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Multiemployer plans

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[Official Guidance] Text of IRS Temporary Regs: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA
"A participant vote requires the completion of three steps. First, a package of ballot materials is distributed to eligible voters. Second, the eligible voters cast their votes and the votes are collected and tabulated. Third, the Treasury Department (in consultation with the PBGC and the Labor Department) determines whether a majority of the eligible voters has voted to reject the proposed suspension.... [T]he Treasury Department is permitted to designate a service provider or service providers to facilitate the administration of the vote.... Because the ballot for each eligible voter is accompanied by a unique identifier, the plan sponsor cannot itself distribute the ballot. Instead, the plan sponsor is responsible for furnishing a list of eligible voters so that the ballot can be distributed on the plan sponsor's behalf.... [B]allot packages be distributed no later than 30 days after the application has been approved and specify that the voting period begins on the ballot distribution date.... The temporary regulations do not provide for the collection of votes using paper ballots ... Within 7 days after the end of the voting period ... the Treasury Department (in consultation with the PBGC and the Labor Department) will either certify that a majority of all eligible voters has voted to reject the suspension or, if a majority of eligible voters did not vote to reject the suspension, issue a final authorization to suspend." (Internal Revenue Service [IRS])
Employee Plans Compliance Unit (EPCU) Interim Report: Multiemployer Actuarial Certification Projects
"The purpose of this project is to collect and document actuarial certifications for multiemployer defined benefit plans required to be filed by PPA of 2006 and IRC Section 432.... MECA Project: 2008 was the first plan year certifications were required. At that time over 75% of the plans were in 'Green Status' indicating they were 'Neither Endangered nor Critical'. By 2009, the percentage of cases in 'Green Status' dropped to 31.80%; revealing a nearly complete reversal of plan funding. This was most likely due to the effects of the economic crisis. The 2012 filings show a significant improvement with 57.59% of certifications reporting their funding as 'Green Status'. Plans in the Critical, Seriously Endangered, or Endangered Status started to decline in number, which is a direct result of Legislative action under WRERA." (Internal Revenue Service [IRS])
Buyer Beware! Multiemployer Pension Plan Successor Liability Following an Asset Sale
"Recently ... the Seventh Circuit [held] that an asset purchaser could be liable for a seller's withdrawal liability triggered as a result of an asset sale, provided that the purchaser had known of the seller's 'contingent' withdrawal liability that would be triggered by the sale.... The court's reasoning that equity mandates imposing common law notions of successor liability to multiemployer pension plans is questionable given the ERISA Section 4204 exception to the general rule that a sale of assets otherwise would trigger a complete or partial withdrawal for the seller." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Morgan Lewis & Bockius LLP, via Lexology)
[Opinion] Pension Rights Center Comments to IRS on Rules for Retiree Benefit Cuts in Financially Troubled Multiemployer Pension Plans (PDF)
10 pages. "[This letter provides] specific comments intended to help improve the proposed regulations in seven substantive areas: [1] plan eligibility to suspend benefits; [2] post-suspension maintenance of records showing ongoing compliance with suspension conditions; [3] equitable allocation of benefit suspensions; [4] rules relating to disability benefits; [4] rules relating to benefits to alternative payees; [6] rules relating to participant voting; [7] rules relating to benefit improvements; [8] method of communicating with participants; and [9] the selection and function of the retiree representative." (Pension Rights Center)
[Opinion] Comments by American Academy of Actuaries on Proposed Regs on Suspensions of Benefits (PDF)
"The level of resources required could serve to discourage some plan sponsors from pursuing benefit suspensions, particularly because they cannot be certain that their applications will be approved. This concern would be most acute for small plans.... [The authors] suggest that the final regulations clarify that the actuary should base the projections to certify that the proposed suspensions are sufficient to avoid insolvency on the market asset value as of the end of the calendar year quarter preceding the date of certification." (American Academy of Actuaries)
[Opinion] Pension Rights Center Comments to PBGC on Partition Rules for Financially Troubled Multiemployer Plans (PDF)
"[These] comments will focus on five issues that bear directly on participants: [1] the content of the participant notices; [2] deficiencies in the required elements of the plan application; [3] the need for the PBGC to provide adequate technical and financial resources to the Participant and Plan Sponsor Advocate; [4] whether the statute makes benefit suspensions an absolute prerequisite for partition; and [5] how Title I of ERISA interacts with new Section 4233." (Pension Rights Center)
Ninth Circuit: Multiemployer Plan Calling Unpaid Contributions 'Plan Assets' Does Not Make Persons Controlling Contribution Payments ERISA Fiduciaries
"The Ninth Circuit recently held that a multiemployer pension plan cannot label unpaid contributions as 'plan assets' so as to impose ERISA fiduciary status on persons controlling the payment of employer contributions to the plan.... [T]he court rejected the reasoning of the Second and Eleventh circuits, which have held that unpaid [multiemployer plan] contributions can be plan assets if the plan documents expressly define plan assets to include unpaid contractually required contributions." [Bos v. Board of Trustees, No. 13-15604 (9th Cir. July 30, 2015)] (McGuireWoods LLP)
[Guidance Overview] Draft Instructions to IRS 2015 Forms 1094-C and 1095-C Give Clear Guidance to ALEs Contributing to Multiemployer Plans (PDF)
"Employers who contribute to a multiemployer plan that complies with the multiemployer interim guidance, can use the 1H/2E codes to report on employees for which it makes contributions to the plan. If such an ALE has other employees that are not covered by the multiemployer plan, it must also report those employees using the 1094/1095-C series forms. If such other employees are covered by an insured plan, the insurance company would do the reporting required under Part III of Form 1095-C." (United Actuarial Services, Inc.)
