Tag: Special Financial Assistance

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

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

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.

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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

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

SFA Update – Two Refilers

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/05/20/sfa-update-two-refilers/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed a refiling of a prior withdrawal (America’s Family Benefit Retirement Plan) that asked for $4,.5 million less and one withdrawal and immediate refile (UTWA NJ Union Employer Pension Plan) that asked for $17,918 more.

Author(s): John Bury

Publication Date: 20 May 2022

Publication Site: burypensions

Breaking News: Central States Filed

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/04/29/breaking-news-central-states-filed/

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Excerpt:

The first 34 plans that filed requested a total $8.4 billion in bailout money from the PBGC Special Financial Assistance program for troubled multiemployer plans. No press release but the PBGC weekend update showed one new plan – the Central States, Southeast & Southwest Areas Pension Plan with 364,908 participants which is asking for $35 billion dollars.

Author(s): John Bury

Publication Date: 29 Apr 2022

Publication Site: burypensions

SFA Update – One Revision; One Withdrawal

Mary Pat Campbell

Link:https://burypensions.wordpress.com/2022/04/15/sfa-update-one-revision-one-withdrawal/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed one plan withdrawing and reapplying immediately with another simply withdrawing.

Our updated summary of the 35 plans in the system – 10 approvals and 25 under review:

Author(s): John Bury

Publication Date: 15 Apr 2022

Publication Site: Burypensions