The Pension Benefit Guaranty Corp. approved a partition application and will provide early financial assistance to the Plasterers & Cement Masons Local No. 94 Pension Fund, Harrisburg, Pa.
In an announcement Thursday, the PBGC said its early financial assistance, together with benefit reductions that are required as a condition for receiving the assistance, will help the plan avoid insolvency and pay benefits to participants. Partitioning sets up a second plan to pay some benefits that the PBGC guarantees and is granted only if the changes will make a pension fund solvent for at least 30 years.
The Local 94 fund applied for the partition in April. At that time, the fund was projected to be insolvent in 2026 without both benefit cuts and the partition, and by 2029 without the partition. The pension fund covers about 100 participants and had $2.3 million in assets as of April 30, 2017, according to its latest Form 5500.
About 70 people will see an average reduction of 38% in benefits, PBGC spokesman Marc Hopkins said in an email. The benefits of about 30 participants will not be reduced because of the statutory protections for benefits of older and disabled participants and for participants whose benefits are equal to or less than 110% of the PBGC guarantee amount, he noted.
The financial assistance is effective May 1.
"This (action) will relieve some of the financial burden on the Cement Masons 94 Plan and, together with the benefit cuts, enable it to avoid insolvency," the PBGC said in a news release. "Plan participants whose benefits are moved to the new plan will be treated the same as participants whose benefits remain entirely in the original plan."