Seventh Circuit Makes It Easier to Tag an Asset Purchaser with Seller's ERISA Multiemployer Pension Plan Withdrawal Liability
"The Seventh Circuit [found] that the requirement of successor foreknowledge of liability may be satisfied by notice of either existing or contingent liabilities. The Seventh Circuit maintained that, in the absence of this new rule, a 'liability loophole' would exist: because withdrawal liability is ascertainable only after withdrawal occurs, plan sponsors would be foreclosed from imposing successor liability on asset purchasers if the seller's withdrawal occurred after the asset sale but would be able to do so (under Seventh Circuit precedent) if the seller's withdrawal occurred before the asset sale." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Paul, Weiss, Rifkind, Wharton & Garrison LLP)
[Official Guidance] Text of Corrections to IRS Proposed Regs on Suspension of Benefits under the Multiemployer Pension Reform Act
"This document contains corrections to a notice of proposed rulemaking ... published in the Federal Register on Friday, June 19, 2015 (80 FR 352 62). The proposed regulations relate to multiemployer pension plans that are projected to have insufficient funds, at some point in the future, to pay the full benefits to which individuals will be entitled under the plans (referred to as plans in 'critical and declining status)." [Additional technical corrections issued here and here.] (Internal Revenue Service [IRS])
Looking Past Due Diligence for Benefit Plans in Mergers and Acquisitions (PDF)
"Corporate transactions involving the sale or purchase of another company or division are complex events. While employee benefit plans generally are considered in these transactions, the time and attention devoted to these plans are often minimal. This exposes the parties to additional risks, both in terms of direct costs and in long term administrative complexities. This article will review the various risks that often are undiscovered during the standard due diligence process. Health plans and retirement plans, including multiemployer plans, and executive compensation plans are all considered." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])
Multiemployer Pension Plans: Withdrawal Liability Is Mounting
"At least four plans, through their actuaries, have dramatically reduced the interest rate assumption to calculate withdrawal liability. Rather than using the plan's assumed rate of return, typically 7-8 percent, they have adopted the PBGC long term interest rate of slightly more than 3 percent to calculate the unfunded vested benefit liabilities and, hence, withdrawal liability. These interest rate changes are increasing the amount of withdrawal liability by 200-400 percent depending on the methodology used ... Employers in critical plans need to understand and manage this mounting withdrawal liability before it becomes so great that it exceeds the net worth of a company." (Ford & Harrison LLP)
Multiemployer Pension Plans: A Primer and Analysis of Policy Options (PDF)
29 pages. "[S]ome stakeholders have proposed new, alternative pension plan structures that they feel would avoid many of the problems inherent in the current multiemployer pension plan system. Possible solutions to plan underfunding could involve some combination of increased contributions from the employers that sponsor pension plans, cuts in future benefits to plan participants who are currently working, cuts in current benefits to retired participants, or financial assistance from the U.S. government." [Report No. R43305, dated July 24, 2015.] (Congressional Research Service [CRS])
Impact of the Multiemployer Pension Reform Act: 2015 Survey Results
"Six months after the passing of the Multiemployer Pension Reform Act of 2014 (MPRA), an International Foundation of Employee Benefit Plans survey finds multiemployer plans are closely monitoring and discussing the law, but few are taking any drastic measures." [Page includes infographic and 20-page report of survey results.] (International Foundation of Employee Benefit Plans [IFEBP])
[Guidance Overview] Treasury, PBGC Begin to Wrestle with Multiemployer Pension Plan Reforms (PDF)
"The success of the law will turn, first, on whether a political backlash dissuades plans from utilizing it and, second, whether the argument that limited cuts now are better than bigger cuts later will persuade participants not to vote down proposed reductions. Both of these considerations come together in the case of the 'systemically important' Central States plan. If participants disapprove a benefit suspension, will the Treasury Department overrule them? One recourse unhappy participants apparently do not have is litigation. MPRA denies them standing to challenge benefit suspensions in court, leaving perhaps only a potential constitutional challenge." (Steptoe & Johnson LLP)
Multiemployer Funds, PBGC Face Hurdles with Partitions
