“Notable changes made to the existing 2013 version include expanding the scope to clarify the application of the standard when the actuary selects an output smoothing method and when an assumption or method is not selected by the actuary.”
But this description obscures a significant new required disclosure, one which follows years of controversy and acrimony within and among actuaries and the public pension plan community at large. The requirement was the overwhelming focus during the drafting and comment period.
The new required disclosure reflects economic reality better than any currently required number.
Five years ago retired coal miners traveled to Washington, D.C. to lobby lawmakers to put in place a federal safety net in case the United Mine Workers of America (UMWA) pension fund fails. Coal plant closures and company bankruptcies have sent the pension fund to the edge of collapse. In October, 2019 Murray Energy, the last major company propping up the dwindling fund, also went bankrupt and the prediction was insolvency in FY23.
By the April 15, 2022 deadline, the plan submitted their 5500 form for the year ended 6/30/21 showing only 68 active participants remaining and providing an idea of how much more taxpayers will now be on the hook for on top of what appears to be the $330 million that came in during the plan year.
The Pension Benefit Guaranty Corporation has approved applications submitted to the Special Financial Assistance Program by five more struggling multiemployer plans in May alone. The PBGC has now approved more than $6.2 billion in bailout funds to plans covering close to 120,000 workers and retirees.
The PBGC said it will provide $210.4 million in SFA funding to the Local 365 UAW Pension Fund Pension Plan of Englewood Cliffs, New Jersey, which covers 3,736 participants in the manufacturing industry.
The Local 365 UAW Plan became insolvent in December 2020, at which time the PBGC began providing the plan with financial assistance. As required by law, the plan reduced participants’ benefits to the PBGC guarantee levels, which were approximately 20% below the benefits payable under the terms of the plan.
All 1,298 pages of the Central States, Southeast and Southwest Areas Pension Fund bailout application is on the SFA website but, for me, it is these two pages that tell the tale of the fall of this and many other union pension plans.
Funded ratio: 21.91%
Unfunded Liabilities as of 1/1/20: $43,878,930,013
Asset Value (Market) as of 12/31/20: $10,409,490,502
A Teamsters pension fund has applied to the Pension Benefit Guaranty Corporation for a bailout after a circuit court denied its appeal in a lawsuit seeking $58 million in withdrawal liabilities from C&S Wholesale Grocers Inc.
The New York State Teamsters Conference Pension and Retirement Fund, a multiemployer plan based in Syracuse, New York, has applied to PBGC for special financial assistance under the American Rescue Plan Act to improve its financial health and restore benefits previously suspended under the Multiemployer Pension Reform Act. The pension fund said the restoration of suspended benefits would be retroactive and prospective, which means participants would be repaid for benefits reduced previously, while also having benefits restored to pre-suspension levels.
Today, the House Committee on Education and Labor unveiled a new Multiemployer Pension Rescue Tracker to highlight the hard-earned pensions saved and businesses protected under Congressional Democrats’ and President Biden’s American Rescue Plan Act. The multiemployer pension crisis – which was accelerated by the COVID-19 pandemic – threatened to strip more than a million retirees of the pensions they earned over a lifetime of work, jeopardized tens of thousands of businesses and endangered tens of thousands of jobs.
In response, the American Rescue Plan Act created a Special Financial Assistance (SFA) Program to avert the immediate crisis threatening the retirement security of American workers, retirees, and their families. This solution was supported by a diverse group of stakeholders, including the AFL-CIO, AARP, the United States Chamber of Commerce, UPS and scores of other employers who participate in multiemployer plans.