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Multiemployer plans

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Teamster Retirees' Campaign Against Pension Cuts Draws Support
"Less than six months after getting started, a grassroots campaign among Teamsters union retirees to protect their pensions appears to be picking up steam, attracting the support of presidential candidate Bernie Sanders and threatening to influence the outcome of the union's own leadership elections next year." (In These Times)
Current ACA Issues for Multiemployer Plans
"More than half of plans in the study ... remain grandfathered under the ACA, meaning they do not have to comply with some parts of the law. A large majority of plans in the study have not changed coverage for spouses. Most plans in the study have maintained coverage for retirees. The three most popular cost-management strategies that plans have implemented are [1] soliciting competitive bids from carriers/vendors, [2] implementing more intensive pharmacy management programs, and [3] increasing copayments." (Segal Consulting)
PBGC Partition Rules Give Clear Guidance, Will Help Preserve Plans (PDF)
"The rules aren't burdensome and let endangered plans understand the procedures they must follow before the PBGC can use its authority to approve partitions, [said W. Andrew Douglass, of Polsinelli PC].... Thomas C. Nyhan, [Central States Pension Fund's] executive director, said the plan's trustees are currently reviewing the guidance and 'will be working expeditiously to develop a fair rescue plan. Once that has been completed, we will be filing that rescue plan with Treasury and notifying all of our pension fund participants. We expect for that to happen sometime this summer.' " (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)
[Guidance Overview] PBGC Prescribes Program for Mulltiemployer Plan Partitions to Promote Preservation (PDF)
"PBGC sets out the application process and notice requirement for partitioning multiemployer plans. PBGC intends to provide guidance on facilitated mergers in a separate rulemaking. PBGC expects that fewer than 20 plans will be approved for partition over the next three years and that the total financial assistance they will provide will be less than $60 million per year." (Buck Consultants at Xerox)
[Guidance Overview] Multiemployer Plan Benefit Suspension Guidance Is Here (PDF)
"Plans with 10,000 or more participants must select a retiree representative -- a plan participant in pay status ... [who] advocates for the interests of the retired and deferred vested participants and beneficiaries of the plan throughout the suspension approval process.... Notice of proposed suspension must be provided, via written or electronic delivery, to all participants, beneficiaries, alternate payees, each employer with an obligation to contribute, and each employee organization representing plan participants for collective bargaining purposes[.]" (Buck Consultants at Xerox)
[Guidance Overview] Guidance on MPRA's Rules for Benefit Suspension and Plan Partition
"The time between the submission of a 'suspension-only' application and its approval generally will be at least nine months. Preparation of the application is not included in that period and should begin as soon as possible for plans that need approval as early as possible.... [P]lans in the early stages of considering a future suspension and/or partition should spend time now looking at their participant data to determine if it is sufficient to support the numerous calculations and determinations that will be required." (Segal Consulting)
[Guidance Overview] Regulatory Guidance Issued on Plan Benefit Suspensions and Plan Partitions for Multiemployer Pension Plans at Risk of Insolvency
"Since a partition applicant must show it has taken 'all reasonable measures' -- including benefit suspensions -- to avoid insolvency, the PBGC expects that plans seeking partitions will also apply for proposed suspension of benefits. Therefore, the PBGC strongly recommends that plan sponsors file concurrent applications for partition and suspension of benefits. If a plan seeks both a suspension of benefits and a plan partition, the partition must occur first." (Jackson Lewis P.C.)
