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Multiemployer plans


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[Official Guidance] Text of Treasury Department Notice: Reopening of Comment Period on Central States Pension Fund Application to Reduce Benefits
"On October 23, 2015, the Department published a notice of availability and request for comments regarding an application to Treasury to reduce benefits under the Central States, Southeast and Southwest Areas Pension Plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to reopen the comment period and provide more time for interested parties to provide comments. Comments must be received on or before March 1, 2016." (U.S. Department of the Treasury)
[Opinion] Statement of Pension Rights Center at Treasury Department Public Session on Central States Pension Fund Benefit Reduction Application
"Here's how the Central States application flunks every condition set by MPRA: First, the application fails to demonstrate that the Central States Pension Fund took all reasonable steps to avoid insolvency ... Second, the plan did not equitably distribute the benefit cuts.... Third, even with the steep and unjust proposed cuts, the ability of the Central States Pension Fund to survive for the long term is extremely uncertain -- a key factor that the law says must be considered before the Treasury Department can approve any application to cut retiree pension benefits.... Mr. Feinberg, please reject the application.... There are better solutions." (Pension Rights Center)
Sixth Circuit Denies Equitable Relief for Employer Liability Upon Union-Mandated Withdrawals from Multiemployer Plan (PDF)
"The withdrawal assessment exceeds half of Rubber Associates' annual sales in 2009, 2010, and 2011 ... The parties agree that a complete withdrawal has happened in this case, and that ERISA and the MPPAA require a contributing employer to pay withdrawal liability upon its exit from a multiemployer pension plan. The parties disagree, however, on whether we should create federal common law under ERISA to carve out special liability rules for contributing employers which are forced out of pension funds due to union-mandated withdrawal.... Allowing employers to reduce or eliminate their withdrawal liability even when faced with a union-mandated withdrawal is not essential to the promotion of fundamental ERISA policies." [United Food and Commercial Workers Union-Employer Pension Fund v. Rubber Assoc., Inc., No. 15-3434 (6th Cir. Feb. 4, 2016)] (U.S. Court of Appeals for the Sixth Circuit)
Survey of Principal Features of Multiemployer Defined Contribution Plans (PDF)
"Given the increasing importance of defined contribution plans in helping to ensure participants' 'retirement readiness' as a supplement to a defined benefit pension plan, trustees may want to benchmark their fund's annuity plan, which can be either a profit-sharing plan or a money-purchase pension plan, against Segal's client database." (Segal Consulting)
Sen. Grassley Seeks GAO Review of DOL Oversight of Central States Pension Fund
"In his letter to the GAO, Grassley said that for more than three decades, Central States has operated under a federal court-ordered consent decree obtained by the Labor Department following its investigation that found gross mismanagement and self-dealing by fund managers. Among other things, the consent decree granted the Labor Department considerable oversight authority on the selection of independent fund managers, as well as to changes in investment strategies, among other oversight powers. Grassley wrote that he is unaware of any GAO review of the Labor Department's role in overseeing the pension fund since 1985." (Sen. Chuck Grassley, R-IA)
[Guidance Overview] Benefit Reductions in the Central States Multiemployer DB Pension Plan: Frequently Asked Questions (PDF)
11 pages. Topics include: [1] What is the Central States Pension Plan? [2] Why is the Plan proposing to reduce benefits? [3] Is the PBGC supposed to pay benefits when a plan cannot? [4] How does the Multiemployer Pension Reform Act (MPRA) dictate which benefits to cut and by how much? [5] What is the process for approving benefit reductions? [6] Is a vote of participants required to approve benefit reductions? [7] Has any legislation been introduced that could prevent implementation of the benefit reductions?" [Report No. R44355, dated Jan. 28, 2016.] (Congressional Research Service [CRS])
Reciprocity Agreement Required Payment of 'PPA Funding Contributions' (PDF)
"The arbitrator decided in favor of [the plaintiff, the National Pension Fund (NPF),] that '[Pension Protection Act (PPA)] Contributions' were 'Employer Contributions' within the meaning of the [United Association Pension Reciprocal Agreement, the purpose of which was to facilitate the transfer (reciprocation) of funds when members of one local union visit and work in the territory of another local union] ... and ordered [the U.A. Local 38 Defined Benefit Pension Plan (Local 38)] to pay more than $200,000 in contributions to the NPF. Local 38 appealed to the District Court. The District Court confirmed the arbitration award and granted the NPF's request for damages." [Trustees of the U.A. Local 38 Defined Benefit Pension Plan v. Trustees of the Plumbers and Pipe Fitters National Pension Fund, No. 15-cv-04703 (N.D. Cal. Jan. 21, 2016)] (United Actuarial Services, Inc.)
