PBGC Splits Chicago-area Trucking Pension Fund

A Chicago-area pension fund that faced insolvency by 2013 will be split in two, with workers from bankrupt firms receiving benefits from the Pension Benefit Guaranty Corp.

That "partition" means companies contributing to the plan will no longer cover the benefits of "orphaned" retirees or workers from companies that went out of business.

The PBGC approved the division of the 55-year-old Chicago Truck Drivers, Helpers & Warehouse Workers Union (Independent) Pension Fund yesterday into two separate funds for employees of bankrupt and non-bankrupt companies.

PBGC will take responsibility for the benefits of about 1,500 former employees of defunct trucking companies in the plan, contributing $4 million a year to cover them.

Benefits for the remaining 3,700 current and former employees of existing companies will continue to be funded by those companies without assistance from the PBGC.

That could mean lower benefits for the employees of some bankrupt firms. Federal law limits the benefits paid by PBGC, a federal corporation that guarantees basic benefits.

Nearly half the Chicago plan's original 109 employers have gone out of business since 1955, leaving the remaining 57 contributing companies to cover their benefits.

The partition is the kind of reform multiemployer plans want Congress to encourage. The Teamsters Central States fund says it could be insolvent in 10 to 15 years without reform.

-- Contact William B. Cassidy at wcassidy@joc.com.