PBGC approves special financial assistance for 3 multiemployer plans

The Pension Benefit Guaranty Corp. approved special financial assistance applications totaling more than $600 million to aid three struggling multiemployer pension plans.

The Western States Office and Professional Employees Pension Plan will receive $295 million; United Furniture Workers Pension Fund A will receive $215 million; and Excavating, Building Material, Construction Drivers and Race Track Employees IBT Local 436 Plan will receive about $95 million under the Special Financial Assistance Program, the PBGC announced Monday.

Created by the American Rescue Plan Act that Democrats passed in March 2021, the SFA Program is designed to shore up struggling multiemployer pension plans through 2051.

The Portland, Ore.-based Western States Office pension plan covers 7,230 participants in the service industry, and in 2018, it implemented a benefit suspension under the terms of the Multiemployer Pension Reform Act of 2014, or MPRA, to address its projected insolvency. The plan reduced benefits of about 6,000 plan participants by an average of 25%, the PBGC said in a news release.

The United Furniture Workers Fund A, based in Nashville, Tenn., implemented a benefit suspension under MPRA in 2017. Benefits of about 2,800 plan participants were reduced, on average, by 13%, the PBGC said. In total, the plan covers 8,434 participants in the manufacturing industry.

And the Cleveland-based Building Material Drivers Local 436 plan, which covers 1,461 participants in the transportation industry, was projected to run out of money in 2026, the PBGC said.

The respective SFA awards will enable the plans to restore all benefits suspended under the terms of MPRA, make payments to retirees to cover prior benefit suspensions and pay retirement benefits without reductions for many years into the future, according to the PBGC.

The Western States Office plan had a funding ratio of 87% with $393 million in projected benefit obligations as of Jan. 1, 2021, according to the plan's most recent Form 5500 filing. As of Dec. 31, 2021, the plan had $420 million in assets, the filing showed.

The United Furniture Workers Fund A, had a funding ratio of 60% with $82 million in projected benefit obligations as of Feb. 28, 2021, according to the plan's most recent Form 5500 filing. As of Feb. 28, 2022, the plan had $54 million in assets, the filing said.

The Building Material Drivers Local 436 plan had a funding ratio of 23% with $106 million in projected benefit obligations as of Jan. 1, 2021, according to the plan's most recent Form 5500 filing. As of Dec. 31, 2021, the plan had $35 million in assets, the filing showed.

As of Monday, the PBGC has approved more than $47.4 billion in special financial assistance to plans that covers nearly 574,000 workers, retirees and beneficiaries, the PBGC said.