[Official Guidance] Treasury Department Announcement: Iron Workers Local 17 Applies to Reduce Benefits Under MPRA
"The Board of Trustees of the Iron Workers Local 17 Pension Plan ... has submitted an application to Treasury to reduce benefits under the plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to announce that the application ... has been published on the website of the Department of the Treasury, and to request public comments on the application from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of the Iron Workers Local 17 Pension Plan." (U.S. Treasury Department)
[Guidance Overview] PBGC Issues Final Partition Rule
"The PBGC discussion makes it clear that the application must contain sufficient documentation information to support the Trustees' conclusion, and the PBGC will make its own determination whether all reasonable measures have been exhausted. The PBGC's determination will be made after consultation with the Participant and Plan Sponsor Advocate. This raises the questions of the level of documentation needed to support the Trustees' conclusions and the consequences of a negative determination by the PBGC." (Cheiron)
Second Multiemployer Pension Plan Seeks to Reduce Core Benefits
"On January 8, 2016, the Iron Workers Local 17 Pension Fund -- which operates from Cleveland, Ohio -- became the second multiemployer pension plan to file an application with Treasury to reduce core benefits. In its application, the Iron Workers Fund trustees advised that the Fund's actuary had certified that the Fund was in 'critical and declining status' for the plan year beginning May 1, 2015. Moreover, without approval of the application, the Fund was projected to become insolvent by 2025." (Jackson Lewis P.C.)
Is the PBGC Worth Propping Up?
"General president of the Laborers' International Union of North America [Terry O'Sullivan] thinks the half-million union members he represents at $35 billion LIUNA are headed for disaster. That's because, as insured members of the [PBGC], they're paying into a mandatory program with a whopping $52.3 billion deficit.... He wants a wholesale exit from the PBGC and asserts that his union can take care of participants who fall victim to employer bankruptcies without help from the troubled federal agency." (Institutional Investor)
GASB Issues Statement No. 78 Regarding Pensions for Certain Multiemployer DB Plans
"GASB Statement No. 78 establishes: [1] The criteria for identifying the applicable pension plans; [2] Recognition of pension expense equal to the employer's required contributions to the pension plan for the reporting period, and a payable equal to the unpaid required contributions at the end of the reporting period; [3] Note disclosures providing descriptive information about the plan, benefit terms and contribution terms; and [4] Required supplementary information[.]" (Gabriel Roeder Smith & Company)
Text of PBGC Participant and Plan Sponsor Advocate 2015 Annual Report (PDF)
30 pages. Participant Issues: [1] Complex benefit entitlement and omitted participant cases; [2] Consultation with the Participant Advocacy Groups and PBGC; and [3] Interagency coordination and participant benefit entitlements. Plan Sponsor Issues: [1] PBGC must improve relations with plan sponsors; [2] Premiums and premium penalties need a fresh look; [3] PBGC's early warning program; and [4] Reportable events regulations. (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] The Gut-Wrenching Truth About Pensions
"U.S. Sen. Bernie Sanders' and U.S. Rep. Marcy Kaptur's bill to provide federal funding to plans like Central States is well-intentioned, and we would love to see it pass. But in the current political climate, it is difficult to understand where the votes would come from.... Nobody wants to reduce pension benefits. It is a gut-wrenching course of action that we must take, having exhausted every other reasonable alternative solution. As fiduciaries of the Central States Pension Fund, we have an obligation to safeguard our participants' retirement security and the financial well-being of the fund -- now and in the future." (Thomas C. Nyhan, Executive Director and General Counsel, Central States Pension Fund)
[Guidance Overview] PBGC Issues Final Rule on Multiemployer Plan Partitions
"There were minor changes made from the interim final rule regarding: [1] Application requirements. [2] Required actuarial and financial information. [3] Gender information for participant census data. [4] A new 14-day review period for the PBGC's initial review of the partition application. [5] Clarifications relating to the effect of a conditional approval of partition for plan sponsors who file applications for partitions and benefit suspensions." (Practical Law Company)
