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Multiemployer plans


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Lawmaker Warns Against Stealth Passage of Pension Revamp
"[Rep. Joseph Courtney (D-Conn.) said] that it's 'still theoretically possible for the proposal to be debated in the committee and amended during the post-election lame-duck session.' Yet, he said he sees many parallels between this bill and the way the MPRA bill was passed two years ago as part of an omnibus bill. During the hearing, Courtney said it's 'common sense' that there isn't time left to amend the bill and questioned the timing of the draft bill hearing. Later, he said he suspects this bill, which is supported by many of the same groups that supported the MPRA, is part of a similar strategy used to pass that law." (Bloomberg BNA)
[Opinion] Joint Statement of Unions and Other Organizations Opposing Consideration of 'Composite' Pension Legislation
"The composite legislation does not go nearly far enough to ensure the retirement security of our members and other participants in multiemployer pension plans. The draft provides inadequate funding for composite plans and weakens the funding base for existing (legacy) plans ... Protecting the benefits of workers in legacy plans would require deep cuts to active workers in composite plans in times of market instability.... [C]omposite plans are exempt from paying PBGC premiums ... When combined with plan failures, the PBGC will be saddled with significant new liabilities at the same time an already underfunded multiemployer insurance program is depleted of funds." (International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Teamsters, United Steelworkers, National Retirees Legislative Network, and the Pension Rights Center)
House Subcommittee Holds Hearing on Multiemployer 'Composite Plan' Proposal
"[T]he draft proposal would authorize 'composite' multiemployer plans, an innovative retirement plan option for workers and employers. The proposal represents the next step in the committee's ongoing efforts to strengthen retirement security and improve the multiemployer pension system." (Health, Employment, Labor, and Pensions Subcomittee of the Committee on Education and the Workforce, U.S. House of Representatives)
Senate Committee Approves Funding for Mine Workers' Pension Plan
"The mine workers bill, whose supporters say will have a floor vote by the end of the year, was approved 18-8. It would allow the use of surplus funds from the Abandoned Mine Land Reclamation Fund, which currently goes to the U.S. Treasury. Without the funds, the pension fund could become insolvent and overwhelm the [PBGC]." (Pensions & Investments)
Multiemployer Plan Application for Benefit Suspension: New York State Teamsters Conference Pension and Retirement Fund
"The New York State Teamsters Conference Pension and Retirement Fund application proposing benefit suspensions can be found [at the link]. The application is organized by the items specified in Revenue Procedure 2016-27." (U.S. Department of the Treasury)
[Official Guidance] Text of PBGC Draft Forms and Instructions for Proposed Expanded Missing Participants Program
"PBGC [has issued] a proposed rule that would expand its existing Missing Participants Program to cover terminated 401(k) and other defined contribution plans and certain defined benefit plans that are not currently covered by the Program.... These forms are for information purposes only. PBGC-insured single-employer plans in the process of doing a standard termination should use the current forms to report missing participants." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC FAQs on Proposed Expanded Missing Participants Program
"Why is PBGC proposing a missing participants regulation? ... Will terminating plans be required to use PBGC's Missing Participants Program? ... How will the program work for defined contribution plans that choose to use it? ... What are the benefits to plans and participants of PBGC's proposed defined contribution Missing Participants Program? ... Did PBGC coordinate with other federal agencies? ... What types of defined contribution plans could use the Missing Participants Program? ... Does PBGC propose any changes to the current program for single-employer PBGC-insured defined benefit plans? ... When will the proposed expanded Missing Participants Program be available? ... Under the proposal, will plans pay a fee to participate in the Missing Participants Program? Where can I find more information about this proposal?" (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Proposed Regs: Expanded Missing Participants Program to Cover Multiemployer Plans, Most DC Plans, and Certain Other DB Plans
108 pages. "The [PBGC] administers a program to hold retirement benefits for missing participants and beneficiaries in terminated retirement plans and to help those participants and beneficiaries find and receive the benefits being held for them. The program is currently limited to single-employer defined benefit pension plans covered by the pension insurance system under title IV of [ERISA]. PBGC proposes to make changes to its existing program and, as authorized by the Pension Protection Act of 2006, to establish similar programs for multiemployer plans covered by title IV, certain defined benefit plans that are not covered by title IV, and most defined contribution plans. PBGC seeks public comment on its proposal." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Notice of Multiemployer Pension Plan Application to Reduce Benefits Filed by United Furniture Workers Pension Fund A
