial Assistance Program. The program, created by the American Rescue Plan Act that Democrats passed in March 2021, was designed to shore up struggling multiemployer pension plans through 2051. The PBGC estimates the total cost of the program will range from $74 billion to $91 billion.

The Central States Pension Fund covers more than 350,000 union workers and retirees who were facing estimated benefit reductions of roughly 60% in the next few years, according to a White House news release.

The pension plan had a funding ratio of 18% with $57.2 billion in projected benefit obligations as of Jan. 1, 2021, according to the plan’s most recent Form 5500 filing. As of Dec. 31, the plan had $10.1 billion in assets, the filing showed.

The PBGC approved the first SFA application in December 2021 and since then has awarded funds to 36 other struggling multiemployer plans. But Thursday’s announcement is by far the largest. As of Dec. 1, the PBGC had approved just over $8.9 billion in SFA funds to cover roughly 193,000 workers, retirees and beneficiaries.

Author(s): Brian Croce

Publication Date: 8 Dec 2022

Publication Site: P&I Online

5500 – Central States – 2021

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/10/20/5500-central-states-2021/

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Excerpt:

With the 5500 filing season done it is time to tentatively get back to some blogging – starting with the plan that was likely to bring the PBGC (and the entire private pension system) down before the SFA bailout and now will be another cog in the hyperinflation wheelbarrow.

We had some 5500 history in an earlier blog through 2016. This is where the plan was last year based on their 5500 filing for 2021:

Plan Name: Central States, Southeast & Southwest Areas Pension Plan

EIN/PN: 36-6044243/001

Total participants @ 12/31/21: 357,056 including:

  • Retirees: 189,449
  • Separated but entitled to benefits: 117,511
  • Still working: 50,096

Asset Value (Market) @ 1/1/21: 10,409,440,502

Value of liabilities using RPA rate (2.43%) @ 1/1/21: $58,623,837,073 including:

  • Retirees: $34,084,275,398
  • Separated but entitled to benefits: $15,801,905,005
  • Still working: $8,736,875,945

Funded ratio: 17.76%

Author(s): John Bury

Publication Date: 20 Oct 2022

Publication Site: burypensions

PBGC Provides Financial Assistance to Struggling Metal Workers Pension

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pbgc-provides-financial-assistance-to-struggling-metal-workers-pension/

Excerpt:

The Pension Benefit Guaranty Corporation approved a Special Financial Assistance program from a Metal Sheet Workers local pension plan in Massillon, Ohio, on Wednesday.

The plan covered 1,649 participants in the sheet metal trade. About 850 of them saw their benefits cut an average of 24% in May 2020 under the terms of the Multiemployer Pension Reforms Act of 2014. SFA will pay $28.8 million to make up the shortfall.

The MPRA allowed trustees of multiemployer plans to submit an application to the Treasury Department to reduce pension payouts if such a reduction is necessary to prevent the fund from running out of money.

Author(s): Paul Mulholland

Publication Date: 7 Oct 2022

Publication Site: ai-CIO

SFA Update – 9/2/22

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/09/02/sfa-update-9-2-22/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans updated today with one new filer (Toledo Roofers Local No. 134 Pension Plan), one withdrawal (Bricklayers Union Local No. 1 Pension Fund) and one approval asking for more (Local Union No. 466 Painters, Decorators and Paperhangers Pension Plan). 

Author(s): John Bury

Publication Date: 2 Sept 2022

Publication Site: burypensions

SFA Update – One Refiler; One Approval

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/08/05/sfa-update-one-refiler-one-approval/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed one approval (Pension Plan of the Printers League – Graphic Communications International Union Local 119B out of East Farmingdale, NY) and a plan that withdrew their application last week (Local 966 Pension Plan out of Cresskill, NJ) is back and asking for over $8 million less.

Author(s): John Bury

Publication Date: 5 Aug 2022

Publication Site: burypensions

PBGC Finalizes Rescue of Ailing Multiemployer Pension Plans

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pbgc-finalizes-rescue-of-ailing-multiemployer-pension-plans/

Excerpt:

The Pension Benefit Guaranty Corporation, under the direction of the Biden administration, has published the final rule implementing the American Rescue Plan Act of 2021’s Special Financial Assistance program.

According to supporters of the program, the Special Financial Assistance program, which is already operating on an interim basis, will protect millions of workers in stressed multiemployer union pension plans who previously faced the possibility of significant cuts to their benefits.

