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Multiemployer plans

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[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 Consulting)
[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])
Pension Funding Study: 2014 Was a So-So Year for Most Multiemployer Plans; Impact of New Legislation Remains to Be Seen (PDF)
"The aggregate funded percentage for multiemployer plans was estimated to be 80% as of December 31, 2014, compared with 81% as of December 31, 2013. For most multiemployer pension plans, the 2014 investment experience is estimated to be slightly less than what was expected by the plans' actuarial assumptions. The more mature plans continue to struggle to recover from the financial crisis. Over one-half of the total underfunding for multiemployer plans is attributed to the 15% of plans that are less than 65% funded." (Milliman)
Multiemployer Pension Reform Act of 2014 Increases Disclosure Requirements
"Prior to the amendment, ERISA disclosure requirements were limited to furnishing actuarial reports, financial reports and applications for extension of amortization periods filed with the Secretary of the Treasury to plan participants or beneficiaries, employer representatives or any employer obligated to contribute to the plan. The MPRA completely amends the disclosure requirements and amends provisions relating to limitations of disclosure, record retention and civil enforcement. The new disclosure requirements require Plan administrators to furnish [an] expanded list of documents of which they have had possession for at least 30 days and less than six years[.]" (Lindquist LLP)
Multiemployer Guarantee Will Cover a Smaller Share of Benefits in Future Plan Failures
"[M]ore than half of the people in terminated multiemployer plans that run out of money in the near future face a reduction in benefits under current PBGC guarantees. This compares to 20 percent of workers and retirees who saw reduced benefits under plans that have already run out of money and are relying on PBGC financial assistance.... For retirees and workers whose benefits were not fully guaranteed in the past, a typical loss was about 10 percent of the promised pension benefit. These reductions are likely to become deeper and more frequent for retirees and workers in plans that require PBGC assistance in the future." (Pension Benefit Guaranty Corporation [PBGC])
Multiemployer Health Benefits: Key Facts at a Glance
"[This report] shows statistics on ... [1] Median actuarial plan value, [2] Grandfathered status, and [3] Likelihood of family coverage triggering the excise tax in 2018. It also includes information on the following types of participant cost sharing: [1] Medical plan in-network deductibles; [2] Medical plan annual out-of-pocket maximums for in-network coverage; [3] Copayments for primary office, specialist office and emergency room visits; [4] Retail pharmacy benefit copayments; and [5] Individual dental plan annual in-network benefit maximum." (Segal Consulting)
[Guidance Overview] Section 4062(e) Liability Reformed: A Summary and Analysis of the New Law (PDF)
"A new 4062(e) era has now begun. For many employers, the new law will lead to far greater certainty, and far more favorable consequences, than existed under the old law. And for all employers, an understanding of the new law is essential in order to evaluate any 4062(e) implications of potential business transactions." (Keightley & Ashner LLP)
[Opinion] The Media Guild Pension Plan Survives in Hostile Times
"For more than five decades, the Media Guild Pension Plan has paid lifetime pensions to retired participants ... [It] has proven to be a tough survivor of recessions, regulatory hits and the near-collapse of daily print journalism. Today, the Media Guild Pension Plan is down to a single employer -- the Hearst Corp., publisher of the Chronicle ... Plan participants are expecting official word soon from the plan's fiduciaries as to its current funding status. It's even possible that recent financial gains will push the plan out of the so-called 'red zone' of underfunded pension plans." (George M. Kraw)
[Guidance Overview] DB Plan Sponsors Beware: Potential Liability Related to Facility Closings and Sales of Business Units
"[Recently revised ERISA] Section 4062(e) ... applies when an employer has a permanent cessation of operations at a facility that results in a reduction in the number of eligible employees equal to 15 percent of all eligible employees of the employer.... Because employees eligible for any employer pension plan (including defined contribution plans) rather than just the subject pension plan are [considered eligible], the denominator for determining the workforce reduction percentage is likely larger. Thus, even though the percentage has decreased [from 20% under prior law to 15% under current law], it may be harder to hit the percentage given the larger base of employees considered.... [Nevertheless,] the PBGC has lifted its enforcement moratorium. As a result, employers with Title IV plans who are contemplating a plant shutdown or selling a division that will result in a substantial cessation should take a close look at whether they will trigger Section 4062(e)." (Drinker Biddle)
Agencies Issue Request for Comments Under Multiemployer Pension Reform Act of 2014