"The Board of Trustees of the United Furniture Workers Pension Fund A (UFW Pension Fund), a multiemployer pension plan, has submitted an application to Treasury to reduce benefits under the plan in accordance with [MPRA]. The purpose of this notice is to announce that the application ... has been published on the website of the Department of the Treasury, and to request public comments on the application from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the UFW Pension Fund." (U.S Department of the Treasury)
[Guidance Overview] Avoiding the Pitfalls of the Multiemployer Pension Plan Amendments Act (PDF)
"This article identifies and addresses the dangerous 'traps' of MPPAA that employers will confront immediately after an assessment of withdrawal liability and suggests practical strategies to preserve an employer's ability to contest its withdrawal liability.... MPPAA contains unwieldy and often incomprehensible time limits. Failure to meet those time limits can preclude an employer from contesting its withdrawal liability assessment." (Jackson Lewis, P.C., via Wolters Kluwer Law & Business)
Modernizing Multiemployer Pensions: Questions and Answers About the Composite Plan Proposal
"Would the retirement plans created under the proposal be defined benefit or defined contribution retirement plans? ... Does the proposal weaken current funding standards for traditional multiemployer pension plans? ... Will existing multiemployer pension plans facing severe financial challenges be able to transition to the composite plan design? ... Does this proposal allow employers to escape their responsibilities to their traditional multiemployer pension plan? ... Will this proposal exacerbate the fiscal challenges facing the PBGC?" (Committee on Education and the Workforce, U.S. House of Representatives)
House Committee Releases Discussion Draft on a New Multiemployer Plan Structure: 'Composite Plans' (PDF)
"The Act would: [1] Require that benefits under a composite plan be calculated pursuant to a formula set by the plan's trustees in order to provide annuities upon retirement. [2] Require the trustees of a composite plan to take corrective actions in the current plan year if the plan is projected to be less than 120% funded in 15 years. [3] Allow a composite plan to be established either as a stand-alone plan or a component of an existing multiemployer defined benefit retirement plan[.]" (United Actuarial Services, Inc.)
Draft Bill May Offer Better Mousetrap for Multiemployer Pensions
"The draft bill, released Sept. 9, would permit plans in the troubled multiemployer system to use newly created 'modified' defined contribution plans -- known as 'composite plans' -- designed to be successors to existing multiemployer defined benefit plan structures.... Composite plans wouldn't participate in the PBGC's defined benefit plan insurance system, which provides a backstop for retirees when their plans become insolvent and can't pay benefits." (Bloomberg BNA)
Rep. John Kline Releases Discussion Draft to Modernize Multiemployer Pensions
"[T]he proposal follows years of bipartisan work led by a coalition of business and labor leaders and would provide workers a new option to save for retirement by authorizing an innovative multiemployer plan structure known as 'composite plans.' The draft reflects input from employers, worker representatives, and retiree advocates. The committee is requesting public feedback on the proposal." [Also available: Text of discussion draft; section-by-section outline of the discussion draft; summary of the discussion draft; and answers to basic questions.] (Committee on Education and the Workforce, U.S. House of Representatives)
Application for Multiemployer Plan Benefit Suspension: United Furniture Workers Pension Fund A
"The United Furniture Workers Pension Fund A ('UFW Pension Fund A') application proposing benefit suspensions can be found below. The application is organized by the items specified in Revenue Procedure 2016-27. The UFW Pension Fund A application is currently being reviewed and the review is expected to take several months." (U.S. Department of the Treasury)
[Opinion] Joint Letter Submitted to Congress on Threats Posed by Proposed 'Composite' Multiemployer Pension Plans
"[T]he Pension Rights Center joined with retiree and labor organizations by sending a letter to the U.S. House of Representatives expressing extreme opposition to draft legislation that would create a new type of pension plan called a 'composite' multiemployer plan. This draft legislation would substantially weaken the funding status of currently-existing multiemployer plans, putting at risk the pensions of retirees participating in these plans. The Center strongly opposes any attempt ... to push through legislation in yet another year-end backroom deal." (Pension Rights Center)
What Happens to Multiemployer Pension Plan Reform Now?