[Official Guidance] Text of PBGC Final Regs: Partitions of Eligible Multiemployer Plans
30 pages. "On June 19, 2015, PBGC published an interim final rule to implement the application process and notice requirements for partitions of eligible multiemployer plans under title IV of [ERISA], as amended by the Multiemployer Pension Reform Act of 2014 (MPRA). PBGC is making minor changes to the interim final regulation in response to public comments received on the interim final rule." (Pension Benefit Guaranty Corporation [PBGC])
A Troubling Expansion of Successor Liability (PDF)
"Two recent opinions from the U.S. Courts of Appeals forecast a troubling expansion of the imposition of withdrawal liability of non-signatory entities under the successor liability doctrine. While the imposition of such liability is not new, recent case law extends the doctrine beyond the reach of the Seventh Circuit ... to which it had previously been confined, and appears to ease the requirements for a claim against a putative successor. These cases also illustrate the effect of successor liability on the 'building and construction industry exception' to withdrawal liability." (Jackson Lewis P.C.)
Teamster Retirees Demand Trustees 'Stop the Rush' to Reduce Pensions
"This past month, meetings in Columbus, Ohio, and Kansas City, Missouri, drew 600 and 500 Teamsters and family members, respectively. Milwaukee saw nearly 300 and Cincinnati more than 200. Retirees have formed active 'Committees to Protect Pensions' in 20 cities, with Facebook pages set up in a dozen more.... The pension committees are demanding that trustees of the Teamsters' mammoth Central States Pension Fund, with 407,000 members, stop the rush to achieve solvency on their backs, and find another way to shore up the fund's ailing finances." (Labor Notes)
[Opinion] Pension Rights Center Comment Letter to Treasury on Central States Application for Benefits Suspension (PDF)
13 pages. "[1] The application fails to demonstrate that the plan took all reasonable steps to avoid insolvency; [2] The actuarial assumptions, particularly the projection on future investment returns, are unrealistic and will not result in the plan remaining solvent in the long term; [3] The benefit distributions are not equitable and the plan misconstrued a critical component of the statute in assigning benefit cuts; and [4] The application violated explicit and implicit statutory requirements designed to ensure fairness and transparency. For these reasons we believe that MPRA requires that the Department of the Treasury reject the application." (Pension Rights Center)
Survey of Multiemployer Plans' Zone Status, Fall 2015 (PDF)
"Nearly two-thirds of plans are in the green zone. About one-half of all participants are in plans in the red zone and nearly one-half of these red-zone participants are also in plans that are considered to be 'critical and declining,' based on filings between October 1, 2014 and September 30, 2015.... The average PPA'06 funded percentage is 85 percent for plans with zone certifications filed in July, August and September of this year; and 87 percent for plans with zone certification filing deadlines between October 1, 2014 and September 30, 2015." (Segal Consulting)
[Official Guidance] Text of Treasury Department Notice: Central States Pension Plan Application to Reduce Benefits -- Reopening of Comment Period
"On September 25, 2015, the Board of Trustees of the Central States, Southeast and Southwest Areas Pension Plan (Central States Pension Plan) submitted an application for approval to reduce benefits under the Central States Pension Plan.... [A previous] notice provided that comments must be received by December 7, 2015.... Comments are requested from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of the Central States Pension Plan. Consideration will be given to any comments that are timely received by Treasury on or before February 1, 2016." (U.S. Department of the Treasury)
Survey of Multiemployer Plans' Zone Status (PDF)
"Nearly two-thirds of plans are in the green zone. About one-half of all participants are in plans in the red zone and nearly one-half of these red-zone participants are also in plans that are considered to be 'critical and declining,' based on filings between October 1, 2014 and September 30, 2015. The ratio between the number of active and inactive participants is a key indicator of red-zone status, but not a key indicator of yellow-zone status. The average PPA'06 funded percentage is 85 percent for plans with zone certifications filed in July, August and September of this year; and 87 percent for plans with zone certification filing deadlines between October 1, 2014 and September 30, 2015." (Segal Consulting)
The Multiemployer Retirement Plan Landscape: A Ten-Year Look (2004-2013)