"Unlike the old partition program, which just took financial responsibility for participants in orphaned plans and left a healthy plan intact, plans must now cut benefits for all participants.... It is also not a simple -- or inexpensive -- calculation to figure out whether applying for partitioning will be enough to save a plan ... Explaining it to plan participants could be equally daunting, especially along with benefit cuts.... PBGC officials estimated they could take on up to $60 million in payments and process up to six applicants per year." (Pensions & Investments)
[Opinion] Response of the Pension Rights Center to Editorial About the 'Keep Our Pension Promises Act of 2015'
"This legislation introduced by Senator Bernie Sanders, Representative Marcy Kaptur, and 11 other congressional co-sponsors, offers an economically workable solution to the cash-flow problems faced by severely-troubled multiemployer plans, including the Central States Teamster Pension Fund.... The Sanders-Kaptur legislation recognizes that a major problem for many multiemployer plans is that large numbers of employers have left the plans without paying sufficient withdrawal liability to fund the pensions of the retirees they have left behind." (Pension Rights Center)
Teamster Retirees' Campaign Against Pension Cuts Draws Support
"Less than six months after getting started, a grassroots campaign among Teamsters union retirees to protect their pensions appears to be picking up steam, attracting the support of presidential candidate Bernie Sanders and threatening to influence the outcome of the union's own leadership elections next year." (In These Times)
Current ACA Issues for Multiemployer Plans
"More than half of plans in the study ... remain grandfathered under the ACA, meaning they do not have to comply with some parts of the law. A large majority of plans in the study have not changed coverage for spouses. Most plans in the study have maintained coverage for retirees. The three most popular cost-management strategies that plans have implemented are [1] soliciting competitive bids from carriers/vendors, [2] implementing more intensive pharmacy management programs, and [3] increasing copayments." (Segal Consulting)
PBGC Partition Rules Give Clear Guidance, Will Help Preserve Plans (PDF)
"The rules aren't burdensome and let endangered plans understand the procedures they must follow before the PBGC can use its authority to approve partitions, [said W. Andrew Douglass, of Polsinelli PC].... Thomas C. Nyhan, [Central States Pension Fund's] executive director, said the plan's trustees are currently reviewing the guidance and 'will be working expeditiously to develop a fair rescue plan. Once that has been completed, we will be filing that rescue plan with Treasury and notifying all of our pension fund participants. We expect for that to happen sometime this summer.' " (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)
[Guidance Overview] PBGC Prescribes Program for Mulltiemployer Plan Partitions to Promote Preservation (PDF)
"PBGC sets out the application process and notice requirement for partitioning multiemployer plans. PBGC intends to provide guidance on facilitated mergers in a separate rulemaking. PBGC expects that fewer than 20 plans will be approved for partition over the next three years and that the total financial assistance they will provide will be less than $60 million per year." (Buck Consultants at Xerox)
[Guidance Overview] Multiemployer Plan Benefit Suspension Guidance Is Here (PDF)
"Plans with 10,000 or more participants must select a retiree representative -- a plan participant in pay status ... [who] advocates for the interests of the retired and deferred vested participants and beneficiaries of the plan throughout the suspension approval process.... Notice of proposed suspension must be provided, via written or electronic delivery, to all participants, beneficiaries, alternate payees, each employer with an obligation to contribute, and each employee organization representing plan participants for collective bargaining purposes[.]" (Buck Consultants at Xerox)
[Guidance Overview] Guidance on MPRA's Rules for Benefit Suspension and Plan Partition
"The time between the submission of a 'suspension-only' application and its approval generally will be at least nine months. Preparation of the application is not included in that period and should begin as soon as possible for plans that need approval as early as possible.... [P]lans in the early stages of considering a future suspension and/or partition should spend time now looking at their participant data to determine if it is sufficient to support the numerous calculations and determinations that will be required." (Segal Consulting)
[Guidance Overview] Regulatory Guidance Issued on Plan Benefit Suspensions and Plan Partitions for Multiemployer Pension Plans at Risk of Insolvency
"Since a partition applicant must show it has taken 'all reasonable measures' -- including benefit suspensions -- to avoid insolvency, the PBGC expects that plans seeking partitions will also apply for proposed suspension of benefits. Therefore, the PBGC strongly recommends that plan sponsors file concurrent applications for partition and suspension of benefits. If a plan seeks both a suspension of benefits and a plan partition, the partition must occur first." (Jackson Lewis P.C.)