"If one of the most useful tools provided by the MPRA has been stymied because the Treasury Department is unprepared to accept what it views as overly optimistic actuarial assumptions, what is the future of multiemployer pension plan reform? One proposal that was not included in the final version of the MPRA involved the use of so-called hybrid composite plans.... In light of the Treasury Department's rejection of Central States' application, the assumption that many unions will oppose hybrid composite plans may no longer be accurate. Government reports have estimated that up to 15% of multiemployer plans are at risk of becoming insolvent over the next 20 years and that up to 1.5 million participants are at risk from those insolvencies." (Polsinelli PC)
Multiemployer Pension Plans: Solving the Anticipated Insolvency of PBGC Program -- A Bipartisan Endeavor (PDF)
"[R]eading the CBO and PBGC reports may cause many to lose confidence and reinforce beliefs that efforts to improve the financial condition of the PBGC's multiemployer plan insurance program will be anything but successful. Notwithstanding, employers and plan sponsors with multiemployer plans may want to get a better understanding of the gravity of the situation, as well as potential fixes that would impact them if implemented." (Xerox HR)
[Official Guidance] Text of Treasury Department Notice of Revised Application by Iron Workers Local 17 Multiemployer Pension Plan for Reduction in Benefits
"The Board of Trustees of the Iron Workers Local 17 Pension Fund ... has submitted a revised application ... to reduce benefits under the plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). This revised application was submitted on July 29, 2016 ... following the withdrawal of the application that it submitted on December 23, 2015. The purpose of this notice is to announce that the revised application has been published on the Treasury website and to request public comments on the application from interested parties[.]" (U.S. Department of the Treasury)
[Opinion] Why a Coal Miner Pension Bailout Could Lead to a $600 Billion Union-Pension Bailout
"The UMWA pension plan ... has promised $5.6 billion more in pension benefits than it will be able to pay.... [It] represents only one of more than 1,300 multiemployer (union) pension plans across the U.S. Almost all of these plans have made promises they cannot keep.... If Congress forces taxpayers to bail out private union plans, why not also private non-union plans that have $760 billion in unfunded liabilities, and public plans that have as much as $4 trillion to $5 trillion in unfunded liabilities?" (The Heritage Foundation)
Teamsters, Bricklayers Funds Eye Multiemployer Benefit Cuts
"New York State Teamsters Conference Pension and Retirement Fund, Syracuse, is expected to file an application on Aug. 25 to reduce benefits under the Multiemployer Pension Reform Act of 2014 ... Benefit reductions would go into effect on July 1, 2017. As of Jan 1, 2014, the most recent 5500 filing, the plan was 46.5% funded, with $1.46 billion in assets and $3.14 billion in liabilities." (Pensions & Investments)
Application for Benefit Suspension: Bricklayers and Allied Craftsmen Local No. 5 Pension Plan
"The Bricklayers and Allied Craftworkers Local 5 New York Retirement Fund Pension Plan application proposing benefit suspensions can be found [at the link]. The application is organized by the items specified in Revenue Procedure 2016-27." (U.S. Department of the Treasury)
[Opinion] U.S. Chamber of Commerce Comment Letter to the PBGC on Mergers and Transfers Between Multiemployer Plans
"Congress established a framework of conditions, limitations, factors for consideration, protections, notices and procedures that all serve to observe and protect the interests of participants while permitting the plans wide latitude within such a framework. [The Chamber's] comments focus on ensuring that substance takes precedence over form and that all parties receive the information and assistance they need without being overly burdened." (U.S. Chamber of Commerce)
[Opinion] NCCMP Comment Letter to PBGC on Proposed Merger Transfer Rules (PDF)