"The report covers both defined benefit (DB) and defined contribution (DC) plans using data from Form 5500 Annual Reports filed with the Department of Labor, with 2013 being the most recent information currently available. The report analyzes key trends in demographics, cash flows, and investments for defined benefit and defined contribution plans over the ten-year period from 2004 through 2013, and will help trustees, consultants and policy makers gain a better understanding of these plans and their environment." (International Foundation of Employee Benefit Plans [IFEBP])
[Guidance Overview] IRS Employee Plans News No. 2015-14, Dec. 21, 2015
Topics: [1] 2015 Cumulative List explains the changes in plan qualification requirements for retirement plans (Notice 2015-84); [2] Year-end IRA reminders; [3] FAQs on new IRS compliance questions on the 2015 Form 5500-series returns, explaining the optional questions; and [4] Form 5500 automatic extension to file has been changed back to 2-1/2 months." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Hearing Notice: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits under the Multiemployer Pension Reform Act
"This document provides notice of public hearing on proposed regulations relating to the administration of a multiemployer plan participant vote on an approved suspension of benefits under the Multiemployer Pension Reform Act of 2014 (MPRA) ... The public hearing is being held on Friday, December 18, 2015, at 10 a.m. The IRS must receive outlines of the topics to be discussed at the public hearing by Monday, November 30, 2015." (Internal Revenue Service [IRS])
[Opinion] Bill Would Protect Multiemployer Plan Participants from Benefit Cuts
"The Teamsters Union has been working with several members of Congress to develop legislation that would prevent massive cuts to some pension beneficiaries.... S.1631 and House Resolution 2844, the Keep Our Pension Promises Act, sponsored by Sanders in the Senate and Kaptur in the House, not only would restore the anti-cutback rule but also would help prevent multiemployer pension plans from failing by making pension obligations a higher priority in bankruptcy proceedings, which would reduce the number of plans that become 'orphaned.' The bill also creates a legacy fund within the Pension Benefit Guaranty Corporation by closing two tax loopholes that only benefit the wealthiest members of society." (The Columbus Dispatch)
Central States Rescue Pain Puts Spotlight on Retirees' Representative
"With many Central States Pension Fund retirees facing severe cuts to their retirement benefits, the person appointed to represent them as part of the process for the fund's rescue proposal has drawn bitter criticism from some of the fund's participants.... The controversy highlights some of the issues other financially troubled multiemployer plans may face as they seek to use provisions in a law passed in late 2014 allowing them to suspend benefits." (Bloomberg BNA)
Ninth Circuit: Company May Be Subject to Withdrawal Liability Under 'Successorship Doctrine'
"[T]he court explained that it had imposed liability for the seller's delinquent ERISA contributions on the purchaser because '[a]bsent the imposition of successor liability, present and future employer participants in the union pension plan will bear the burden of [the predecessor's] failure to pay its share,' which would threaten the health of the plan while the purchaser reaps a windfall.... The Ninth Circuit explained that although the composition of the workforce is important in successorship cases involving the duty to bargain under the National Labor Relations Act (NLRA), that factor is not of special relevance when considering MPPAA withdrawal liability." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. No. 12-17675 (9th Cir. Sept. 11, 2015)] (Trucker Huss)
Milliman Multiemployer Pension Funding Study: Fall 2015 (PDF)
"The aggregate funded percentage for multiemployer plans was estimated to be 79% as of June 30, 2015, compared with 80% as of December 31, 2014. For most multiemployer pension plans, the 2015 investment experience through June 30, 2015, has underperformed expected returns, and that doesn't take into account the turmoil in the investment markets since then. Over one-half of the total underfunding for multiemployer plans continues to be attributable to the 200-plus plans that are less than 65% funded. With a return through June 30 of about 2%, it will take a 3% return for the last six months of 2015 to sustain the June 30 funded percentage as of December 31, 2015." (Milliman)
Resources for Central States Pension Fund Retirees
