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Biden administration awards $36 billion to save the pensions of 357,000 union workers

US President Joe Biden speaks about strengthening the economy for union workers and retirees in the Eisenhower Executive Office Building, next to the White House in Washington, DC, on December 8, 2022. (Photo by Brendan SMIALOWSKI / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

(CNN) — The Biden administration awarded $36 billion Thursday to prevent cuts to the pensions of roughly 357,000 union workers and retirees.

It’s the largest federal award of its kind, according to the White House.

The funding comes from the American Rescue Plan, a federal pandemic aid package passed by Congress in 2021 that allowed some struggling multiemployer pension plans to apply for financial assistance.

The money announced Thursday goes to the Central States Pension Fund, which has been struggling financially for many years. The private pension fund covers workers and retirees from more than 1,000 companies across a range of industries, including warehouse workers, construction workers and food processors. Most of its retirees are truck drivers.

Without the influx of money, the fund’s workers and retirees were facing benefit reductions of roughly 60% over the next few years. Now, with the $36 billion award, the fund is expected to be able to pay full benefits through at least 2051.

At the time the American Rescue Plan was passed, more than 200 multiemployer pension plans were struggling to continue paying the retirement benefits workers had earned.

Normally, when a multiemployer fund like Central States runs out of money, a government insurance fund called the Pension Benefit Guaranty Corporation, or PBGC, kicks in so that retirees still receive a partial benefit. But the PBGC itself has been underfunded and was expected to become insolvent in 2026.

The funding from the American Rescue Plan has allowed the PBGC to approve 37 applications for relief for pension plans that were either already insolvent or projected to run out of money in the near future, according to the House Education and Labor Committee.

The relief has saved more than 550,000 pensions and protected nearly 2,000 employers.

“Thanks to the American Rescue Plan, we secured a historic victory that is keeping the promises made to retirees, saving businesses from going under, and shielding taxpayers from the even greater cost of a multiemployer pension collapse,” said Virginia Democrat Rep. Bobby Scott, chairman of the House committee, in a statement.