The Pension Benefit Guaranty Corp. awarded $635 million to a struggling multiemployer plan facing insolvency.
The special financial assistance, or SFA, will go to the Carpenters Pension Trust Fund – Detroit and Vicinity, a Troy, Michigan-based plan that covers 22,576 participants in the construction industry, according to an Oct. 17 announcement from the PBGC.
The plan was projected to become insolvent and run out of money in 2033. Without the SFA Program, the Detroit Carpenters Fund would have been required to reduce participants’ benefits to the PBGC guarantee level upon plan insolvency, which is roughly 70% below the benefits payable under the terms of the plan, the PBGC noted.
The plan had a funding ratio of 34% with $2.3 billion in projected benefit obligations as of May 1, 2022, according to the plan's most recent Form 5500 filing. As of April 30, 2023, the plan had $709 million in assets, the filing showed.
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.
As of Oct. 17, the PBGC had approved about $68.6 billion in SFA to plans that cover about 1.2 million workers, retirees and beneficiaries.