"The Pension Rights Center has posted this page to serve as a retiree resource hub for materials related to the Central States Pension Fund's application to the U.S. Department of the Treasury to reduce retiree benefits under the Multiemployer Pension Reform Act of 2014. This page will be updated on an ongoing basis." (Pension Rights Center)
[Opinion] Chamber of Commerce Comment Letter to IRS on Administration of Multiemployer Plan Participant Vote on an Approved Suspensions of Benefits Under MPRA (PDF)
"Electronic ballot packages should be allowed for participants that have affirmatively chosen electronic delivery.... The proposal states that all ballot packages must be delivered by paper. While the Chamber recognizes the importance of ensuring delivery of these packages, we believe this requirement exceeds what is necessary.... The Chamber encourages the IRS to provide a model ballot." (U.S. Chamber of Commerce)
[Official Guidance] Text of Treasury Department Comment Request for Central States Pension Plan Application to Reduce Benefits
"On September 25, 2015, the Board of Trustees of the Central States Pension Plan submitted an application for approval to reduce benefits under the Central States Pension Plan.... Treasury is publishing this notice in the Federal Register, in consultation with PBGC and the Department of Labor, to solicit public comments on all aspects of the Central States Pension Plan application, including with respect to the interpretation of section 432(e)(9)(D)(vii) of the Internal Revenue Code that is reflected in the application. Comments are requested from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of the Central States Pension Plan. Consideration will be given to any comments that are timely received by Treasury." (U.S. Department of the Treasury)
Central States Rescue Plan: Gut-Wrenching Decisions for All
"[Thomas C. Nyhan, executive director and general counsel of the fund,] said it was 'impossible for me to see a path' for legislation with Republicans in control of Congress 'to appropriate taxpayer dollars to support union pension plans,' but that 'should something like this ever materialize, I guarantee you that we will be the first' in line 'to try to take advantage of it.'... Even if legislative action was realistic, it would likely be too late when viewed from the retirees' perspective. There is speculation that at least one suicide can be attributed to the impending benefit cuts." (Bloomberg BNA)
Teamster Pensions Go Off Road
"Central States is the poster child for underfunded pension plans. According to the fund's 2014 annual report, it has projected assets of about $17 billion to cover projected liabilities of $35.2 billion. Whereas four workers generated employer contributions that supported one retiree in 1980, today one worker supports five retirees. Executive director Thomas Nyhan said the fund pays $3.46 in benefits for every $1 dollar employers contribute, a pace that is expected to drain the fund within 10 years." (Pittsburgh Post-Gazette)
[Official Guidance] Central States Pension Plan Application for Benefit Suspension
"The Central States, Southeast and Southwest Areas Pension Plan application proposing benefit suspensions ... is organized by the items specified in Rev. Proc. 2015-34.... The application includes, among other items, the Description of Benefit Suspension and the Certification to Avoid Insolvency.... [The] application is currently being reviewed and the review is expected to take several months.... Treasury will consider comments on the application that are timely received from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of Central States. Click here to submit a comment on the application." [Page includes links to 50 individual documents comprising the application.] (U.S. Department of the Treasury)
[Official Guidance] Treasury Requests Comments on Central States Pension Plan Application for Benefit Reduction
"We're committed to ensuring an open and fair process.... We understand that any reductions in benefits resulting from this application under the Kline-Miller law will have a real impact on people's lives. We're focused on ensuring that the voices of those affected are heard. We encourage plan participants to provide feedback on this application, as we review it to determine whether it meets the requirements set by Congress." (U.S. Department of the Treasury)
Proposed Cuts to Teamster Pensions Draws Fire from Retirees, Who Vow Action
" 'I was in shock as to what percentage they wanted,' [said] Mike Walden, 66, chairman of Northeast Ohio Committee to Protect Pensions who worked 31 years for now-defunct Roadway Express and retired 2010... [H]is pension would be cut from around $2,900 a month to around $1,450. 'They (Central States) had said the average reduction was supposed to 22 percent. I have not spoken to anybody whose cut is 22 percent. Most were in the 50 to 60 percent range. To me, their summary is very misleading,' Walden said." (Logistics Management)