"The issues upon which Treasury and IRS requested comments include the following: [1] How should actuarial and other issues relating to determinations and certifications (such as certification of insolvency) be addressed? [2] Issues pertaining to providing notice to participants of the request and the impact on the individual participant. [3] Issues relating to how a vote of plan participants should be conducted, including the timing involved.... If, for example, plan sponsors do not have up-to-date addresses for participants and beneficiaries, especially terminated vested participants, issues can be raised concerning the notice and voting portions of the overall suspension process." (Cheiron)
PBGC, IRS Seek Information for Guidance on Multiemployer Plan Cutbacks, Partitions
"IRS and the [PBGC] have less than six months to develop regulations that will spell out how the new law will be enacted and enforced for affected plans. Comments they are soliciting are due by April 6.... IRS and PBGC called for public comments on two areas of MPRA revisions: suspension of benefits and plan partition, respectively. The agencies say they will share the materials submitted with each other and the [DOL]." (Thompson's HR Compliance Expert)
[Official Guidance] Text of PBGC Request for Information: Multiemployer Pension Reform Act; Partitions of Eligible Multiemployer Plans and Facilitated Mergers
"This document is a request for information (RFI) to inform future PBGC guidance under sections 4231 and 4233 of ERISA. PBGC is seeking comments from all interested stakeholders, including multiemployer plan participants and beneficiaries, organizations serving or representing such individuals, multiemployer plan sponsors and professional advisors, contributing employers, unions, and other interested parties." [Includes 12 specific questions covering Issues Affecting both Partitions and Facilitated Merger; Issues Affecting Partitions Only; and Issues Affecting Facilitated Mergers Only.] (Pension Benefit Guaranty Corporation [PBGC])
Union Retirees Fear Possible Dramatic Cuts Under Multiemployer Pension Reform Act of 2014
"[An] act that allows plans to cut retiree pensions is 'such a departure from current law,' [said Karen Friedman, executive vice president and policy director at the nonprofit Pension Rights Center]. 'It's just such a buzz saw on retiree pensions.' As many as 150 pension plans nationally may be impacted by the new act, Friedman said.... The Pension Rights Center created a Multiemployer Retiree Cutback Calculator for its website ... that allows people to get an idea of how much their pension could be cut under the law." (
[Guidance Overview] Multiemployer Review: Tools for Plans in Critical and Declining Status (PDF)
"MEPRA has made significant changes to the rules that apply to multiemployer pension plans, including the creation of a new status for very poorly funded plans called 'critical and declining status.' The trustees of these plans may apply to the [PBGC] for merger assistance or partitioning the plan, and/or apply to the Secretary of the Treasury to suspend previously accrued and protected benefits if certain requirements are met. This [article] defines this new status and outlines the most significant rules and procedures related to plan mergers, plan partitions, and benefit suspensions. These rules were effective on December 16, 2014[.]" (Milliman)
[Official Guidance] Text of IRS Request for Information on Suspension of Benefits Under the Multiemployer Pension Reform Act of 2014
"The Department of the Treasury invites public comments with regard to future guidance required to implement provisions of the Multiemployer Pension Reform Act of 2014 (MPRA) ... MPRA generally permits a sponsor of a multiemployer defined benefit plan that is in critical and declining status to suspend certain benefits following the provision of specified notice, consideration of public comments, approval of an application for suspension, and satisfaction of other specified conditions (including a participant vote).... The PBGC is issuing its own request for information to seek comment on the processes associated with applying for partition or merger assistance, including how such processes should be coordinated with the benefit suspension process. The agencies will coordinate on the development of processes that will apply to applications falling within their respective jurisdictions.... Comments are requested on matters that may be addressed in future guidance implementing section 432(e)(9), and in particular on [nine specific issues]." (Internal Revenue Service [IRS])
M&A Basics: Pension, Savings, and Welfare Plan Issues (PDF)
37 presentation slides. Topics: M&A 101 Review; Diligence; Acquisition Agreement Considerations; Defined Benefit Plan/Multiemployer Plan Considerations; Pre- and Post-Closing Actions and Considerations. (Morgan Lewis)
Key Administrative Dates and Deadlines in 2015 for Calendar-Year Multiemployer DB Plans (PDF)
Detailed chart of notice and reporting requirements and deadlines. (Milliman)
[Guidance Overview] A Look at the Multiemployer Pension Reform Act of 2014 (PDF)
"Unless otherwise specified, the new provisions will go into effect for plan years beginning after December 31, 2014. This review is based on our current understanding of the MEPRA provisions, which could change after the IRS publishes regulations or other specific guidance. MEPRA provisions that apply to all multiemployer plans are discussed first, followed by provisions that impact plans depending on their Pension Protection Act (PPA) zone status (green zone or endangered status, endangered status, endangered and critical status, and critical status)." (Milliman)
DOL Places 150 Union Pension Funds in 'Critical' Status
"Another 85 funds are listed as being 'endangered,' meaning they lack the assets to meet at least 80 percent of their future obligations. 'These are lists of plans whose own funding [levels] puts the plan at risk,' said Norman Stein, senior policy adviser to the Pension Rights Center ... That status gives the trustees the option of cutting some benefits as part of a rehabilitation plan to get the program back to health." (Washington Examiner)
