By Pension and Benefits Editorial Staff
The Pension Benefit Guaranty Corporation (PBGC) has announced its first approved facilitated merger under the Multiemployer Pension Reform Act of 2014 (MPRA) that will provide financial assistance to help merge two multiemployer plans in order to extend the solvency of a financially distressed plan. The Laborers International Union of North America 1000 Pension Fund (Local 1000 Plan) will merge with the Laborers Local 235 Pension Fund (Local 235 Plan). To help facilitate this merger, the PBGC will provide three annual installments of $8.9 million to the merged plan beginning this month.
The two merged plans, Local 1000 and Local 235, are based in New York. The Local 235 Plan is a “green zone” plan covering over 1,100 participants. The Local 1000 Plan covers over 400 participants and was projected to become insolvent in 2026. The PBGC expects that this merger will reduce the Agency’s long-term loss with respect to the Local 1000 plan and will not affect participants and beneficiaries of the Local 235 Plan.
The PBGC notes that under MPRA, the PBGC has the authority to facilitate plan mergers under certain conditions, including when one or more of the plans involved is projected to run out of money within 20 years. Plans can apply to the PBGC for financial assistance to help facilitate a merger, provided that the assistance does not impair the Agency’s ability to meet its existing financial assistance obligations to other multiemployer plans.
“PBGC’s mission is to protect the retirement security of workers and retirees in defined benefit plans, and helping plans merge is one way we can do that,” PBGC Director Gordon Hartogensis said. “Through this facilitated merger, we are preventing a failing plan from going broke and preserving benefits in a financially responsible way.”
Source: PBGC Press Release No. 20-01.
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