"[T]he Proposed Rule adopts an interpretation of the interaction of the merger rule with the suspension rule ... that is inconsistent with the acknowledged legislative intent.... This interpretation will work against the legislative intent of MPRA by making financially distressed plans less likely to be merged as [a plan] likely to take in a financially distressed plan would be compelled to restore suspended benefits to the detriment of its own financial position.... [T]ightening the safe harbor provision will make mergers more difficult and therefore are contrary to the legislative purpose of MPRA." (National Coordinating Committee for Multiemployer Plans [NCCMP])
[Opinion] American Academy of Actuaries Comments to PBGC on Proposed Regs for Mergers and Transfers Between Multiemployer Plans (PDF)
11 pages. "The fact that the statute permits PBGC to provide financial assistance that would enable a plan to postpone insolvency -- not just avoid it -- is an important concept that should be applied throughout the regulations on mergers and transfers.... PBGC's proposed rule, however, would make the solvency requirements for mergers and transfers involving multiemployer plans even stricter than they are under current regulations.... Transactions should be evaluated not against the ideal outcome of no participant benefit losses, but against the current realities facing plans." (American Academy of Actuaries)
Iron Workers Retirees Get Temporary Reprieve from Pension Cuts
"Retired iron workers in Northeast Ohio will get a short reprieve before their pensions could be cut.... Cuts of monthly pensions by up to about half must be made for some retirees in order to make sure there's something left for everyone over time, the pension's trustees say. But the union fund's trustees late last week withdrew their government application for permission to make those cuts, and submitted a revised one instead." (Cleveland Plain Dealer)
PBGC Proposal Could Halt Plan Mergers, Grocers Say
"Attempts to save struggling multiemployer pension plans could be halted by proposed rules issued by the [PBGC], according to the grocery-chain Kroger Co. and a coalition of food and dairy companies. The proposed rules are intended to help plans that are in 'endangered,' 'critical' or 'critical and declining' status to merge with or transfer their assets to healthier plans to prevent -- or, in some cases, merely postpone -- insolvency. The rules would 'prevent mergers and transfers that are in the best interests of plan participants and that lessen the risk to the PBGC for guaranteed benefits,' the Cincinnati-based company said[.]" (Bloomberg BNA)
Options to Improve the Financial Condition of the PBGC's Multiemployer Program (PDF)
35 pages. "In 2014, lawmakers enacted changes ... [which] modestly improved the outlook for the multiemployer program, but claims for financial assistance are still projected to greatly exceed the program's resources over the next 20 years. Policymakers and others have proposed additional changes to improve the financial position of PBGC and the overall health of multiemployer pension plans. CBO analyzed the effects of several types of proposed changes[.]" (Congressional Budget Office [CBO])
[Official Guidance] Text of FASB Proposed ASU: Employee Benefit Plan Master Trust Reporting
25 pages; covers Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965). "This proposed Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust. A master trust is a trust for which a regulated financial institution ... serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.... The amendments in this proposed Update would clarify presentation requirements for a plan's interest in a master trust and require more detailed disclosures of the plan's interest in the master trust. The proposed amendments also would eliminate a redundancy relating to 401(h) account disclosures." (Financial Accounting Standards Board [FASB])
Pension Funded Status Decreased in Q2 2016 Due to Continued Interest Rate Declines (PDF)
"During the second quarter of 2016, the funded status of the model pension plan examined in each issue of Prism dropped by 3 percentage points: from 79 percent to 76 percent. This decline was the result of a 2 percent asset increase and a 6 percent liability increase during the quarter." (Segal Rogerscasey)
Application for Benefit Suspension: Bricklayers & Allied Craftsmen Local No. 7 Pension Plan
"The Bricklayers & Allied Craftsmen Local No. 7 Pension Plan application proposing benefit suspensions can be found [at the link]. The application is organized by the items specified in Revenue Procedure 2016-27. The Bricklayers Local 7 application is currently being reviewed and the review is expected to take several months. Bricklayers Local 7's representative has advised [Treasury] that individualized participant notices were sent via U.S. mail on July 1st." (U.S. Department of the Treasury)