[Guidance Overview] ACA Reporting Requirements for Multiemployer Plans
"The 2014 version of the Instructions for Forms 1094-C and 1095-C required ALEs that contribute to a multiemployer plan on behalf of full-time employees to obtain information from the multiemployer plan about covered employees. In addition to creating a myriad of logistical problems for contributing employers, this created compliance concerns regarding the HIPAA privacy rules. As a solution, the IRS's 2015 draft Instructions directed contributing employers to use Code 1H (no offer of coverage) on Form 1095-C, Line 14 for any month in which the employer claimed the multiemployer plan transition relief made available in the preamble to the final Code Section 4980H regulations." (The Wagner Law Group)
[Opinion] Teamsters Applaud Introduction of Pension Accountability Act By Sen. Portman
"The Pension Accountability Act seeks to fix changes to multiemployer pension law that were attached to the omnibus spending bill passed in December. The Multi-employer Pension Reform Act (MPRA) allows the Treasury Department to overrule any vote taken by pension participants on proposed cuts in large plans. Portman's bill would change that part of the law by making any vote by participants binding and not subject to overrule by the Treasury Department. The legislation would also change the law so that only those ballots returned in any vote are counted." (Teamsters)
[Opinion] Proposed Retiree Benefit Cuts by the Central States Pension Fund Are a 'Pension Demolition Plan'
"The Pension Rights Center has said from the beginning that the Fund could have taken other steps to truly rescue the Fund. But rather than do the work needed to find better solutions, the Fund took the easy way out: cutting the benefits of the most vulnerable -- the very people Congress intended to protect when it passed ... ERISA in 1974.... We are getting calls and letters from desperate retirees, who have been told that their benefits will be cut by between 50 to 70 percent. While many of them knew they would be getting letters about proposed pension cuts, they have been completely blindsided by how deep these cuts are." (Pension Rights Center)
Buyer Beware: Seventh Circuit Lowers Hurdle to Make Claim for Withdrawal Liability Under the Successorship Doctrine
"Prior court decisions going back over 40 years have established that the successorship doctrine is applicable to employment-related liabilities. However, as [this case] demonstrates, in the context of multiemployer plan liabilities, courts may be more willing to find successor liability in order to further the MPPAA's policies of protecting remaining contributors to a multiemployer plan." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Dechert LLP via Lexology)
Central States Pension Fund Submits Plan for Reducing Benefits
"Within 30 days of receiving an application to suspend benefits, Treasury will publish the Rescue Plan and request comments from contributing employers, unions, participants and other parties.... Treasury must approve or deny Central States' application within 225 days of the submission.... Within 30 days of an application's approval, the IRS must administer a vote for participants and beneficiaries to approve or reject the proposed benefit suspensions.... If a majority of participants and beneficiaries vote to reject the suspension, the plan sponsor may again apply for benefit suspensions.... [B]ased on the filing date for the Rescue Plan, if it is approved, it would be implemented on or around July 1, 2016." (McGuireWoods LLP)
Website Now Online: Central States Pension Fund Rescue Plan
"This site is an easy-to-navigate clearinghouse of comprehensive, important and up-to-date information regarding the status of Central States Pension Fund's proposed pension rescue plan, submitted under the Multiemployer Reform Act of 2014 (MPRA).... A detailed description of each of [the] proposed pension rescue plan components is available ... [1] Timing; [2] Re-employment phase-out; [3] Future accruals for active participants; [4] Early retirement; [5] Terminated status participants; [6] Orphans; [7] UPS transfer group; [8] All other participants; [9] Age protections; [10] Disability protections; [11] Spousal/survivor benefits." (Central States Pension Fund)
Pension Fund May Cut Benefits for 273,000 Workers and Retirees
"The proposal, which still needs approval from the Treasury Department, will spare retirees age 80 or older from any cuts as well as anyone receiving disability protections. And reductions would be less severe for those older than 75 or widows and widowers receiving spousal benefits. While they vary, cuts will average about 23% and could happen as soon as July." (CNNMoney.com)
