(RoyalPatriot.com )- On Thursday, the Biden administration awarded $36 billion to prevent pension cuts for approximately 357,000 union workers and retirees in what the White House described as the largest federal award of its kind.
The funding comes from the 2021 American Rescue Plan which allowed some multi-employer pension plans to apply for financial assistance as part of the overall pandemic aid package.
Thursday’s award will go to the Central States Pension Fund which has been struggling since long before the pandemic started.
The Central States Pension Fund is a private pension fund that covers workers and retirees from over 1,000 companies from a range of industries, including warehouse, construction, and food processing workers. Most of the retirees in the fund are truck drivers.
Without the American Rescue Plan bailout, the fund’s workers and retirees would have faced benefit reductions of about 60 percent over the next few years. But with the $36 billion in taxpayer money, the pension fund is expected to be able to fully pay benefits through 2051.
Ordinarily, when a multi-employer fund like Central States Pension Fund runs out of money, the government insurance fund called the Pension Benefit Guaranty Corporation, or PBGC would kick in, allowing retirees to receive a partial benefit.
However, the PBGC is so badly mismanaged that it is expected to become insolvent by 2026.
When the American Rescue Plan was passed in March 2021, over 200 multi-employer pension plans were already struggling to pay the retirement benefits workers had earned.
The pension funding earmarked in the bill allowed the PBGC to approve 37 applications for pension plan relief for pensions that were already insolvent or projected to run out of money soon.
The Central States Pension Fund is only the single largest of those 37 bailouts.
In total, the pension fund relief in the American Rescue Plan bailed out 550,000 pensions and protected nearly 2,000 employers from their retirement plans going insolvent.