[Opinion] This Senator Opposes a Mine Worker Pension Bailout
"Wyoming produces 40 percent of the nation's coal. That's more than the next five largest coal-producing states combined.... [T]he UMWA's unfunded pension plan ... is on track to become insolvent in less than a decade.... But as [Sen. Mike Enzi, R-Wyo.] pointed out, 'the UMWA agreement was made between the members and the UMWA, not between the members and the American taxpayer.' The union -- not taxpayers -- should have to account for the union's broken promises.... [T]he mere fact that a coal cleanup fund exists does not mean one select coal union should have access to that fund for its unfunded pensions." (The Daily Signal)
[Guidance Overview] PBGC Issues Proposed Rule for Multiemployer Plan Mergers and Transfers
"The proposed rule clarifies PBGC's authority to facilitate the merger of multiemployer plans under section 4231 of ERISA. Facilitation may include training, technical assistance, mediation, communication with stakeholders, and support with related requests to other government agencies.... PBGC may also provide financial assistance to facilitate a merger determined necessary to enable one or more of the plans involved to avoid or postpone insolvency ... The proposed rule presents noteworthy changes to the actuarial valuation requirements for mergers and plan solvency tests." (Trucker Huss)
GAO to Investigate Central States' Investments
"The investigation was requested June 21 by 10 senators and 41 congressmen, who asked GAO officials to consider several issues, including how the pension fund's fiduciaries and relevant parties ensured conflict-free investment advice with reasonable fees. The letter also asked about the investment strategy and returns from 1997 to 2015, including comparisons to similar funds for each asset class." (Pensions & Investments)
[Official Guidance] Text of Treasury Department Denial of Benefit Suspension Application for Road Carriers Local 707 Pension Fund (PDF)
"On June 10, 2016, PBGC denied the Plan's application for partition.... The Application states that the Plan is projected, absent suspension of benefits, to become insolvent by February 2017.... Treasury has determined that the suspensions described in the Application fail to satisfy the requirement ... that the proposed benefit suspensions ... be reasonably estimated to achieve, but not materially exceed, the level that is necessary to avoid insolvency, because without a partition, the Plan will not avoid insolvency[.]" (U.S. Department of the Treasury)
Spring 2016 Zone Report: Multiemployer Plans Are Predominantly 'Green' (PDF)
"[W]hile 64 percent of plans are in the green zone based on all zone certifications filed in the 12 months ending in March 2016 ... just under half of all participants are in plans in the red zone based on the full set of plan data. Significantly, about half of these red-zone participants (23 percent overall) are in plans that are considered to be 'critical and declining.' " (Segal Consulting)
Lawmakers Ask GAO to Probe Central States Fund Finances
"Ten Democrats in the Senate and 41 in the House requested on June 20 that the Government Accountability Office review the Central States, Southeast and Southwest Areas Pension Fund's investment decisions going back to 1982, when the fund came under the supervision of a court-ordered consent decree. The requests seek to determine if there was any wrongdoing that led to the fund's severe financial woes. The fund has projected it will be insolvent in 10 years or less.... The GAO is already investigating the [DOL's] supervision of the fund in response to Sen. Charles Grassley's (R-Iowa) [February] request." (Bloomberg BNA)
[Opinion] Statement by House Education and Workforce Committee Chairman on PBGC Multiemployer Pension Reports
"The bipartisan Multiemployer Pension Reform Act provides the tools necessary to save plans from insolvency and protect retirees from losing everything. When trustees are denied the opportunity to use those tools, the risk to workers, taxpayers, and retirees grows greater. [The PBGC report] is a reminder of the urgent need to enact additional reforms to strengthen multiemployer pensions, reforms that would modernize the system for workers and provide PBGC additional resources to meet its obligations." (Rep. John Kline [R-MN], Chairman of the Committee on Education and the Workforce, U.S. House of Representatives)
