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Multiemployer plans

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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 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)

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