The Pension Benefit Guaranty Corp. on Friday announced it had approved a combined $1.9 billion in special financial assistance for two struggling multiemployer plans.
The Food Employers Labor Relations Association and United Food and Commercial Workers Pension Plan, or FELRA Pension Plan, will receive about $1.2 billion; and the Trucking Employees of North Jersey Welfare Fund, Inc. Pension Plan, or Trucking Employees Plan, will receive $673.1 million under the Special Financial Assistance Program, the PBGC said.
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 satisfies 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 FELRA Pension Plan, which covers 51,500 participants in the service industry, was projected to run out of money in 2022. Without the Special Financial Assistance Program, it would have been required to reduce participants' benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 20% below the benefits payable under the terms of the plan, the PBGC noted.
As of Dec. 31, 2020, the FELRA Pension Plan had $149.2 million in assets and $1.6 billion in projected benefit obligations, for a funding ratio of 9.3%, according to the plan's most recent Form 5500 filing.
The Trucking Employees Plan, which covers 6,121 participants in the transportation industry, became insolvent in July 2021. At that time, the PBGC started providing financial assistance to the plan and as required by law, the plan reduced participants' benefits to the PBGC guarantee levels, which were roughly 50% below the benefits payable under the terms of the plan.
As of Dec. 31, 2020, the Trucking Employees Plan had $41 million in assets, according to the plan's most recent Form 5500 filing; its projected benefit obligations were not listed.
In addition to the $673.1 million in special financial assistance paid to the plan, the PBGC's Multiemployer Insurance Program will be repaid $16.7 million, which is the amount of the plan's outstanding loans, including interest, for the financial assistance the PBGC provided beginning in July 2021 and ending on the expected date of the SFA payment to the plan, the PBGC noted.