Text of PBGC Report to Congress on Sufficiency of Premiums Under MPRA
25 pages. "Projected premiums at the MPRA legislated rates ... become insufficient to pay average projected financial assistance obligations during FY 2024.... The range of potential [premium] increases is wide, ranging from 59 percent to 85 percent for 10 year solvency and from 363 percent to 552 percent for 20 year solvency.... A well designed [premium] increase may encourage additional contributions, encourage continued participation in plans, and strengthen the multiemployer system. A poorly designed premium increase may encourage employer withdrawals and accelerate plan insolvency with a resulting cost to plan participants and a need for even larger premiums." (Pension Benefit Guaranty Corporation [PBGC])
Text of PBGC Projections Report, FY 2015
55 pages. "PBGC's multiemployer program remains likely to use up all of its assets by the end of 2025. The program, which covers roughly one-quarter of private sector defined benefit pension participants, continues to have deficits ... much larger than those of the single-employer program. Different estimates of the number of plans that will undertake benefit suspensions or request financial assistance through partition or facilitated merger affect the projected program deficits, but have only a small effect on the date of program insolvency. New results for PBGC's single-employer program are broadly consistent with findings of the prior year's report -- the financial status of the program is likely to improve, potentially reaching net surplus over the 10-year projection period." (Pension Benefit Guaranty Corporation [PBGC])
Union Retirees Battle for Pension Payouts, Possible Bailout: What's at Stake?
"What you probably heard was the story of retired or soon-to-retire Teamster truck drivers and warehouse workers, ... members of the Central States Pension Fund who faced similar problems this year. [But retired construction worker Walter] Overstreet belongs to a much smaller union, Local 17 of the Iron Workers, with about 2,000 members altogether. Their union has $223 million in pension liabilities but only $90 million in assets. Get used to hearing such stories, because several other union pension plans are pleading similar hardships right now, and about 150 more are lined up behind them." (cleveland.com)
Past Practice, Single Employer Doctrine Save Building Contractor That Didn't Contribute to Union's Fringe Benefit Fund
"A building contractor that subcontracted work to nonunion businesses did not necessarily violate its duty to pay contributions to a carpenters' union's fringe-benefit funds, held the Seventh Circuit.... [T]he nonunion business that was awarded the subcontract appeared to be a 'single employer' with a union signatory that ultimately performed the work, so the work was effectively done by a union business." [Chicago Regional Council of Carpenters Pension Fund v. Schal Bovis, Inc., Nos. 14-3413 & 14-3336 (7th Cir. June 10, 2016)] (Wolters Kluwer Law & Business)
Arbitrator Slashes Annual Withdrawal Liability Payments in Underfunded Multiemployer Pension Plan Dispute
"The arbitrator found persuasive the employer's argument that the plain and unambiguous language of the statute dictated that the Rehab Plan Increases were improperly included in the highest contribution rate by the Fund.... He found the Rehab Plan Increases, implemented unilaterally by the Fund under the Rehab Plan, clearly did not arise under a collective bargaining (or related) agreement." (Jackson Lewis P.C.)
[Guidance Overview] Treasury Issues Final Benefit Suspension Guidance Under MPRA (PDF)
"The statute states that in the aggregate, benefit suspensions must not materially exceed the level that is necessary to avoid insolvency. The Proposed Regulation established a numerical test for determining if this requirement is satisfied.... The Final Regulation adds a second way to satisfy this test. Under the second approach, a suspension plan will 'not materially exceed the level that is necessary to avoid insolvency' if reducing the amount of each participant's suspension by 2% of the pre-suspension benefit would cause the plan to fail to be projected to be solvent." (Groom Law Group)
Central States' Strategy: Litigate Less, Recoup More?