[Guidance Overview] IRS and PBGC Issue Regulations under MPRA
"Notice of the application for a suspension of benefits is required to be provided to participants, beneficiaries of deceased participants, and alternate payees, and is not met simply by mailing to the last known address of an individual. A plan sponsor will have to make reasonable efforts to communicate with participants beyond the mailing to the last known address. The regulations set out the content of the notice. The notice may have to be revised once the final regulation is issued. After reasonable efforts, any participants or beneficiaries of deceased participants (eligible voters) who could not be located will be treated as voting 'no' in the same percentage as those who could be located." (Cheiron)
[Guidance Overview] PBGC Issues Interim Final Rule on Multiemployer Pension Plan Partitions Under MPRA
"As the PBGC discusses in the preamble to the rule, a significant minority of financially troubled multiemployer plans are projected to become insolvent over the next two decades. Plans that seek to maintain solvency may need to rely on the tools provided by MPRA, including plan partitions and suspension of benefits. As the preamble notes, most plans that will require a partition will also require a benefit suspension." (Practical Law Company)
Survey of Multiemployer Plans' Zone Status: 2015 Results for Calendar-Year Plans (PDF)
"A majority of plans are in the green zone. The ratio between the number of active and inactive participants is a key indicator of zone status. The average PPA '06 funded percentage is 88 percent for 2015 calendar-year plans and 87 percent for plans with zone certification filing deadlines between April 1, 2014 and March 31, 2015.... Of the 2015 calendar-year plans, 65 percent are in the green zone. A similar percentage (63 percent) of plans in the larger group is also in the green zone." (Segal Consulting)
[Guidance Overview] IRS, PBGC Issue Guidance on Multiemployer Plan Benefit Suspensions and Plan Partitions
"The Guidance provides that benefit suspension applications can be submitted beginning June 19, 2015, but also indicates that any submitted applications likely will not be approved prior to consideration of public comments on the proposed regulations and the subsequent issuance of final regulations. Moreover, applications submitted before the issuance of final regulations may need to be revised (including potential revisions to participant notices) or supplemented to take into account any differences that might be included in the final regulations. For these reasons, some struggling multiemployer plans may choose not to submit applications for benefit suspensions until final regulations are issued." (McGuireWoods LLP)
[Official Guidance] Text of IRS Rev. Proc. 2015-34: Application Procedures for Approval of Benefit Suspensions for Certain Multiemployer Defined Benefit Pension Plans Under Section 432(e)(9) (PDF)
31 pages. "This revenue procedure prescribes the application process for approval of a proposed benefit suspension in accordance with Section 432(e)(9)(G) and provides a model notice that a plan sponsor proposing a benefit suspension may use to satisfy the content and readability requirements of Section 432(e)(9)(F)(ii) and (iii)(II).... This revenue procedure does not affect the standards that will be applied in reviewing an application for a suspension of benefits under Section 432(e)(9)." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Temporary Regs: Suspension of Benefits under the Multiemployer Pension Reform Act of 2014
55 pages. "This document contains temporary regulations under section 432(e)(9) that, together with proposed regulations ... and Rev. Proc. 2015-34, implement section 432(e)(9) as required by the statute.... The temporary regulations in this document, which are applicable immediately, provide sufficient guidance to enable a plan sponsor that wishes to apply for approval of a suspension of benefits to prepare and submit such an application, and to enable the Department of the Treasury to begin the processing of such an application. The temporary regulations provide general guidance regarding section 432(e)(9), including guidance regarding the meaning of the term 'suspension of benefits,' the general conditions for a suspension of benefits, and the implementation of a suspension after a participant vote.... The provisions of the temporary regulations and proposed regulations are expected to be integrated and issued as a single set of final regulations with any changes that are made following consideration of the comments received." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Notice of Proposed Rulemaking and Public Hearing: Suspension of Benefits under the Multiemployer Pension Reform Act of 2014