[Guidance Overview] Dramatic Changes Result from the Multiemployer Pension Reform Act of 2014
"Prior to MEPRA, the actuary need only certify that the multiemployer plan was not projected to have an accumulated funding deficiency for the current plan year and the subsequent nine plan years. Now, the actuary must also certify that the multiemployer plan is not projected to become insolvent for any of the next 30 years and such plan is not in 'critical status' as of the beginning of the plan year. Certification that the multiemployer plan is not in 'critical status' at the beginning of the plan year is subject to an exception for some plans that have an automatic extension of amortization period. However, MEPRA also protects multiemployer plans that emerge from 'critical status' from overly easy reentry into critical status." (Weil Gotshal & Manges LLP, via Lexology)
Tips for Increasing Revenue and Decreasing Expenses in Operating Your Multiemployer Plan
"Establishing an aggressive collection policy might aid in the timely collection of employer contributions while keeping legal fees for the collection of older delinquent contributions in check.... There are several methods a trustee may consider when looking to reduce the expenses paid by their plan. However, trustees should also keep in mind that choosing the lowest cost option may not always be the prudent choice. In most cases, lower cost means lower quality, which can increase issues in the future that ultimately become more costly." (Bond Beebe Accountants & Advisors)
2015 Planning Calendar for ERISA Multiemployer Defined Benefit Plan Operations (PDF)
10 pages. "[This] calendar ... will help you set up your own schedule of activities to address as the year progresses so that you do not miss important deadlines for your qualified plans. As you evaluate the various tasks, you can confirm suitable deadlines with your vendors for getting them done.... As you make your plans, in addition to the calendar deadlines, [the authors] discuss a number of key issues for you to consider as we head into 2015." (Buck Consultants at Xerox)
[Guidance Overview] PBGC Ends Section 4062(e) Moratorium
"Now that Congress has addressed the cessations to which section 4062(e) should apply and the amount and manner of satisfying the liability, PBGC has decided that there is no need to continue its enforcement moratorium. Employers that had or have a cessation of operations on or after December 16, 2014, that is not exempt and that meets the 15% reduction trigger described above should report the event to PBGC. Employers that had a cessation before that date should report it to PBGC, if they have not already done so. PBGC may be contacting employers that previously reported a cessation for additional information to determine whether and how the new rules apply to that event." (Pension Benefit Guaranty Corporation [PBGC])
Outlook for 2015: Multiemployer, 4062(e) Changes Enacted; Time to See How It Shakes Out
"Some plans will be moving as quickly as possible now that they have the legal tools to do so, such as the financially troubled Central States Pension Fund, although the fund, one of the largest in the nation, said any changes likely wouldn't take effect for at least a year.... Central States was the most aggressive in pushing for an ability to save itself, but other plans that were unwilling to admit their financial condition will now be coming forward and requesting to use the new legal tools, [said Joshua Gotbaum, a guest scholar in the economic studies program at the Brookings Institution in Washington and director of the PBGC from 2010 to August 2014]." (Bloomberg BNA)
Time to Take Another Look at Stop-Loss Insurance
"Purchasing stop-loss insurance is a complicated process. Premium rates are obviously important in comparing policies, but trustees must also understand what their stop-loss insurance policies cover before they can make informed decisions regarding the best-value coverage that will help meet their objectives. This [article] reviews the basics of stop-loss insurance ... and how plan sponsors can use it to better manage the added risk and increased cost to plans that have made plan design changes to comply with the Affordable Care Act. It also looks at recent innovations and best practices for purchasing stop-loss insurance." (Segal Consulting)
[Guidance Overview] Significant Multiemployer and Single Employer DB Plan Changes Now in Effect
"While the most talked-about changes relate to plans in critical (the 'red zone) or endangered (the 'yellow zone) status, there are also a number of changes of which even well-funded multiemployer plans should be aware. Key provisions from the law affecting multiemployer and single employer plans, which generally took effect January 1, 2015, are detailed [in this article]." (Proskauer Rose LLP)
[Guidance Overview] How Contributing to a Multiemployer Plan Protects an Employer from the ACA's Employer Shared Responsibility Penalty
"The multiemployer rule protects the employer with respect to its employees for whom it has signed a CBA or participation agreement, but it does not change the employer's responsibilities to provide coverage to other employees or pay the penalty.... Any penalty that is owed would be paid by the contributing employer, not by the plan, based on the employer's total workforce (bargained or not)." (Segal Consulting)
Is It Too Little, Too Late for Multiemployer Pension Reform?