"Once described by the U.S. Court of Appeals for the Seventh Circuit as a 'uniquely aggressive seeker of withdrawal payments,' the fund filed 52 lawsuits in 2011 seeking withdrawal liability payments. By 2015, this dropped 35 percent, to 34.... Despite the decline in lawsuits, Central States has seen the actual dollar amount of withdrawal liability collected increase from $171 million in 2011 to $548 million in 2015 ... [One] significant factor ... is that in October 2011, the [PBGC] granted Central States' application for approval of a new alternative method of determining withdrawal liability -- the 'hybrid' method." (Bloomberg BNA)
[Guidance Overview] PBGC Issues Proposed Regs on Mergers and Transfers Between Multiemployer Plans
"[T]he proposed regulations ... [1] Allow plan sponsors to engage in informal consultations with the PBGC to discuss proposed mergers and transfers.... [2] Amend and reorder the plan solvency tests used to demonstrate that a merger or transfer would not cause the benefits of participants and beneficiaries to be subject to suspension ... [3] Extend the deadline for providing notice of a proposed facilitated merger from 120 days to 270 days before the proposed effective date of a facilitated merger." (Practical Law Company)
[Official Guidance] Text of PBGC Proposed Regs: Mergers and Transfers Between Multiemployer Plans
54 pages. "The proposed rule would provide guidance on the process for requesting a facilitated merger under section 4231(e) of ERISA, including a request for financial assistance under section 4231(e)(2).... [PBGC] will determine whether to provide further guidance on the evaluation criteria for facilitated mergers, and any limitations PBGC may impose relating to the amount of financial assistance available, based on the experience it gains implementing this proposed rule.... [T]he proposed rule includes a provision that would allow a plan sponsor to engage in informal discussion s with PBGC before filing a formal request for a facilitated merger.... PBGC does not interpret section 4231(e)(2)(B)(ii) to preclude a small, critical and declining status plan from receiving financial assistance to merge into a large, financially healthy multiemployer plan because such an interpretation would be inconsistent with the statute as a whole." (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] Treasury Issues Final Suspension of Benefits Regs Under MPRA
"Critical and declining plans will usually be experiencing negative cash flows, which means that the near-term returns when assets are at their highest level are much more significant in determining the actual cash flows of the plan. Accordingly, it may be appropriate to consider using a select and ultimate set of interest assumptions when performing the cash flow projections.... It is not clear if the sensitivity analyses on the different investment returns and different contribution base trends are to be performed independently or in combination with each other. Logic would suggest that all combinations should be shown." (Cheiron)
Who Will Pay Benefits of Bankrupt Multiemployer Plans?
"Multiemployer (union) plans, for a variety of reasons, will all go bankrupt. So what happens to promised benefits? The Road Carriers Local 707 Pension Fund (RC707) ... is one of five multiemployer plans looking to suspend benefits under MPRA. Their application asserts that 'the plan is projected to be insolvent by February, 2017' so they are proposing to 'reduce all of the Plan participants' pension benefits to 110 percent of the PBGC guarantee' ... The most instructive chart from the 8/31/14 valuation report is the asset history[.]" (Burypensions)
[Official Guidance] Treasury Department Notice: Teamsters Local 469's Multiemployer Pension Plan Application to Reduce Benefits
"The Board of Trustees of the Teamsters Local Union No. 469 Pension Plan, a multiemployer pension plan, has submitted an application to Treasury to reduce benefits under the plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to announce that the application submitted by the Board of Trustees of the Teamsters Local 469 Pension Plan has been published on the Treasury website, and to request public comments on the application from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of the Teamsters Local 469 Pension Plan. Comments must be received by June 22, 2016." (U.S. Treasury Department)
Tenth Circuit Expands Withdrawal Liability of Construction Industry Employer
"Unionized construction employers should now closely scrutinize acquisitions within jurisdictions where the employer had previously contributed to a [multiemployer plan]: non-contributory work performed by an after-acquired entity will (at least within Oklahoma, Kansas, New Mexico, Colorado, Wyoming, and Utah) likely trigger withdrawal liability." [Ceco Concrete Construction, LLC v. Centennial State Carpenters Pension Trust, Nos. 15-1021, 15-1190 (10th Cir. May 3, 2016)] (Jackson Lewis P.C.)