74 pages. "This document contains proposed regulations relating to multiemployer pension plans that are projected to have insufficient funds, at some point in the future, to pay the full benefits to which individuals will be entitled under the plans (referred to as plans in 'critical and declining status).... MPRA requires the Secretary of the Treasury, in consultation with the [PBGC] and the Secretary of Labor, to approve or deny applications by these plans to reduce benefits. As required by MPRA, these proposed regulations, together with temporary regulations being published at the same time, provide guidance implementing these statutory provisions. These proposed regulations would affect active, retired, and deferred vested participants and beneficiaries of multiemployer plans that are in critical and declining status as well as employers contributing to, and sponsors and administrators of, those plans." (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Interim Final Regs: Partitions of Eligible Multiemployer Plans
63 pages."This document contains an interim final rule prescribing 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 soliciting public comments ... As under prior law, PBGC's decision to order a partition is discretionary. Unlike prior law, however, the statute requires PBGC to make a determination not later than 270 days after the date such application was filed ... In addition, section 4233(a)(2) states that not later than 30 days after submitting an application for partition, the plan sponsor shall notify the participants and beneficiaries of such application, in the form and manner prescribed by regulations issued by PBGC... Section 4233(b) of ERISA contains five statutory conditions that must be satisfied before PBGC may order a partition... Under the new withdrawal liability rule, if an employer withdraws fro m the original plan within 10 years following the date of the partition, withdrawal liability is computed under section 4201 with respect to the original plan and the successor plan[.]" (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] Responding to the Multiemployer Pension Reform Act
"The law was passed ostensibly to 'save' deeply troubled underfunded multiemployer plans, but really what the law does is allow trustees to balance the books on the backs of retirees -- the most vulnerable.... [A] report by the hedge fund BlackRock [says] point-blank that the new Multiemployer Pension Reform Act of 2014 may lead to what they euphemistically call other 'reform' in corporate pension plans. They suggest that the new law may offer a 'useful model' for other pension plans facing imminent distress. In other words, what happens to multis will happen to everyone, and the only ones to benefit are the corporations, the trustees, and the hedge funds. Is that the America we want?" (Karen Friedman, of the Pension Rights Center)
Multiemployer Pension Plan Mortality Study (PDF)
"[M]ultiemployer plan liabilities and costs are likely to be lower than what would be expected using the recently released Society of Actuaries (SOA) RP-2014 Blue Collar Mortality Tables.... [M]ost industries experienced more deaths than anticipated by the RP-2014 Blue Collar tables. For example, with a ratio of 1.15, iron workers experienced 15 percent more deaths than predicted by the RP-2014 Blue Collar tables. One possible explanation is that the data used by the SOA to create the Blue Collar tables is based largely on information from single-employer plans in a limited set of blue-collar industries and includes virtually no input from multiemployer plans." (Segal Consulting)
[Guidance Overview] Final Rule on Limited Wraparound Coverage Under the ACA
"[L]imited 'wraparound' benefits are considered 'excepted benefits,' which means they are not be subject to the [ACA's] group health plan mandates, such as the prohibition on annual dollar limits. [Topics addressed in this article are:] [1] Limited wraparound coverage is a pilot project ... [2] Requirements for any limited wraparound coverage ... [3] Specific rules for limited wraparound coverage for part-time employees or retirees ... [4] Requirements for limited wraparound coverage for full-time employees ... [5] Implications for plan sponsors." (Segal Consulting)
[Guidance Overview] Notes from Meeting of Actuaries Intersector Group with PBGC, April 16, 2015 (PDF)
7 pages. Topics include: [1] Status of PBGC's internal review of assumption methodology; [2] Mortality, including projection scales; [3] Early warning program; [4] 4062(e) change; [5] Standard termination post-distribution certification; [6] Critical and Declining (C&D) plan notice; [7] Benefit Suspensions under MPR; and [8] Partition authority under MPRA. (American Academy of Actuaries)
[Guidance Overview] Confusion at the Intersection of Employers, Union-Affiliated Coverage and ACA Tax Reporting
"[T]he employer does not report on the fund's coverage actually supplied to its bargaining unit employees. But the employer does need to prove its compliance with the ACA's employer mandate with respect to its full-time bargaining unit employees. Happily, in most cases the employer will be able to take credit for the Taft-Hartley fund's offer of coverage, as long as the employer is making contributions to the fund on behalf of the employee, and the fund offers at least minimum value coverage to the employee and at least minimum essential coverage (MEC) to the employee's children." (Lockton)
