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PBGC $284K payout start of millions for ailing multiemployer pension plans

PBGC $284K payout start of millions for ailing multiemployer pension plans

The Pension Benefit Guaranty Corp. said Tuesday it has paid out more than $284,000 — the first of what will be millions of dollars in payments — to cover benefits for 365 participants in two insolvent multiemployer pension plans.

The PBGC said it sent $108,100 to Teamsters Local 531 Pension Plan in Brooklyn, New York, to pay benefits to 184 plan participants. The agency estimates its total financial commitment to be more than $14.9 million.

In addition, the PBGC said it sent $176,000 to cover benefits due 181 participants in Local 976 International Longshoremen's Association Pension Fund in New York. The PBGC estimates its total financial commitment to pay benefits to participants in the insolvent plan at more than $9.8 million.

Unlike the PBGC's insurance program for single-employer pension plans, the PBGC doesn't assume responsibility for insolvent multiemployer plans. For those plans, the PBGC sends payments to the plans, which, in turn then pay benefits to participants up to PBGC guaranteed levels.

Last year, the PBGC paid $89 million to 44 financially distressed multiemployer plans to cover benefits earned by nearly 50,000 retirees.

And far bigger PBGC payments are on the horizon. Indeed, 175 multiemployer plans are in such financial trouble, the PBGC reported last year, that it expects the plans to run out of assets and need money from the agency to pay participants' benefits.

The agency has warned that the cost of paying the promised pensions would be nearly $10 billion, five times more than the federal agency has in its multiemployer pension plan insurance fund. Without changes in law and/or premium increases, the PBGC's insurance program “is more likely than not to run out of funds in eight years and highly likely to do so within 10 years,” the PBGC said in a summer report.

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