[Guidance Overview] IRS and PBGC Issue Regulations under MPRA
"Notice of the application for a suspension of benefits is required to be provided to participants, beneficiaries of deceased participants, and alternate payees, and is not met simply by mailing to the last known address of an individual. A plan sponsor will have to make reasonable efforts to communicate with participants beyond the mailing to the last known address. The regulations set out the content of the notice. The notice may have to be revised once the final regulation is issued. After reasonable efforts, any participants or beneficiaries of deceased participants (eligible voters) who could not be located will be treated as voting 'no' in the same percentage as those who could be located." (Cheiron)
[Guidance Overview] PBGC Issues Interim Final Rule on Multiemployer Pension Plan Partitions Under MPRA
"As the PBGC discusses in the preamble to the rule, a significant minority of financially troubled multiemployer plans are projected to become insolvent over the next two decades. Plans that seek to maintain solvency may need to rely on the tools provided by MPRA, including plan partitions and suspension of benefits. As the preamble notes, most plans that will require a partition will also require a benefit suspension." (Practical Law Company)
Survey of Multiemployer Plans' Zone Status: 2015 Results for Calendar-Year Plans (PDF)
"A majority of plans are in the green zone. The ratio between the number of active and inactive participants is a key indicator of zone status. The average PPA '06 funded percentage is 88 percent for 2015 calendar-year plans and 87 percent for plans with zone certification filing deadlines between April 1, 2014 and March 31, 2015.... Of the 2015 calendar-year plans, 65 percent are in the green zone. A similar percentage (63 percent) of plans in the larger group is also in the green zone." (Segal Consulting)
[Guidance Overview] IRS, PBGC Issue Guidance on Multiemployer Plan Benefit Suspensions and Plan Partitions
"The Guidance provides that benefit suspension applications can be submitted beginning June 19, 2015, but also indicates that any submitted applications likely will not be approved prior to consideration of public comments on the proposed regulations and the subsequent issuance of final regulations. Moreover, applications submitted before the issuance of final regulations may need to be revised (including potential revisions to participant notices) or supplemented to take into account any differences that might be included in the final regulations. For these reasons, some struggling multiemployer plans may choose not to submit applications for benefit suspensions until final regulations are issued." (McGuireWoods LLP)
[Official Guidance] Text of IRS Rev. Proc. 2015-34: Application Procedures for Approval of Benefit Suspensions for Certain Multiemployer Defined Benefit Pension Plans Under Section 432(e)(9) (PDF)
31 pages. "This revenue procedure prescribes the application process for approval of a proposed benefit suspension in accordance with Section 432(e)(9)(G) and provides a model notice that a plan sponsor proposing a benefit suspension may use to satisfy the content and readability requirements of Section 432(e)(9)(F)(ii) and (iii)(II).... This revenue procedure does not affect the standards that will be applied in reviewing an application for a suspension of benefits under Section 432(e)(9)." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Temporary Regs: Suspension of Benefits under the Multiemployer Pension Reform Act of 2014
55 pages. "This document contains temporary regulations under section 432(e)(9) that, together with proposed regulations ... and Rev. Proc. 2015-34, implement section 432(e)(9) as required by the statute.... The temporary regulations in this document, which are applicable immediately, provide sufficient guidance to enable a plan sponsor that wishes to apply for approval of a suspension of benefits to prepare and submit such an application, and to enable the Department of the Treasury to begin the processing of such an application. The temporary regulations provide general guidance regarding section 432(e)(9), including guidance regarding the meaning of the term 'suspension of benefits,' the general conditions for a suspension of benefits, and the implementation of a suspension after a participant vote.... The provisions of the temporary regulations and proposed regulations are expected to be integrated and issued as a single set of final regulations with any changes that are made following consideration of the comments received." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Notice of Proposed Rulemaking and Public Hearing: Suspension of Benefits under the Multiemployer Pension Reform Act of 2014
