The Pension Benefit Guaranty Corp. has given its first approval to an application made under a federal assistance program for struggling multiemployer funds created by the American Rescue Plan Act.
The agency announced in a news release Tuesday that Local 138 Pension Plan, Baldwin, N.Y., will receive $112.6 million under the Special Financial Assistance Program.
Under the program, created by legislation signed into law by President Joe Biden in March, 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; 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 has not been terminated.
The union pension plan covers over 1,700 participants in the transportation industry and would have become insolvent in 2022 without the assistance, which would have required the plan to reduce benefits by about 20%, according to the news release.
As of Dec. 31, the Local 138 Pension Trust Fund had $12 million in assets and $121 million in projected benefit obligations, according to the plan's most recent Form 5500 filing.
The financial assistance program officially launched on July 9 and 20 eligible multiemployer pension plans have submitted applications for approval, the news release said.