The Pension Benefit Guaranty Corp. approved $36 million in special financial assistance to prevent a struggling multiemployer pension plan from going insolvent.
The Retirement Plan of the Retirement Fund of Local 305 will receive the funds under the Special Financial Assistance Program, the PBGC announced Aug. 18.
The Mineola, N.Y.-based plan covers 918 participants in the service industry and was projected to go insolvent in 2024, according to a PBGC news release. Without the SFA Program, the Local 305 fund would have been required to reduce participants' benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 15% below the benefits payable under the terms of the plan, PBGC added. The $36 million in aid will enable the plan to continue to pay retirement benefits without reduction for many years into the future.
The plan had a funding ratio of 24% with $29 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 $6 million in assets, the filing showed.
As of Aug. 18, the PBGC has approved more than $52.4 billion in SFA funds to plans that cover more than 757,000 workers, retirees and beneficiaries. 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.