74 pages. "This document contains proposed regulations relating to multiemployer pension plans that are projected to have insufficient funds, at some point in the future, to pay the full benefits to which individuals will be entitled under the plans (referred to as plans in 'critical and declining status).... MPRA requires the Secretary of the Treasury, in consultation with the [PBGC] and the Secretary of Labor, to approve or deny applications by these plans to reduce benefits. As required by MPRA, these proposed regulations, together with temporary regulations being published at the same time, provide guidance implementing these statutory provisions. These proposed regulations would affect active, retired, and deferred vested participants and beneficiaries of multiemployer plans that are in critical and declining status as well as employers contributing to, and sponsors and administrators of, those plans." (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Interim Final Regs: Partitions of Eligible Multiemployer Plans
63 pages."This document contains an interim final rule prescribing the application process and notice requirements for partitions of eligible multiemployer plans under title IV of [ERISA], as amended by the Multiemployer Pension Reform Act of 2014 (MPRA).... PBGC is soliciting public comments ... As under prior law, PBGC's decision to order a partition is discretionary. Unlike prior law, however, the statute requires PBGC to make a determination not later than 270 days after the date such application was filed ... In addition, section 4233(a)(2) states that not later than 30 days after submitting an application for partition, the plan sponsor shall notify the participants and beneficiaries of such application, in the form and manner prescribed by regulations issued by PBGC... Section 4233(b) of ERISA contains five statutory conditions that must be satisfied before PBGC may order a partition... Under the new withdrawal liability rule, if an employer withdraws fro m the original plan within 10 years following the date of the partition, withdrawal liability is computed under section 4201 with respect to the original plan and the successor plan[.]" (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] Responding to the Multiemployer Pension Reform Act
"The law was passed ostensibly to 'save' deeply troubled underfunded multiemployer plans, but really what the law does is allow trustees to balance the books on the backs of retirees -- the most vulnerable.... [A] report by the hedge fund BlackRock [says] point-blank that the new Multiemployer Pension Reform Act of 2014 may lead to what they euphemistically call other 'reform' in corporate pension plans. They suggest that the new law may offer a 'useful model' for other pension plans facing imminent distress. In other words, what happens to multis will happen to everyone, and the only ones to benefit are the corporations, the trustees, and the hedge funds. Is that the America we want?" (Karen Friedman, of the Pension Rights Center)
Multiemployer Pension Plan Mortality Study
"[M]ultiemployer plan liabilities and costs are likely to be lower than what would be expected using the recently released Society of Actuaries (SOA) RP-2014 Blue Collar Mortality Tables.... [M]ost industries experienced more deaths than anticipated by the RP-2014 Blue Collar tables. For example, with a ratio of 1.15, iron workers experienced 15 percent more deaths than predicted by the RP-2014 Blue Collar tables. One possible explanation is that the data used by the SOA to create the Blue Collar tables is based largely on information from single-employer plans in a limited set of blue-collar industries and includes virtually no input from multiemployer plans." (Segal Consulting)
[Guidance Overview] Final Rule on Limited Wraparound Coverage Under the ACA
"[L]imited 'wraparound' benefits are considered 'excepted benefits,' which means they are not be subject to the [ACA's] group health plan mandates, such as the prohibition on annual dollar limits. [Topics addressed in this article are:] [1] Limited wraparound coverage is a pilot project ... [2] Requirements for any limited wraparound coverage ... [3] Specific rules for limited wraparound coverage for part-time employees or retirees ... [4] Requirements for limited wraparound coverage for full-time employees ... [5] Implications for plan sponsors." (Segal Consulting)
[Guidance Overview] Notes from Meeting of Actuaries Intersector Group with PBGC, April 16, 2015 (PDF)
7 pages. Topics include: [1] Status of PBGC's internal review of assumption methodology; [2] Mortality, including projection scales; [3] Early warning program; [4] 4062(e) change; [5] Standard termination post-distribution certification; [6] Critical and Declining (C&D) plan notice; [7] Benefit Suspensions under MPR; and [8] Partition authority under MPRA. (American Academy of Actuaries)
[Guidance Overview] Confusion at the Intersection of Employers, Union-Affiliated Coverage and ACA Tax Reporting
"[T]he employer does not report on the fund's coverage actually supplied to its bargaining unit employees. But the employer does need to prove its compliance with the ACA's employer mandate with respect to its full-time bargaining unit employees. Happily, in most cases the employer will be able to take credit for the Taft-Hartley fund's offer of coverage, as long as the employer is making contributions to the fund on behalf of the employee, and the fund offers at least minimum value coverage to the employee and at least minimum essential coverage (MEC) to the employee's children." (Lockton)