`Zombie' Pension Plans Need Autopsies
"For retirees of Central States and other plans facing insolvency, a forensic investigation may be more productive and more likely to succeed than lobbying Congress ... If wrongdoing is found, those responsible can be made to compensate the fund for the damages they caused ... [F]und's participants could easily raise the money to hire an independent investigator through crowd sourcing or other means." (Bloomberg BNA)
Treasury Denies Central States; How Will Other Multiemployer Plans Fare?
"If the Department of the Treasury will not approve benefit suspensions under the Multitemployer Pension Reform Act (MPRA) for participants in the Central States Pension Fund then how will other multiemployer plans lined up for approvals fare? ... [This article includes links to] the latest 5500 forms for all five plans in the pipeline ... A spreadsheet comparison shows all the plans similarly situated as to depletion dates[.]" (Burypensions)
Treasury's Reasoning for Rejecting Central States Suspension Application is Misunderstood
"Many commentators ... have stated that the Treasury believes a 7.5% interest rate is not a reasonable actuarial assumption for funding a pension plan. The reasoning related to the 7.5% interest rate was much more specific ... Treasury did not say that a 7.5% investment return assumption was inappropriate for purposes of determining a plan's minimum funding requirements (or for funding a public pension plan over the long term). Instead, Treasury recognized because of Central States's specific situation (with negative cash flow), there needed to be a focus on the near term when testing whether the Plan could avoid insolvency." (Cheiron)
Failing Central States Pension Fund Is Out of Options
" 'The fact that the ... PBGC is also running out of money means our participants may see their pension benefits ultimately reduced to virtually nothing when the fund runs out of money,' [fund director Thomas Nyhan said in a letter to workers and retirees]. Only government funding, either to the Central States Fund directly or through the PBGC, can fix the problem, he said." (CNNMoney.com)
Central States Pension Fund Drops Efforts to Create Second Bailout Plan
"The decision ... to drop efforts of a second rescue-package submission means the fate of the cash-strapped $16.8 billion multiemployer plan sits with federal lawmakers. Absent a congressional bailout, ... [the plan] will run out of cash by the end of 2025, said Thomas Nyhan, the group's executive director. Mr. Nyhan said ... that there wasn't enough time to resubmit a plan without cutting retiree benefits deeper than is legally allowed." (The Wall Street Journal; subscription may be required)
Crash Landing for Central States
"Treasury opined that the estimated 10-year average rate of return should have been 6.43% reflective of the Horizon Survey of investment forecasts. However, adoption of that rate would have resulted in even deeper reductions in core benefits to participants. Significantly, a review of several other multi-employer funds reveals that an investment return assumption of 7.50% is not uncommon. Based on Treasury's 'scrutiny,' it seems probable that the other pending applications will suffer a similar fate to Central States." (Jackson Lewis P.C.)
[Opinion] There's No 'Tooth Fairy' for Pension Fund Bailout
"Anger predictably ensued when Central States administrators proposed cuts for 270,000 drivers and retirees as part of their rescue plan.... But the Treasury Department rejected the Central States restructuring and benefit cuts.... The reality, however, is that rejecting the least bad option simply means that the other solutions are worse. The plan's dire finances have not changed. And without reform, pensioners' cuts eventually may be even deeper.... The debate going forward needs to honestly acknowledge the long odds of a congressional bailout for the Central States fund and what can realistically be done to preserve pensions." (StarTribune)
It's Back to the Drawing Board for Multiemployer Pension Reform
"Sweeping solutions are not expected in an election year, particularly one that could change the balance of power in Congress. MPRA critics, including the Pension Rights Center in Washington and AARP, realize their victory in the Central States decision is short-lived, as many troubled multiemployer plans head toward insolvency, along with the Pension Benefit Guaranty Corp.'s multiemployer insurance program itself." (Pensions & Investments)
PBGC to Double Penalties for Failing to Give Notices
"[T]he new maximum amount for noncompliance with the Section 4071 requirements will nearly double, from the current $1,100-per-day penalty to $2,063. The penalty under ERISA Section 4302 will increase from $110 per day to a $275 daily assessment.... A PBGC official ... [said] on May 12 that these penalties are rarely assessed." (Bloomberg BNA)

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