Teamsters' Pension Fund Warns 400,000 of Cuts
"Any reorganization of the decades-old Central States Pension Fund would take months and would probably be a brutal battle as workers, retirees, union leaders and employers all seek to protect competing interests.... [The] plan has caused consternation for many years, because if it failed, it could wipe out a federal insurance program that now pays the benefits of a million retirees. If the reorganization ultimately proves successful, however, it could serve as a model for other retirement plans with similar, seemingly intractable financial problems." (The New York Times; subscription may be required)
Central States Pension Fund Announces Proposed Pension Cuts
"Retirees have questions about these proposed cuts and what the letter means.... [H]ere is what we can tell you right now. [1] Check the calculation.... [2] If you are a Central States' retiree, participate in the plan's town hall meeting.... [3] Ask your members of Congress to support the Keep Our Pension Promises Act.... [4] Contact local media.... [5] Spread the word ... [6] Add your voice to our story bank.... [7] Timeline." (Pension Rights Center)
[Opinion] Comment Letter to PBGC on Annual Financial and Actuarial Information Reporting; Changes to Waivers (PDF)
"[If] a plan has at least 500 participants, it should be permitted to use non-stabilized rates to determine it meets the dollar threshold. While this may create additional expense for the plan, it will generally be less expensive and onerous than complying with the reporting requirements. In addition, the PBGC should consider increasing both the dollar threshold and the participant count." (U.S. Chamber of Commerce, American Benefits Council, and Financial Services Roundtable)
Ninth Circuit Hammers Out New Successorship Liability Test Under MPPAA
"Two circuits now agree that asset purchasers can be liable for withdrawal liability as successors. No circuit court has taken the opposite position. And the Ninth Circuit has set forth how it would focus on where a new company's customer base is derived for purposes of determining successorship. In light of this, employers need to assume that if they are a successor they will be subject to the predecessor employer's withdrawal liability." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Seyfarth Shaw LLP)
Third Circuit: PPA Surcharges Not Included in Withdrawal Liability
"C&S Wholesale Grocers argued that a [PBGC] opinion letter suggested that an average of the contribution rates in its three CBAs should be used to determine its withdrawal liability from the IBT Local 863 Pension Fund. However, the court said it would not consider the argument since it found that the plain language of the MPPAA required otherwise." [Bd. of Trustees of the IBT Local 863 Pension Fund v. C&S Wholesale Grocers, Inc., No. 14-1956 (3d Cir. Sept. 16, 2015)] (PLANSPONSOR)
Central States Pension Fund Prepares to Slash Hundreds of Thousands of Workers' Pensions
"The cuts in monthly payments to workers covered by Central States will vary from nothing (for about one-third of the group) to more than 60 percent (the highest losses will be suffered by many in a group of about 28,400 Teamsters whose employers had abandoned their employees, usually via bankruptcy and closure). The average loss for all participants will be 22.6 percent of retirement pay on which they had counted, according to the summary prepared by the fund trustees." (In These Times)
Central States Teamsters Pension Fund Seeks Permission to Cut Benefits
"The pension fund had assets of $17.8 billion as of Dec. 31, and is projected to become insolvent in 2026.... The rescue plan application was submitted on Sept. 25 to the Treasury Department, which will post it shortly and allow for public comments. Treasury officials have up to 225 days to review an application, and once approved, 30 days to administer a participant vote on the proposed benefit reductions. The law requires the Treasury Department to approve an application if a plan's potential claims would cost the PBGC $1 billion or more." (Pensions & Investments)
Ninth Circuit Holds That Asset Sale Successor May Be Liable for Predecessor Multiemployer Plan Withdrawal Liability Without Assumption of Liability
"Even though the purchaser (a former salesman of the predecessor employer) purchased only 30 percent of the predecessor's assets at public auction and none of its customer lists or goodwill, and used his own experience and contacts to hire the predecessor's former employees and contact customers, the court remanded the case back to the district court to determine whether there was sufficient continuity of the predecessor's business (most notably, continuity of the customer base) to be a successor." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Haynes and Boone, LLP)