The #1 Reason Multiemployer Plans Fail a DOL Audit
"Multiemployer plan trustees have a fiduciary duty under ERISA to make sure the fund is receiving all employer contributions that are due, based on participants' hours worked. This means they must follow up when employers neglect to send their contributions on time (in other words, when they're delinquent). This also means trustees need to make sure that the correct amounts are received. If trustees neglect this fiduciary responsibility, they can be personally liable. They help fulfill this duty by having a payroll audit performed by a knowledgeable and experienced auditor." (International Foundation of Employee Benefit Plans [IFEBP])
[Guidance Overview] Mandatory E-Filing Under PBGC Proposed Rule Applies Only to Notices to PBGC
"PBGC has received inquiries whether its proposed rule on mandatory e-filing for certain multiemployer notices would affect notices to participants. The proposed rule only affects notices to PBGC.... [T]he proposed rule would require the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281 ... Further, the proposed rule does not involve the Multiemployer Pension Reform Act of 2014 (MPRA). Comments on the proposed rule are due June 2, 2015." [Announcement is dated May 20, 2015.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] Benefit Suspensions Under the Multiemployer Pension Reform Act (PDF)
7 pages. "This [article] examines the conditions for making such suspensions and the procedure that Trustees must follow before putting them into effect. The process is lengthy and can take more than one year before any benefit reductions are actually made. The process for implementing benefit suspensions takes place in several steps. Each of these steps contains additional requirements that must be satisfied before a plan may implement any suspension of benefits." (Cheiron)
[Opinion] Preserving Multiemployer Pensions: Promises Made Should Be Promises Kept (PDF)
"MPRA was an important advance in addressing the challenges facing Taft-Hartley plans and the PBGC multiemployer insurance program. But much work remains to be done. [1] In all likelihood, the multiemployer insurance program eventually will require direct federal government financial assistance. The time to recognize this challenge is now, before there is a crisis.... [2] The current multiemployer plan guaranties are being degraded and need to be increased ... [3] Give transparency a chance." (Kraw Law Group, via Bloomberg BNA Pension & Benefits Daily)
[Guidance Overview] Withdrawal Liability to Multiemployer Pension Plans Under ERISA (2015 Update) (PDF)
"This paper is intended as a general guide to the withdrawal liability provisions of ERISA, which were added in 1980 by the Multiemployer Pension Plan Amendments Act (MPPAA), for practitioners and executives. It discusses the MPPAA's background and the operation of its major provisions, with some emphasis on litigation procedures." (Vedder Price)
House HELP Subcommittee Hearing: Time to Modernize Multiemployer Pension System
" 'We need new tools in our toolbox to address the challenges which were not contemplated when multiemployer pension rules were initially put in place,' said Andrew Scoggin, Vice President of Albertson's LLC. 'Congress needs to equip employers and employees with the regulatory flexibility necessary to make changes to benefits programs that do not run afoul of beneficiaries, their employers, or the system as a whole.' ... Randy DeFrehn, Executive Director of the [National Coordinating Committee for Multiemployer Plans], described the composite plan model as the 'next logical step in the evolution' of multiemployer plans." (Subcommittee on Health, Employment, Labor, and Pensions, Committee on Education and the Workforce, U.S. House of Representatives)
[Opinion] Pension Rights Center Statement in Response to House Subcommittee Hearing on Multiemployer Pension Plans
"MPRA's provisions allowing retirees' pension benefits to be cut in order to reduce liabilities under multiemployer plans overturned 40 years of pension law, and undermined a central tenet of ERISA: once retirees earn their basic benefits, they can never be cut back -- unless a plan completely runs out of money. Yet this new law will allow retiree benefit cuts many years before a plan is projected to become insolvent. The new law's impact will be devastating to hundreds of thousands of pensioners who rely on their benefits to pay their daily living and medical expenses." (Pension Rights Center)
U.S. House Subcommittee to Discuss Reforms to Modernize the Multiemployer Pension System
"On Wednesday, April 29 at 2:00 p.m., the Subcommittee on Health, Employment, Labor, and Pensions ... will hold a hearing on ways to strengthen the retirement security of America's workers.... [This] hearing will provide members an opportunity to examine the challenges facing the multiemployer pension system and ways to improve the system on behalf of workers, employers, retirees, and taxpayers." (Committee on Education and the Workforce, U.S. House of Representatives)
