New England Teamsters Gets Second Largest PBGC Grant Yet

The Pension Benefit Guaranty Corporation issued a $5.7 billion grant to the New England Teamsters Pension Fund. This grant amount is second only to the $35.8 billion grant issued to another Teamsters plan, the Central States, Southeast & Southwest Areas Pension Plan, in December 2022.

The Burlington, Massachusetts based plan covers 72,141 participants in the transportation industry. The grant will protect them from an insolvency that was anticipated for 2028, at which point the plan would have had to cut benefits across the board by 75%.

According to the plan’s Form 5500, it had about $3.35 billion in assets at the end of 2022. It had 21,786 active participants, 26,177 retired participants, 16,768 participants who are separated but entitled to future benefits, and 7,190 deceased participants with surviving beneficiaries. The plan was 20.6% funded.

The PBGC has issued a total of about $67.7 billion in grants under the SFA program, protecting the pensions of nearly 1.15 million participants.

The SFA provision of the American Rescue Plan Act of 2021 allows for PBGC funding for severely underfunded multiemployer pension plans. Grants are calculated to ensure plan solvency through 2051.

Pension 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 Special Financial Assistance, issued in July 2022, states that the other third can be invested in “return-seeking investments,” such as stocks and stock funds.