PBGC Issues More Than $5B in SFA Grants in One Week

The Pension Benefit Guaranty Corporation issued five special financial assistance grants this week, totaling approximately $5.8 billion. The grants will protect the pensions of approximately 200,000 participants.

The largest plan receiving SFA aid was the Bakery and Confectionery Union and Industry International Pension Fund, which received $3.4 billion on Friday. The Kensington, Maryland-based plan covers 103,056 participants in the bakery, tobacco, and grain milling industries. The plan was expected to become insolvent by 2030 when a 45% benefit cut would have been implemented.

A recent Form 5500 for the Bakery and Confectionary Pension was not available. But according to a funding notice, the plan was 47% funded in 2023.

The second largest grant was for $1.2 billion, and was awarded to the United Food and Commercial Workers Unions and Employers Midwest Pension Plan. The Rosemont, Illinois-based plan covered 35,223 in the food service industry and was expected to become insolvent in 2029, when it would have had to issue a 20% benefit cut. A recent Form 5500 was not available for UFCW Midwest.

The third plan was the Graphic Communications International Union-Employer Retirement Benefit Plan. The Seattle, Washington-based plan received $913.5 million and covers 40,373 in the printing industry. The plan was expected to become insolvent in 2033, when it would have had to issue a 20% benefit cut.

According to the fund’s Form 5500 from the end of 2022, the plan had 1,387 active participants, 19,382 retired, 14,688 entitled to benefits in the future, and 3,927 beneficiaries of deceased participants. The plan was 38.87% funded.

The Retail, Wholesale and Department Store International Union and Industry Pension Plan, a pension fund based in Birmingham, Alabama, received a grant worth $261 million. The plan covers 21,079 participants in the food processing, retail and manufacturing industries.

According to the plan’s Form 5500 from the end of 2022, it had 1,611 active participants, 7,212 retired, 10,949 entitled to benefits in the future, and 1,307 beneficiaries of deceased participants. The plan was 65.3% funded.

The last plan to receive a grant this week, was the Pacific Coast Shipyards Pension Plan, which received $18.9 million. The Pleasanton, California-based plan covers 507 participants in the maritime construction industry. The plan was expected to become insolvent in 2032, when it would have had to issue a 35% benefit cut.

According to the plan’s Form 5500 from the end of 2022, it had 132 active participants, 50 retired, and 2 entitled to benefits in the future. The form did not disclose a funding level.

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.