Coal Companies Get Reprieve on Pension Costs
"The United Mine Workers of America 1974 pension plan ... is underfunded by about $2 billion ... The plan will require coal companies and other members to increase contributions by 10%, to $6.05 per union employee per hour worked, and maintain that rate until 2027 ... Benefit cuts for future retirees also are planned. A previous plan called for contributions to increase in stages from a minimum $12.50 in 2017 to as much as $26.50 as early as 2022 ... The United Mine Workers plan has roughly 12 retirees for every active worker[.]" (The Wall Street Journal; subscription may be required)
Teamsters Mount Grassroots Campaign to Block Pension Cuts
"A dozen meetings around the Midwest and South over the last month have attracted 100 to 200 angry members apiece, as activists and local retiree clubs learn their benefits are in danger. The meetings are likely to grow in size and number: Central States has just sent out notices to every member warning that cuts are coming.... [T]he average Central States pension is $1,230 a month ($14,760 a year).... For those with decent pensions -- some make $36,000 a year -- the cuts could be as high as 65 percent." (LaborNotes)
[Opinion] Pension Rights Center Comment Letter to PBGC on Partitions of Eligible Multiemployer Plans and Facilitated Mergers (PDF)
"[It] is critically important that PBGC guidance ensure that these tools, when they are used, promote the long-term financial security of affected participants and beneficiaries, as well as that of plan sponsors and the PBGC.... [T]his will require that the regulations delineate the scope of the Participant and Plan Sponsor Advocate's authority with respect to partition applications, provide meaningful disclosure to participants in both partitions and facilitated mergers, and ensure that the rights of partitioned participants and beneficiaries will be enforced." (Pension Rights Center)
[Guidance Overview] Guide to Benefit Suspensions Under the Multiemployer Pension Reform Act (PDF)
"Subject to a variety of constraints, including government approval, MPRA provides multiemployer plans that are headed towards insolvency with the option of suspending a portion of participants' accrued benefits. This authority is available only if the plan sponsor and actuary conclude that the suspensions are necessary for the plan to remain solvent and suspending benefits will preserve long-term benefits above the [PBGC] guarantee level. This article discusses some of the statutory requirements for benefit suspension authority, along with the factors that plan sponsors may consider in deciding whether and how to exercise this authority." (Groom Law Group, via Bloomberg BNA Collective Bargaining Bulletin)
[Opinion] 15,000+ Comment Letters on Multiemployer Pension Reform Act Delivered to IRS
"The comments included personal stories as well recommendations on what information plans must provide when they apply for benefit cuts, how plans should notify workers and retirees about the proposed cuts, who can be appointed as a representative of retirees, input on the process to allow participants the ability to vote on the cuts, and much more. Although the Treasury Department cannot change the law, the comments will help show how important it is that the law is as protective of retirees as possible." (Pension Rights Center)
[Opinion] American Academy of Actuaries Comment Letter to PBGC on Suspension of Benefits Under the Multiemployer Pension Reform Act of 2014 (PDF)
"[C]ritical and declining plans that need to implement benefit suspensions in order to remain solvent are able to take this action as soon as possible. Delays could lead to a necessity for larger benefit suspensions will be necessary in order for plans to survive.... [A] change in the effective date of the benefit suspensions will result in the notices overstating the impact of the suspensions submitted for Treasury approval due to benefits becoming eligible for additional protection under the age limitations. Guidance does not need to require the production of revised individualized estimates. However, advance notice to pay status participants alerting them to their actual benefit change would be appropriate shortly before the final implementation date." (American Academy of Actuaries)
[Opinion] American Academy of Actuaries Comment Letter to PBGC on Partitions of Eligible Multiemployer Plans and Facilitated Mergers (PDF)
"[We] recommend that the guidance include the details that will be required with respect to needed actuarial projections and reports.... It would also be helpful if the PBGC is able to provide, as best it can, its evaluation criteria for determining whether to consider and approve an application for partition or facilitated me... Requiring too extensive an analysis in all cases would be counterproductive if it discouraged plans that could benefit from these provisions from applying." (American Academy of Actuaries)
[Official Guidance] Text of PBGC Proposed Regs: Multiemployer Plans; New Electronic Filing Requirements
