Compliance April 10, 2023

PBGC Provides More Than $400 Million in Supplemental Funding to New York Teamsters

The NYS Teamsters Conference Plan has now received approximately $1.4 billion in total. The PBGC also provided supplemental relief to three other plans.

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Last week, the Pension Benefit Guaranty Corporation provided supplemental assistance to four struggling pension plans through the Special Financial Assistance Program.

On Thursday, the PBGC provided a supplemental $438 million to the Syracuse, New York-based New York State Teamsters Conference Plan. In November 2022, the plan had been given $963.4 million. The plan covers 33,643 participants and became insolvent in October 2017, when it had to cut benefits by approximately 20%.

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On Friday, the PBGC provided supplemental assistance to three smaller plans.

The first was the Teamsters Local 52 Plan, based in Valley View, Ohio, which covers 769 participants. The plan received $12.5 million on top of the $84.9 million it received in November 2022. The plan was projected to become insolvent this year. Senator Sherrod Brown, D-Ohio, who initially sponsored the legislation that became the SFA Program, said in a press release that the plan would have faced cuts of between 50% and 60% absent a bailout.

The PBGC also provided $16,800 to the Cement Masons Local 783 Pension Plan, based in Houston with 51 participants. The plan had previously received $4.5 million in April 2022 and had been insolvent since November 2016, when it cut benefits by 20%.

Lastly, the PBGC gave $47,100 to Cement Masons Local 681 Pension Plan, another cement workers’ plan from Houston, with 196 participants. The plan had previously received $16.1 million in April 2022. The plan became insolvent in August 2016, when it cut benefits by 15%.

The Special Financial Assistance provision of the American Rescue Plan Act allows for PBGC funding for severely underfunded multiemployer pension plans. Funds that receive assistance must monitor the interest resulting from the grant money as separate from other sources of funding. The PBGC requires that at least two-thirds of the money it provides be invested in “high-quality fixed income investments.”

The Final Rule on SFA, issued in July 2022, states that the other third can be invested in “return-seeking investments,” such as stocks and stock funds. The Final Rule also modified the formula for calculating assistance payments. Plans which applied under the interim rule can reapply for the assistance they would have received under the Final Rule.

Data and Research April 10, 2023

US Workers Increasingly Worried About Retirement Lifestyle Affordability

Rising costs have driven an increase in the rate of Americans who worry they might not be able to afford the lifestyle they want in retirement.

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Even as fears of a recession decrease slightly, more Americans are expressing concern about their long-term financial health and retirement lifestyle, new Allianz Life data from the first quarter of 2023 shows.

The research showed 78% of Americans worry they cannot afford an optimal retirement because of increased costs, compared to 73% in 4Q 2022 and 68% in 1Q 2022, according to the 2023 1Q Quarterly Market Perceptions Study, produced by Allianz Life Insurance Co. of North America.

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“A strong retirement strategy will address potential risks like inflation and taxes,” states Kelly LaVigne, vice president of consumer insights at Allianz Life. “You can’t prepare for everything, but you can prepare for anything—if you start preparing for retirement early.”

Recession fears have ebbed, yet 41% of workers are still concerned they will be laid off because of an economic downturn in 2023, the study found.

While 57% of Americans worry about an impending major economic recession, compared to 66% last year, the research showed Americans remain cautious about investing in the current climate. Overall, 63% said they are keeping more money out of the market than they think is optimal, and 62% would rather have their money remain in cash than endure market swings, the research showed.

Allianz Life also found that those in Generation X (ages 44 to 58 in this study) have significant financial worries about their long-term finances and retirement readiness.

“Gen Xers are entering into and in critical years of retirement preparation,” LaVigne states. “Many people are often in their highest earning years in their 40s and 50s and finally able to really save a significant amount of money for retirement. This is when they need to establish strategies and really focus in on how they are setting themselves up for the retirement lifestyle they want.”

For Gen X, defined in the study as people born between 1964 and 1978, the study found elevated levels of financial concern about retirement.

  • 43% of Gen Xers worry their employer will suspend their 401(k) match, compared to 38% of Millennials (born between 1979 and 1996) and 24% of Baby Boomers (born between 1945 and 1963);
  • 67% of Gen Xers say they are keeping more money out of the market than they should, compared to 66% of Millennials and 54% of Baby Boomers; and
  • 85% of Gen Xers worry they might not be able to afford the lifestyle they want in retirement because of the increased cost of living, compared to 80% of Millennials and 72% of Boomers.

Data for the Allianz Life study was gathered via an online survey  conducted in March 2023, with a nationally representative sample of 1,005 respondents aged 18 and older.

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