"Will the union trustees opt to buck their national union to apply for benefit suspensions? Will trustees act to cut benefit promises to vulnerable retirees living on fixed incomes? Similarly, what are the legal obligations of multiemployer trustees under ERISA when faced with benefit suspensions or the uncertain prospect of PBGC insolvency? The new law seems to say that trustees are not subject to fiduciary liability to participants or retirees for suspending benefits, but that is not entirely clear. Difficult and controversial decisions will have to be made when presented with merger and partition alternatives as well. The new reforms stop the bleeding but don't change the fundamental problems facing multiemployer plans[.]" (Fisher & Phillips LLP, via Inside Counsel)
[Guidance Overview] Employer Offer of Healthcare Coverage: The Multiemployer Plan Problem
"[T]he interim guidance now provides that an employer is treated as offering coverage for all employees for whom it is required to contribute to the multiemployer plan, even those full-time employees who never satisfy that plan's eligibility rules and therefore are never offered coverage. So employers who are making contributions to the plan (who arguably never have control over the plan's eligibility rules) are protected as long as they are making contributions. The fact that the plan may not actually provide coverage does not mean the employer has failed to offer the coverage." (Fox Rothschild LLP)
[Guidance Overview] What's In the Multiemployer Pension Reform Act of 2014 (PDF)
"Section 121 of MPRA provides new rules for plan mergers with PBGC assistance. Upon request by the plan sponsors, the PBGC will take such actions it deems appropriate to promote and facilitate a merger -- provided that it determines that the merger is in the interests of participants of at least one of the plans and is not reasonably expected to be adverse to the overall interest of participants in all of the plans. PBGC assistance may include training, technical assistance, mediation, communication with stakeholders, support with requests to other government agencies, and financial assistance." (Buck Consultants at Xerox)
[Opinion] Expectations for Defined Benefit Plans in 2015
"Multiemployer plans are jointly administered by representatives of the union and the participating employers. However, the union representatives have historically had more control over the administration of such plans. Thus, the suspensions [of benefits] are likely to come slowly and in moderation. If this in fact occurs, we will still be looking at a relatively bleak picture for multiemployer plan funding at the end of 2015." (McDonald Hopkins)
[Guidance Overview] Recent Pension Law Changes and PBGC Enforcement Decisions Impact Certain Corporate Transactions
"For transactions that involved a reduction in the number of participants in retirement plans that closed on or after December 16, 2014, employers should carefully review whether there is a reporting obligation and when each type of report is or may be due for the transaction since the new reporting requirement is not limited to reductions in DB Plan participants, but now includes reduction in all retirement plan participants.... Employers contracting with multiemployer plans now also have expanded access to the multiemployer plan documents, rehabilitation plans, funding improvement plans and funding notices ... effective for plan years beginning after December 31, 2014.... Only one copy is required to be provided in any 12 month period, so employers may want to carefully consider the timing of their request to obtain the most recent data available." (Winstead PC)
That Solid Pension Benefit? Subject to Change
"[B]enefits for a 70-year-old worker with 20 years of service and a $3,000 monthly pension could be cut to $787 a month. Someone who worked 15 years and earned a $1000 monthly benefit could get only $590 per month... [W]orkers and retirees ... in an insolvent [single-employer] plan that gets taken over by the agency ... receive a maximum annual benefit of $59,320 if they retire at 65. The most a worker covered by a multiemployer plan with 30 years of service will get through the PBGC if their plan is insolvent is $12,870 per year." (Pittsburgh Post-Gazette)
[Guidance Overview] Multiemployer Pension Reform Act of 2014 Brings Changes to Reporting of Zone Status
