The Pension Benefit Guaranty Corp. announced the approval of a total of $2.2 billion in special financial assistance Thursday for two pension plans in the manufacturing sector.
The PACE Industry Union-Management Pension Fund, based in Nashville, Tennessee, covers 64,522 participants in the manufacturing industry and will receive approximately $1.3 billion in SFA funding, including interest to the expected date of payment to the plan, according to a Thursday news release.
The National Integrated Group Pension Plan, a multiemployer pension plan in the manufacturing industry based in Scranton, Pennsylvania, that covers 48,254 participants, will receive approximately $887 million in SFA funding, including interest to the expected date of payment to the plan, according to a separate Thursday news release from the PBGC.
Under the American Rescue Plan Act of 2021, the SFA program was created to provide aid to severely underfunded multiemployer pension plans.
The PACE plan was projected to run out of money in 2034 and without the funding would have been required to reduce participants' benefits to the PBGC guarantee levels upon plan insolvency, according to the release. The plan would have had to trim benefits to about 20 percent below those payable under the plan, the release noted. The funding will enable the plan to continue to pay retirement benefits without reduction for many years.
The National Integrated Group Pension Plan was also projected to run out of funds in 2034, which would have reduced participants' benefits to roughly 15 percent below the benefits payable under the terms of the plan, according to the news release. The special financial assistance will allow the plan to pay benefits without reduction for several years in the future.
"Under President Biden's leadership, the National Integrated Group Plan received Special Financial Assistance to deliver the pensions that these manufacturing workers have earned," said Assistant Secretary of Labor for Employee Benefits Security Lisa M. Gomez, in the news release.
The United Steelworkers also voiced their support for the SFA approval for the National Integrated Group Pension Plan in a news release Thursday.
"USW members and retirees are deeply grateful to President Biden for stepping forward to save their hard-earned retirements," USW International President Tom Conway said in the news release.
As of Jan. 1, 2021, the National Integrated Group Pension Plan had a funding ratio of 36.6% with $2.2 billion in projected benefit obligations, according to the plan's most recent Form 5500 filing. The plan had $839 million in assets as of Dec. 31, 2021, the filing showed.
As of Dec. 31, 2021, the PACE plan had a funding ratio of 34% and $1.7 billion in assets, according to the plan's most recent Form 5500 filing.
As of Thursday, the PBGC has approved approximately $49.7 billion in special financial assistance to plans that cover more than 687,000 workers, retirees and beneficiaries, the PBGC news release said.