The #1 Reason Multiemployer Plans Fail a DOL Audit
"Multiemployer plan trustees have a fiduciary duty under ERISA to make sure the fund is receiving all employer contributions that are due, based on participants' hours worked. This means they must follow up when employers neglect to send their contributions on time (in other words, when they're delinquent). This also means trustees need to make sure that the correct amounts are received. If trustees neglect this fiduciary responsibility, they can be personally liable. They help fulfill this duty by having a payroll audit performed by a knowledgeable and experienced auditor." (International Foundation of Employee Benefit Plans [IFEBP])
[Guidance Overview] Mandatory E-Filing Under PBGC Proposed Rule Applies Only to Notices to PBGC
"PBGC has received inquiries whether its proposed rule on mandatory e-filing for certain multiemployer notices would affect notices to participants. The proposed rule only affects notices to PBGC.... [T]he proposed rule would require the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281 ... Further, the proposed rule does not involve the Multiemployer Pension Reform Act of 2014 (MPRA). Comments on the proposed rule are due June 2, 2015." [Announcement is dated May 20, 2015.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] Benefit Suspensions Under the Multiemployer Pension Reform Act (PDF)
7 pages. "This [article] examines the conditions for making such suspensions and the procedure that Trustees must follow before putting them into effect. The process is lengthy and can take more than one year before any benefit reductions are actually made. The process for implementing benefit suspensions takes place in several steps. Each of these steps contains additional requirements that must be satisfied before a plan may implement any suspension of benefits." (Cheiron)
[Opinion] Preserving Multiemployer Pensions: Promises Made Should Be Promises Kept (PDF)
"MPRA was an important advance in addressing the challenges facing Taft-Hartley plans and the PBGC multiemployer insurance program. But much work remains to be done. [1] In all likelihood, the multiemployer insurance program eventually will require direct federal government financial assistance. The time to recognize this challenge is now, before there is a crisis.... [2] The current multiemployer plan guaranties are being degraded and need to be increased ... [3] Give transparency a chance." (Kraw Law Group, via Bloomberg BNA Pension & Benefits Daily)
[Guidance Overview] Withdrawal Liability to Multiemployer Pension Plans Under ERISA (2015 Update) (PDF)
"This paper is intended as a general guide to the withdrawal liability provisions of ERISA, which were added in 1980 by the Multiemployer Pension Plan Amendments Act (MPPAA), for practitioners and executives. It discusses the MPPAA's background and the operation of its major provisions, with some emphasis on litigation procedures." (Vedder Price)
House HELP Subcommittee Hearing: Time to Modernize Multiemployer Pension System
" 'We need new tools in our toolbox to address the challenges which were not contemplated when multiemployer pension rules were initially put in place,' said Andrew Scoggin, Vice President of Albertson's LLC. 'Congress needs to equip employers and employees with the regulatory flexibility necessary to make changes to benefits programs that do not run afoul of beneficiaries, their employers, or the system as a whole.' ... Randy DeFrehn, Executive Director of the [National Coordinating Committee for Multiemployer Plans], described the composite plan model as the 'next logical step in the evolution' of multiemployer plans." (Subcommittee on Health, Employment, Labor, and Pensions, Committee on Education and the Workforce, U.S. House of Representatives)
[Opinion] Pension Rights Center Statement in Response to House Subcommittee Hearing on Multiemployer Pension Plans
"MPRA's provisions allowing retirees' pension benefits to be cut in order to reduce liabilities under multiemployer plans overturned 40 years of pension law, and undermined a central tenet of ERISA: once retirees earn their basic benefits, they can never be cut back -- unless a plan completely runs out of money. Yet this new law will allow retiree benefit cuts many years before a plan is projected to become insolvent. The new law's impact will be devastating to hundreds of thousands of pensioners who rely on their benefits to pay their daily living and medical expenses." (Pension Rights Center)
U.S. House Subcommittee to Discuss Reforms to Modernize the Multiemployer Pension System
"On Wednesday, April 29 at 2:00 p.m., the Subcommittee on Health, Employment, Labor, and Pensions ... will hold a hearing on ways to strengthen the retirement security of America's workers.... [This] hearing will provide members an opportunity to examine the challenges facing the multiemployer pension system and ways to improve the system on behalf of workers, employers, retirees, and taxpayers." (Committee on Education and the Workforce, U.S. House of Representatives)
Coal Companies Get Reprieve on Pension Costs
