The Pension Benefit Guaranty Corp. has approved a union's application for a federal assistance program that aids struggling multiemployer plans.
Teamsters Local 641 Pension Plan, Union, N.J., will receive $503.9 million under the Special Financial Assistance Program, the PBGC announced in a news release Thursday.
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 began providing financial assistance to the Local 641 plan, which covers 3,610 participants in the transportation industry, in March 2021 when the plan went insolvent. As required by law, the Local 641 plan reduced participants' benefits to the PBGC guarantee level, which was roughly 55% below the benefits payable under the terms of the plan, according to the PBGC news release.
As of Feb. 28, 2021, the Local 641 plan had $22 million in assets and $459 million in projected benefit obligations, according to the plan's most recent Form 5500 filing.
Also, PBGC's multiemployer program will be repaid $13 million, which is the amount of the plan's outstanding loans for the financial assistance PBGC provided beginning in March 2021, the agency noted.
The PBGC approved the first plan for special financial assistance in December.