U.S. President Joe Biden is announcing the infusion of nearly US$36 billion to shore up a financially troubled union pension plan, preventing severe cuts to the retirement incomes of more than 350,000 Teamster workers and retirees across the U.S.
The money for the Central States Pension Fund is the largest amount of federal aid provided for a pension plan and comes from the American Rescue Plan, a $1.9 trillion coronavirus pandemic relief package that he signed into law in 2021.
Many union retirement plans in the U.S. have been under financial pressure because of underfunding and other issues. Without the federal assistance, Teamsters’ members could have seen their benefits reduced by an average of 60 per cent starting within a couple of years.
Multi-employer pension funds are partially insured by the federal government’s Pension Benefit Guaranty Corp. The insurance program was on track to become insolvent in 2026, but the pandemic relief money is expected to keep it on firm footing through 2051.
Biden traveled to Ohio in July to highlight the final rules for the pension relief program. Before this week’s announcement, the program had awarded aid to 36 troubled pension plans, but none of those had received more than $1.2 billion.
The amount going to the Central States Pension Fund represents somewhere between a third and a half of the total estimated cost of the federal aid program. The retirement plan has participants in almost every state, with the largest concentration in the Midwest.