"The United Mine Workers of America 1974 pension plan ... is underfunded by about $2 billion ... The plan will require coal companies and other members to increase contributions by 10%, to $6.05 per union employee per hour worked, and maintain that rate until 2027 ... Benefit cuts for future retirees also are planned. A previous plan called for contributions to increase in stages from a minimum $12.50 in 2017 to as much as $26.50 as early as 2022 ... The United Mine Workers plan has roughly 12 retirees for every active worker[.]" (The Wall Street Journal; subscription may be required)
Teamsters Mount Grassroots Campaign to Block Pension Cuts
"A dozen meetings around the Midwest and South over the last month have attracted 100 to 200 angry members apiece, as activists and local retiree clubs learn their benefits are in danger. The meetings are likely to grow in size and number: Central States has just sent out notices to every member warning that cuts are coming.... [T]he average Central States pension is $1,230 a month ($14,760 a year).... For those with decent pensions -- some make $36,000 a year -- the cuts could be as high as 65 percent." (LaborNotes)
[Opinion] Pension Rights Center Comment Letter to PBGC on Partitions of Eligible Multiemployer Plans and Facilitated Mergers (PDF)
"[It] is critically important that PBGC guidance ensure that these tools, when they are used, promote the long-term financial security of affected participants and beneficiaries, as well as that of plan sponsors and the PBGC.... [T]his will require that the regulations delineate the scope of the Participant and Plan Sponsor Advocate's authority with respect to partition applications, provide meaningful disclosure to participants in both partitions and facilitated mergers, and ensure that the rights of partitioned participants and beneficiaries will be enforced." (Pension Rights Center)
[Guidance Overview] Guide to Benefit Suspensions Under the Multiemployer Pension Reform Act (PDF)
"Subject to a variety of constraints, including government approval, MPRA provides multiemployer plans that are headed towards insolvency with the option of suspending a portion of participants' accrued benefits. This authority is available only if the plan sponsor and actuary conclude that the suspensions are necessary for the plan to remain solvent and suspending benefits will preserve long-term benefits above the [PBGC] guarantee level. This article discusses some of the statutory requirements for benefit suspension authority, along with the factors that plan sponsors may consider in deciding whether and how to exercise this authority." (Groom Law Group, via Bloomberg BNA Collective Bargaining Bulletin)
[Opinion] 15,000+ Comment Letters on Multiemployer Pension Reform Act Delivered to IRS
"The comments included personal stories as well recommendations on what information plans must provide when they apply for benefit cuts, how plans should notify workers and retirees about the proposed cuts, who can be appointed as a representative of retirees, input on the process to allow participants the ability to vote on the cuts, and much more. Although the Treasury Department cannot change the law, the comments will help show how important it is that the law is as protective of retirees as possible." (Pension Rights Center)
[Opinion] American Academy of Actuaries Comment Letter to PBGC on Suspension of Benefits Under the Multiemployer Pension Reform Act of 2014 (PDF)
"[C]ritical and declining plans that need to implement benefit suspensions in order to remain solvent are able to take this action as soon as possible. Delays could lead to a necessity for larger benefit suspensions will be necessary in order for plans to survive.... [A] change in the effective date of the benefit suspensions will result in the notices overstating the impact of the suspensions submitted for Treasury approval due to benefits becoming eligible for additional protection under the age limitations. Guidance does not need to require the production of revised individualized estimates. However, advance notice to pay status participants alerting them to their actual benefit change would be appropriate shortly before the final implementation date." (American Academy of Actuaries)
[Opinion] American Academy of Actuaries Comment Letter to PBGC on Partitions of Eligible Multiemployer Plans and Facilitated Mergers (PDF)
"[We] recommend that the guidance include the details that will be required with respect to needed actuarial projections and reports.... It would also be helpful if the PBGC is able to provide, as best it can, its evaluation criteria for determining whether to consider and approve an application for partition or facilitated me... Requiring too extensive an analysis in all cases would be counterproductive if it discouraged plans that could benefit from these provisions from applying." (American Academy of Actuaries)
[Official Guidance] Text of PBGC Proposed Regs: Multiemployer Plans; New Electronic Filing Requirements