….

Initially, the interim final rule applied a single rate of return included in the statute that is higher than could be expected for SFA funds given that they were required to be invested exclusively in safe, but low-return, investment-grade fixed-income products. The final rule uses two different rates of return for SFA and non-SFA assets, so that the interest rate for SFA assets is more realistic given the investment limitations on these funds.

Another change in the final rule allows up to 33% of SFA to be invested in return-seeking assets that are projected to allow plans to receive a higher rate of return on their investments than under the interim final rule, subject to certain protections. Namely, this portion of plans’ SFA funds generally must be invested in publicly traded assets on liquid markets to ensure responsible stewardship of federal funds. These return-seeking investments include equities, equity funds and bonds. The other 67% of SFA funds must be invested in investment-grade fixed-income products.

The third major change is meant to ensure plans can confidently restore both past and future benefits and enter 2051 with rising assets. PBGC designed the final rule to ensure that no “MPRA plan”—a group of fewer than 20 multiemployer plans that remained solvent by cutting benefits pursuant to the Multiemployer Pension Reform Act of 2014—was forced to choose between restoring its benefit payments to previous levels and remaining indefinitely solvent. Instead, the final rule ensures that all MPRA plans avoid this dilemma, supporting them with enough assistance so that these plans can both restore benefits and be projected to remain indefinitely solvent going into 2051.

According to PBGC leadership, these changes collectively ensure that all plans that receive SFA are projected to be solvent and pay full benefits through at least 2051.

Author(s): John Manganaro

Publication Date: 7 July 2022

Publication Site: ai-CIO

A chance to enter a new era of financial transparency and awareness for public pension plans

Mary Pat Campbell

Link: https://reason.org/commentary/a-chance-to-enter-a-new-era-of-financial-transparency-and-awareness-for-public-pension-plans/

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Excerpt:

On Feb. 11, the Actuarial Standards Board issued a revised Actuarial Standard of Practice No. 4, effective February 15, 2023. The rollout has been low-key. The announcement says:

“Notable changes made to the existing 2013 version include expanding the scope to clarify the application of the standard when the actuary selects an output smoothing method and when an assumption or method is not selected by the actuary.”

But this description obscures a significant new required disclosure, one which follows years of controversy and acrimony within and among actuaries and the public pension plan community at large.  The requirement was the overwhelming focus during the drafting and comment period.     

The new required disclosure reflects economic reality better than any currently required number.

Author(s): Larry Pollack

Publication Date: 25 Mar 2022

Publication Site: Reason

UMWA 5500 Update – 6/30/21

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/06/02/umwa-5500-update-6-30-21/

Excerpt:

Five years ago retired coal miners traveled to Washington, D.C. to lobby lawmakers to put in place a federal safety net in case the United Mine Workers of America (UMWA) pension fund fails. Coal plant closures and company bankruptcies have sent the pension fund to the edge of collapse. In October, 2019 Murray Energy, the last major company propping up the dwindling fund, also went bankrupt and the prediction was insolvency in FY23.

By the April 15, 2022 deadline, the plan submitted their 5500 form for the year ended 6/30/21 showing only 68 active participants remaining and providing an idea of how much more taxpayers will now be on the hook for on top of what appears to be the $330 million that came in during the plan year.

Author(s): John Bury

Publication Date: 3 June 2022

Publication Site: Burypensions

PBGC Approves Bailouts for Five More Multiemployer Plans in May

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pbgc-approves-bailouts-for-five-more-multiemployer-plans-in-may/

Excerpt:

The Pension Benefit Guaranty Corporation has approved applications submitted to the Special Financial Assistance Program by five more struggling multiemployer plans in May alone. The PBGC has now approved more than $6.2 billion in bailout funds to plans covering close to 120,000 workers and retirees.

The PBGC said it will provide $210.4 million in SFA funding to the Local 365 UAW Pension Fund Pension Plan of Englewood Cliffs, New Jersey, which covers 3,736 participants in the manufacturing industry.

The Local 365 UAW Plan became insolvent in December 2020, at which time the PBGC began providing the plan with financial assistance. As required by law, the plan reduced participants’ benefits to the PBGC guarantee levels, which were approximately 20% below the benefits payable under the terms of the plan.

Author(s): Michael Katz

Publication Date: 23 May 2022

Publication Site: ai-CIO