"The new law, beginning with the 2015 plan year, requires the actuary to certify whether the plan is in one of seven categories ... Each of the possible certification categories carries with it different consequences. [A] table shows what happens under each category.... Effectively, the change provides that a plan that is projected to be safe (green) in 10 years without any changes does not need to go through the trouble of developing a funding improvement plan.... [T]he new status that has the most consequences is the status of 'critical and declining.'... Reductions in normal retirement accrued benefits and benefits of retirees in pay status, which have received much press coverage, can be made only for a plan that is in critical and declining status." (Cheiron)
[Guidance Overview] New Pension Legislation Adopted as Part of Federal Government Spending Legislation
"On December 16, President Obama signed into law new pension legislation affecting both multiemployer and single employer pension plans.... The legislation limits the PBGC's enforcement in the case of a plan sponsor's downsizing under Section 4062(e) of ERISA. Section 4062(e) required plan sponsors who shut down a major facility with accompanying layoffs to provide security to the PBGC in the event of a subsequent distress termination of the plan. The PBGC has often aggressively interpreted when these situations have occurred. The new legislation clarifies and limits the situations covered by Section 4062(e)." (Findley Davies)
[Guidance Overview] 2015 Reporting & Disclosure Calendar for Multiemployer Benefit Plans (PDF)
27 pages. Detailed list of compliance requirements and dates; covers DOL, HHS and IRS requirements for welfare plans as well as retirement plans. Interactive version is also available. (Segal Consulting)
[Guidance Overview] Noteworthy Developments of Interest to Sponsors of Multiemployer Retirement Plans (PDF)
Articles covering: [1] As plan sponsors embrace the idea of diversification, there has been a dramatic uptick in interest in hedge funds in a liquid (mutual fund) format; [2] The Society of Actuaries has released updated mortality tables reflecting a rise in life expectancy that may result in higher benefit obligations; [3] The key provisions of the Multiemployer Pension Reform Act of 2014 generally become effective for plan years beginning on or after January, 2015; and [4] A multiemployer DB plan currently in the PPA '06 green zone may not be 'green' for long if its obligations exceed its assets plus future contributions. (Segal Consulting)
Federal Spending Bill Brings Multiemployer Pension Changes in Through the Back Door
"[F]or employers participating in reasonably well funded plans (green zone), there should not be much that is needed. For the remainder (red zone or yellow zone) of plans, however, employers may need to weigh their options. They might consider doing some or all of the following: [1] Review all of their collective bargaining agreements that cause them to be participating sponsors of multiemployer plans.... [2] If withdrawal from the plan is an option, request a withdrawal liability calculation to see how painful that strategy might be. [3] Consider the pros and cons of remaining in the plan as part of the company's overall risk management strategy. [4] Consider engaging an independent actuary (not affiliated with the plan's actuary) to assist with any strategy decisions." (Benefits and Compensation with John Lowell)
[Guidance Overview] 'CRomnibus' Spending Bill Makes Significant Changes to Law Governing Multiemployer Pension Plans
"The new law makes clear that neither surcharges nor contribution increases required by funding improvement or rehabilitation plans are to be considered (i) to determine a withdrawing employer's allocable share of unfunded vested benefits or (ii) in calculating a withdrawing employer's payment amount. This provision does not apply to increases in contributions other than those required by a funding improvement or rehabilitation plan (for example, contribution increases to provide increased benefits). These changes go into effect for contribution rate increases required during plan years beginning after December 31, 2014." (Littler)
[Guidance Overview] Multiemployer Pension Plan Reform: So Now What?