14 pages. "PBGC is proposing to require electronic filing of the following multiemployer plan filings: [1] Notices of termination under part 4041A; [2] Notices of insolvency and of insolvency benefit level under parts 4245; [3] Notices of insolvency and of insolvency benefit level under part 4281 (following mass withdrawal); [4] Applications for financial assistance under part 4281 (following mass withdrawal)." (Pension Benefit Guaranty Corporation [PBGC])
Why Multiemployer Plans Should Seriously Consider Cyber Liability Insurance for Data Breaches (PDF)
"Whether a breach ... is caused by a plan employee or a service provider that stores the data, the plan and potentially its trustees may be held responsible to some degree. This [article] discusses the protections provided by cyber liability insurance and why they are important to have. It also discusses the different circumstances in which a multiemployer plan may be liable for a breach as well as the steps trustees can take to minimize their plan's cyber liability." (Segal Select Insurance)
[Official Guidance] Text of PBGC Submission to OMB and Comment Request: Reportable Events -- Notice of Failure to Make Required Contributions
"PBGC intends to revise the current forms and instructions to: [1] Require that additional supporting and identifying information be provided ... [2] Require more description of the pertinent facts relating to an event ... and on information being included or missing with filing. [3] Add an information requirement included in the regulation to Forms 10 and 10-A (for change in contributing sponsor or controlled group event). [4] Provide enhanced instructions on the type of actuarial information required to be submitted.... [5] Remove information requirements that PBGC no longer needs or can gather from public sources. [6] Require additional information for certain events ... [and] [7] Require a signature and certification on Form 10 and Form 10-A as to the completeness and accuracy of the contents of the filing." (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] DOL Releases Final Regulations on DB Plan Funding Notices
"The most significant changes in the final regulations address 'material effect events' and delivery to all alternate payees. The exception for plans involved in a standard termination has been expanded. The regulations also include a model notice that has been slightly revised from the models in FAB 2009-01 and the 2010 proposed regulations." (Towers Watson)
Developments of Interest to Sponsors of Multiemployer Retirement Plans (PDF)
"[1] As exposure to non-U.S. investments increases, it is important for trustees to understand the effect that currency can have on results.... [2] The economic efficiencies embedded in DB plans enable the delivery of the same retirement income at a 48 percent lower cost than 401(k)-type defined contribution (DC) accounts.... [3] Early election of [PPA] red-zone status may be of interest to trustees of plans currently in the yellow or green zone facing near-term financial challenges.... [4] At their fiduciary liability insurance policy's next renewal date, trustees may want to consider obtaining pre-claim investigation coverage and interview coverage." (Segal Select Insurance)
[Guidance Overview] Multiemployer Pension Reform Act of 2014: Contributions for Withdrawal Liability (PDF)
"[The authors] recommend that [multiemployer] plan administrators review their procedures and systems with regard to invoicing employers and/or retaining employer contributions in order to isolate the following contribution amounts that are excluded when calculating withdrawal liability: [1] 5% and 10% employer contribution surcharges; and [2] Contribution increases outside the benefit formula and required by a funding improvement plan or rehabilitation plan that go into effect during plan years beginning after December 31, 2014. Tracking these contributions continue[s] while the plan is in endangered or critical status. Tracking ends on the expiration date of the collective bargaining agreement in effect when the plan emerges from endangered or critical status." (Milliman)
Advocates Push for More Multiemployer Reform
"Multiemployer pension reform advocates continue to pursue what they consider a critical missing piece in new legislation: a regulatory green light to do more alternative plan designs. These advocates would like congressional approval for composite plan models that would give plan trustees more tools for maintaining a balance between plan benefits and assets, such as reducing the rate of future accruals and trimming certain benefits, changes that now require lengthy regulatory approval." (Pensions & Investments)
[Guidance Overview] Your Annual Funding Notice May Need Tweaking
"The final model notices do not incorporate language required to comply with the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Highway and Transportation Funding Act (HATFA). Supplemental language complying with HATFA and MAP-21 would not change, no matter if a plan is using the new, final model notices or its previous approach for the 2014 plan year." (International Foundation of Employee Benefit Plans [IFEBP])
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)

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