14 pages. "PBGC is proposing to require electronic filing of the following multiemployer plan filings: [1] Notices of termination under part 4041A; [2] Notices of insolvency and of insolvency benefit level under parts 4245; [3] Notices of insolvency and of insolvency benefit level under part 4281 (following mass withdrawal); [4] Applications for financial assistance under part 4281 (following mass withdrawal)." (Pension Benefit Guaranty Corporation [PBGC])
Why Multiemployer Plans Should Seriously Consider Cyber Liability Insurance for Data Breaches (PDF)
"Whether a breach ... is caused by a plan employee or a service provider that stores the data, the plan and potentially its trustees may be held responsible to some degree. This [article] discusses the protections provided by cyber liability insurance and why they are important to have. It also discusses the different circumstances in which a multiemployer plan may be liable for a breach as well as the steps trustees can take to minimize their plan's cyber liability." (Segal Select Insurance)
[Official Guidance] Text of PBGC Submission to OMB and Comment Request: Reportable Events -- Notice of Failure to Make Required Contributions
"PBGC intends to revise the current forms and instructions to: [1] Require that additional supporting and identifying information be provided ... [2] Require more description of the pertinent facts relating to an event ... and on information being included or missing with filing. [3] Add an information requirement included in the regulation to Forms 10 and 10-A (for change in contributing sponsor or controlled group event). [4] Provide enhanced instructions on the type of actuarial information required to be submitted.... [5] Remove information requirements that PBGC no longer needs or can gather from public sources. [6] Require additional information for certain events ... [and] [7] Require a signature and certification on Form 10 and Form 10-A as to the completeness and accuracy of the contents of the filing." (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] DOL Releases Final Regulations on DB Plan Funding Notices
"The most significant changes in the final regulations address 'material effect events' and delivery to all alternate payees. The exception for plans involved in a standard termination has been expanded. The regulations also include a model notice that has been slightly revised from the models in FAB 2009-01 and the 2010 proposed regulations." (Towers Watson)
Developments of Interest to Sponsors of Multiemployer Retirement Plans (PDF)
"[1] As exposure to non-U.S. investments increases, it is important for trustees to understand the effect that currency can have on results.... [2] The economic efficiencies embedded in DB plans enable the delivery of the same retirement income at a 48 percent lower cost than 401(k)-type defined contribution (DC) accounts.... [3] Early election of [PPA] red-zone status may be of interest to trustees of plans currently in the yellow or green zone facing near-term financial challenges.... [4] At their fiduciary liability insurance policy's next renewal date, trustees may want to consider obtaining pre-claim investigation coverage and interview coverage." (Segal Select Insurance)
[Guidance Overview] Multiemployer Pension Reform Act of 2014: Contributions for Withdrawal Liability (PDF)
"[The authors] recommend that [multiemployer] plan administrators review their procedures and systems with regard to invoicing employers and/or retaining employer contributions in order to isolate the following contribution amounts that are excluded when calculating withdrawal liability: [1] 5% and 10% employer contribution surcharges; and [2] Contribution increases outside the benefit formula and required by a funding improvement plan or rehabilitation plan that go into effect during plan years beginning after December 31, 2014. Tracking these contributions continue[s] while the plan is in endangered or critical status. Tracking ends on the expiration date of the collective bargaining agreement in effect when the plan emerges from endangered or critical status." (Milliman)
Advocates Push for More Multiemployer Reform
"Multiemployer pension reform advocates continue to pursue what they consider a critical missing piece in new legislation: a regulatory green light to do more alternative plan designs. These advocates would like congressional approval for composite plan models that would give plan trustees more tools for maintaining a balance between plan benefits and assets, such as reducing the rate of future accruals and trimming certain benefits, changes that now require lengthy regulatory approval." (Pensions & Investments)
[Guidance Overview] Your Annual Funding Notice May Need Tweaking
"The final model notices do not incorporate language required to comply with the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Highway and Transportation Funding Act (HATFA). Supplemental language complying with HATFA and MAP-21 would not change, no matter if a plan is using the new, final model notices or its previous approach for the 2014 plan year." (International Foundation of Employee Benefit Plans [IFEBP])

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