"The idea behind the 'Multiemployer Pension Reform Act of 2014' is that by making certain changes to multiemployer pension plans, and specifically to underfunded pension plans, PBGC finances will improve. Of course the first part of this repair is that the annual PBGC insurance premiums for multiemployer plans will double to $26 per participant in 2015, and increase over time." (Fox Rothschild LLP)
[Guidance Overview] Employers Should Prepare Now for Big Changes Coming to Multiemployer Pension Plans
"[E]mployers who have collective bargaining agreements that require contributions to multiemployer pension funds should begin analyzing the potential impact now ... Review the current funded status of each multiemployer pension fund. Request an updated withdrawal liability estimate from each multiemployer pension fund and all supporting documentation ... Consider making inquiries through the fund's employer trustees as to whether the fund will implement any of the changes under the Act.... Review any public statements that union representatives have made regarding the changes under the Act, whether in support of or against such changes.... Re-evaluate the company's risks of continuing to participate in the fund and adjust collective bargaining strategy accordingly." (Polsinelli PC)
[Opinion] Big Business Promoted Private Pensions to Crush Unions
"[T]he long, tangled history of U.S. private pensions is equally a story of how business sought to manage labor, conserve profits and block the expansion of a modern welfare state. Research by historians such as Jennifer Klein and Steven Sass helps explain why the U.S. is almost unique in its reliance on private, company-sponsored pensions instead of comprehensive, government-sponsored benefits." (Bloomberg View)
[Opinion] Multiemployer Pension Plan Reforms: Lessons from the Lame-Duck Session (PDF)
"While Solutions Not Bailouts drew loud opposition, no alternatives to address this problem, other than involving a bailout funded by taxpayers -- a political fantasy -- were presented as alternatives. There is a reason for this: if there were an easier way to save failing pensions, those concerned about the fate of these plans would have embraced it. Pretending something can be fixed less painfully later is not a plan, it's denial. After three years, several congressional hearings and many public events on Solutions Not Bailouts, no serious alternative plans emerged -- a clear indication there were no easy or painless ways to tackle this problem." (Earl Pomeroy, via American Benefits Council)
[Guidance Overview] Overview of the Multiemployer Pension Reform Act of 2014 (PDF)
8 pages. "Significant changes the Act makes include the following: [1] Repeals the sunset provisions of the Pension Protection Act of 2006; ... [2] Limits the effect that future required contribution increases will have on employer withdrawal liability; [3] Adds to the list of documents that a plan is required to provide to participants, beneficiaries, unions or employers upon request; [4] Increases PBGC premiums to be paid by multiemployer pension plans; ... [5] Modifies rules regarding mergers of plans and partitioning of plans by the PBGC; [6] Adds a new zone status for seriously underfunded plans called 'Critical and Declining' and allows a plan in that status to cut some previously protected benefits; [7] Extends PBGC guarantees to some pre-retirement death benefits." (Dexter Hofing LLC)
[Guidance Overview] Multiemployer Pension Reform Bill Passed by Congress, Obama Expected to Sign
"MEPRA reflects many of the recommendations included in Solutions not Bailouts, the Report issued by the Retirement Security Review Commission of the National Coordinating Committee for Multiemployer Plans [NCCMP]. The one receiving the most attention is the provision that gives trustees of deeply troubled plans the ability to help their plans avoid insolvency by reducing some benefits (including benefits in pay status), subject to various safeguards and requirements. This Bulletin briefly describes the key provisions of MEPRA, which generally become effective for plan years beginning on or after January 1, 2015." (Segal Consulting)
[Guidance Overview] Congress Passes Multiemployer Pension Reform (PDF)
"The Act permanently extends the Pension Protection Act of 2006 (PPA) multiemployer plan critical and endangered status funding rules that had been scheduled to sunset at the end of 2014. It also includes a series of technical corrections and enhancements to the PPA funding rules, including significant new reforms that allow the trustees of multiemployer plans facing insolvency to apply to the [PBGC] for a suspension of benefits. In addition, the Act gives the PBGC greater flexibility in facilitating plan mergers and approving plan partitions. [In this article, the authors] provide an overview of each of these provisions, and address key questions regarding the relief made available by the Act." (Groom Law Group)
[Guidance Overview] What the CRomnibus Law Means for Multiemployer Pension Plans
"The PBGC is given the clear authority to promote and facilitate the merger of two or more multiemployer pension plans if the action is in the interests of participants and beneficiaries of at least one of the plans and not detrimental to any of the participants and beneficiaries involved.... [T]he PBGC is given the authority to order and finance a plan partition if a plan is in critical and declining status and has taken all reasonable measures to avoid insolvency and the PBGC expects that a partition will keep the plan solvent." (International Foundation of Employee Benefit Plans [IFEBP])