Developments of Interest to Sponsors of Multiemployer Retirement Plans, Q4 2015 (PDF)
Topics include: Ratio of benefit payments to contributions; Investment trends; Key developments and statistics; and Selected strategies for managing multiemployer retirement plans. (Segal Consulting)
More Withdrawal Liability for Unsuspecting Business Owners
"In other successor employer situations, the courts have noted that a buyer who is being tagged with successor liability could protect itself by indemnification or through a reduction in the purchase price.... [In]this case, the owner of the new business had no such opportunity.... On the other hand, the court noted that certain documents in the case were filed under seal, including the business plan of the new business.... It could be that there was some evidence of coordination or collusion between the old business and new business that would otherwise justify the decision." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015) (Stinson Leonard Street)
Asset Purchasers Face Increased Exposure for the Multiemployer Pension Debts of Sellers
"[T]he Court gave no consideration to the seeming lack of an asset purchase agreement between the parties.... Second, the predecessor probably never would have been assessed any withdrawal liability but for the alleged successor's actions to start his own company.... [This case] represents a disturbing expansion of the successor liability doctrine to both create withdrawal liability (by imputing the purchaser's actions to the asset seller) and also to hold the purchaser liable for the withdrawal liability created as a successor." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Jackson Lewis P.C.)
Text of PBGC FY 2014 Projections Report (PDF)
57 pages. "After updating the model, and incorporating the premium increases and other provisions under MPRA, but assuming no plans elect suspensions or partitions, PBGC's projected 2024 multiemployer deficit averages $44.3 billion discounted to today's values. The solvency of the multiemployer program fund is extended by three years; the multiemployer program fund is more likely than not to run out of money in 2025 rather than 2022." [Also available: press release and Frequently Asked Questions.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] PBGC Issues Final Regs on Reportable Events
"[1] Changes to Safe Harbors Based on Financial Soundness: ... The low-default-risk safe harbor ... The well-funded plan safe harbor ... [2] Other Changes to Waiver Provisions Under Final Regulations: Public company waiver ... Controlled group situations ... Small-plan waivers ... [3] Other Changes Under Final Regulations: Active-participant reductions ... Failure to make required minimum funding payments ... Inability to pay benefits when due ... Form 200 reporting." (McGuireWoods LLP)
[Official Guidance] Text of PBGC Correction to Final Regs on Electronic Filing Requirements for Multiemployer Plans
"The [PBGC] published ... a final rule to amend its regulations to require electronic filing of certain multiemployer notices. This document corrects two inadvertent errors in the amendatory language." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Duties of Plan Sponsor Following Mass Withdrawal
"Plan sponsors of multiemployer pension plans terminated by mass withdrawal give notices to PBGC and plan participants about plan insolvency and benefit reductions; notices to participants about electing benefit options; and requests to PBGC for financial assistance or permission to distributee benefits in different amounts or forms than otherwise allowed. PBGC uses information submitted to it to make statutory determinations and estimate the need for financial assistance to plans. Participants use information sent to them to make personal financial decisions." [Forms submitted for approval: [1] Application for Financial Assistance -- Recurring, [2] Application for Financial Assistance -- Initial, [3] Notice of Insolvency Benefit Level, and [4] Notice of Insolvency. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Notice of Insolvency, Notice of Insolvency Benefit Level
"These notices, mandated by section 4245(e) of [ERISA], provide information PBGC needs to estimate cash requirements for financial assistance to troubled mutliemployer pension plans, and other interested parties need for financial planning or to bargain over contribution increases. Multiemployer plans in reorganization that are or may become insolvent give these notices." [Forms submitted for approval: [1] Notice of Insolvency, and [2] Notice of Insolvency Benefit Level. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])

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