Signed into law last March, the American Rescue Plan Act (ARPA) included $1.9 trillion in collective economic relief, much of it targeted to address the coronavirus pandemic.
Along with other provisions aimed at supporting the retirement planning sector, the law allowed for substantial relief payments to be targeted at stressed multiemployer pension plans sponsored by unions. Specifically, the law allows multiemployer plans that are in “critical and declining” status, as defined by prior legislation, to get a lump sum of money to make benefit payments for the next 30 years, or through 2051.
In December, the first of these payments was approved by the Pension Benefit Guaranty Corporation (PBGC), going to the Local 138 Pension Plan based in Baldwin, New York, which covers 1,723 participants working in transportation. The pension plan just this week received its $112.6 million in special financial assistance (SFA).
Alongside confirming that the payment has now gone out to Local 138, PBGC this week announced it has approved a second application for emergency pension funding, this one coming from the Bricklayers and Allied Craftworkers Local 5 New York Retirement Fund Pension Plan (Bricklayers Local 5 Plan).
The Bricklayers Local 5 Plan based in Newburgh, New York—which covers 821 participants in the construction industry—will receive approximately $61.8 million in SFA, including interest to the expected date of payment to the plan.
The plan was projected to run out of money in 2022, and without the special financial assistance program, the Bricklayers Local 5 Plan would have been required to reduce participants’ benefits to the PBGC guarantee levels upon plan insolvency, which is roughly 20% below the benefits payable under the terms of the plan. PBGC says the special support payment will enable the plan to continue to pay retirees’ benefits without reduction for many years into the future.
“These 821 bricklayers went to work with the promise of a pension when they retired. Today, the Biden-Harris Administration has fulfilled that promise,” says U.S. Secretary of Labor Marty Walsh, chair of the PBGC Board of Directors.