The Pension Benefit Guaranty Corp. is providing financial assistance to the Road Carriers Local 707 Pension Fund, Hempstead, N.Y, the agency announced late Wednesday.
The pension fund became insolvent after failing to win approval from the PBGC to partition the plan and create a new retirement plan for terminated vested and retired participants. Its application to the Treasury Department to suspend benefits was denied on June 20. The pension fund listed assets of $27.8 million in its application to the Treasury Department on March 15, 2016, and proposed to suspend benefits as of July 1, 2016, because the plan was projected to be insolvent by February 2017.
According to the PBGC, the pension fund had already reduced benefits and made further cuts in February to meet the PBGC guarantee limits set in law for insolvent multiemployer plans. The full benefit promised to current retirees and beneficiaries averages $1,313 per month, but the average guaranteed benefit is $570. Only 7% of current retirees and beneficiaries will receive their full plan-promised benefit amount, while 42% have benefit reductions of more than half.
PBGC officials noted in the announcement that guaranteed benefits for the fund and other insolvent multiemployer plans' participants “will be reduced even further if steps are not taken to address the deteriorating financial condition of PBGC's multiemployer insurance program.” The program is projected to be insolvent by 2025.