The Pension Benefit Guaranty Corp. approved a Teamsters union's application for a federal assistance program that aids struggling multiemployer plans.
The Western Pennsylvania Teamsters & Employers Pension Plan will receive $715 million under the Special Financial Assistance Program, the PBGC announced in a news release Monday.
In August 2019, the Pittsburgh-based pension plan that covers 21,110 participants in the transportation industry, implemented a benefit suspension under the terms of the Multiemployer Pension Reform Act of 2014. The plan reduced the benefits of about 15,000 plan participants by an average of 20%, according to the PBGC.
PBGC's approval of the special financial assistance application enables the plan to restore all benefits suspended under the terms of the MPRA and to make payments to retirees to cover prior benefit suspensions.
As of Dec. 31, 2020, the Teamsters plan had $603.2 million in assets and $1.38 billion in projected benefit obligations, according to the plan's most recent Form 5500 filing.
Under the program, created by legislation signed into law by President Joe Biden in March 2021, a multiemployer plan is eligible for assistance if it satisfied one of four criteria: it has been in critical and declining status in any plan year beginning in 2020 through 2022; it has had its benefits suspended as of March 11, 2021; it is in critical status, has a modified funding ratio below 40%, and has a ratio of active-to-inactive participants of less than 2-to-3; or it became insolvent after Dec. 16, 2014, but as of March 11, 2021, has not been terminated.
The PBGC on July 6 unveiled a final rule for the program that, among other things, loosened investment restrictions on the special financial assistance plans receive. The final rule goes into effect Aug. 8. The PBGC estimates the program's total cost will range from $74 billion to $91 billion.