[Opinion] Four Ways Congress Just Screwed Up Pensions
"[P]lan trustees have substantial discretion about how to allocate the cuts ... Retirees who are harmed cannot challenge the trustees' actions in court, even if those actions are arbitrary and capricious, or contrary to the interests of plan participants ... That's because this new congressional measure exempts the trustees from being fiduciaries when deciding whose benefits get cut, so retirees can't sue under the normal fiduciary claims. Oh, and there is no provision for automatic restoration of lost benefits if a plan's funding status improves." (The Huffington Post)
[Opinion] Multiemployer Pension Cuts: Reasons Why
"The multiemployer plan pension-cut bill about to be enacted makes sense if you consider: Employers in these plans, who are the source of its funding, have almost no say after they sign up.... Funding rules, though stricter than government plans, still allow for discretion in selecting assumptions ... [T]he cost of withdrawal may dwarf what [the employer] had been paying for what they believed was the cost of benefits for their employees.... Fund employees, lawyers, actuaries, accountants, and investment advisers take money directly out of these plans that would be curbed with a [PBGC] takeover." (Burypensions)
Bill to Let Multiemployer Pensions Cut Benefits Passes
"Severely distressed multiemployer pensions will be able to reduce benefits paid to retirees under an amendment to the omnibus spending bill approved by the U.S. Senate on Dec. 13, two days after House passage. The bill now goes to the White House for an expected presidential signature." (Society for Human Resource Management [SHRM])
Proposed Multiemployer Pension Reform: Don't Count Your Chickens Before They Pass
"[M]ost relevant to employers, the new rules clarify that surcharges imposed pursuant to the Pension Protection Act do not count towards calculation of withdrawal liability payments as the 'highest contribution rate' against which annual payment limits are calculated. This has been arbitrated and litigated for some time and it would serve in many instances to reduce withdrawal liability payments.... [But] laws do not become laws simply because the House passed them. There is has already been heavy anti-reform commentary coming from organized labor and Democrats in the Senate." (Fox Rothschild LLP)
[Opinion] Washington's Pension Non-Bailout
"The big reform breakthrough is that pension plans deemed 'critical' or 'declining' ... could petition the Treasury to cut benefits to up to 110% of the PBGC guarantee.... The reform would also make permanent the 2006 Pension Protection Act's rules that allow insolvent plans to reduce 'adjustable' benefits (e.g., early and disability payouts). Insurance premiums would immediately double to $26 per participant, and the PBGC would have to propose a plan for paying benefits through 2035. This may be a bow to the reality that the multi-employer pension model can't be sustained in the long-term and should be phased out. We're told that next year the House Ways and Means Committee will consider how to facilitate the transition to hybrid plans involving 401(k)s." (The Wall Street Journal; subscription may be required)
[Opinion] Did Congress Just Nuke Pensions?
"[T]here is no question that these multi-employer plans were poorly managed and were in desperate need of reforms. The problem is that instead of implementing more sensible reforms to try to bolster these plans or try saving them -- like maybe have the state public pension funds manage them -- Congress took out the guillotine and chopped them, effectively spreading the message that the pension promise is worthless." (Pension Pulse)
[Opinion] Congress' No-Bailout Pension Plan Is No Solution for Retirees
"The $1.1 trillion omnibus spending bill moving through Congress this week adopts 'Solutions Not Bailouts,' a plan to shore up struggling multiemployer pension funds -- traditional defined benefit plans jointly funded by groups of employers in industries like construction, trucking, mining and food retailing. A bailout, it is not. The centerpiece is a provision that would open the door to cutting current beneficiaries' benefits, a retirement policy taboo and a potential disaster for retirees on fixed incomes." (Mark Miller, for Reuters)
Summary of the Pension Cutback Provisions in the Kline-Miller Amendment
"In some cases, the cuts could exceed 60% of a participant's benefits.... The cuts are made by plan trustees, who are typically more aligned with active workers and contributing employers, than with retirees.... Even if all participants vote against cuts, the Treasury Department can override the vote and uphold the trustees' decision to make cuts, if it concludes that a plan poses a 'systemic' risk to the [PBGC].... The insurance premiums that multiemployer plans pay to the PBGC are increased from $13 to $26 per participant per year." (Pension Rights Center)
[Opinion] Senate Finance Committee Chairman Criticizes House Proposal on Multiemployer Pensions
"[T]he last-minute scheme was rushed through by a few House members in private during the final days of the legislative year without consideration by the Senate Finance Committee and other committees of jurisdiction. That flawed process has produced a lopsided solution leaving existing retirees to shoulder a disproportionate share of sacrifice. It also will result in the rolling back of a major tenet enshrined in pension law -- never take away money a pensioner has already earned." (U.S. Senate Committee on Finance)

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