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Multiemployer plans

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Ninth Circuit Holds That Asset Sale Successor May Be Liable for Predecessor Multiemployer Plan Withdrawal Liability Without Assumption of Liability
"Even though the purchaser (a former salesman of the predecessor employer) purchased only 30 percent of the predecessor's assets at public auction and none of its customer lists or goodwill, and used his own experience and contacts to hire the predecessor's former employees and contact customers, the court remanded the case back to the district court to determine whether there was sufficient continuity of the predecessor's business (most notably, continuity of the customer base) to be a successor." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Haynes and Boone, LLP)
Developments of Interest to Sponsors of Multiemployer Retirement Plans, Q4 2015 (PDF)
Topics include: Ratio of benefit payments to contributions; Investment trends; Key developments and statistics; and Selected strategies for managing multiemployer retirement plans. (Segal Consulting)
More Withdrawal Liability for Unsuspecting Business Owners
"In other successor employer situations, the courts have noted that a buyer who is being tagged with successor liability could protect itself by indemnification or through a reduction in the purchase price.... [In]this case, the owner of the new business had no such opportunity.... On the other hand, the court noted that certain documents in the case were filed under seal, including the business plan of the new business.... It could be that there was some evidence of coordination or collusion between the old business and new business that would otherwise justify the decision." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015) (Stinson Leonard Street)
Asset Purchasers Face Increased Exposure for the Multiemployer Pension Debts of Sellers
"[T]he Court gave no consideration to the seeming lack of an asset purchase agreement between the parties.... Second, the predecessor probably never would have been assessed any withdrawal liability but for the alleged successor's actions to start his own company.... [This case] represents a disturbing expansion of the successor liability doctrine to both create withdrawal liability (by imputing the purchaser's actions to the asset seller) and also to hold the purchaser liable for the withdrawal liability created as a successor." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Jackson Lewis P.C.)
Text of PBGC FY 2014 Projections Report (PDF)
57 pages. "After updating the model, and incorporating the premium increases and other provisions under MPRA, but assuming no plans elect suspensions or partitions, PBGC's projected 2024 multiemployer deficit averages $44.3 billion discounted to today's values. The solvency of the multiemployer program fund is extended by three years; the multiemployer program fund is more likely than not to run out of money in 2025 rather than 2022." [Also available: press release and Frequently Asked Questions.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] PBGC Issues Final Regs on Reportable Events
"[1] Changes to Safe Harbors Based on Financial Soundness: ... The low-default-risk safe harbor ... The well-funded plan safe harbor ... [2] Other Changes to Waiver Provisions Under Final Regulations: Public company waiver ... Controlled group situations ... Small-plan waivers ... [3] Other Changes Under Final Regulations: Active-participant reductions ... Failure to make required minimum funding payments ... Inability to pay benefits when due ... Form 200 reporting." (McGuireWoods LLP)
[Official Guidance] Text of PBGC Correction to Final Regs on Electronic Filing Requirements for Multiemployer Plans
"The [PBGC] published ... a final rule to amend its regulations to require electronic filing of certain multiemployer notices. This document corrects two inadvertent errors in the amendatory language." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Duties of Plan Sponsor Following Mass Withdrawal
"Plan sponsors of multiemployer pension plans terminated by mass withdrawal give notices to PBGC and plan participants about plan insolvency and benefit reductions; notices to participants about electing benefit options; and requests to PBGC for financial assistance or permission to distributee benefits in different amounts or forms than otherwise allowed. PBGC uses information submitted to it to make statutory determinations and estimate the need for financial assistance to plans. Participants use information sent to them to make personal financial decisions." [Forms submitted for approval: [1] Application for Financial Assistance -- Recurring, [2] Application for Financial Assistance -- Initial, [3] Notice of Insolvency Benefit Level, and [4] Notice of Insolvency. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Notice of Insolvency, Notice of Insolvency Benefit Level
"These notices, mandated by section 4245(e) of [ERISA], provide information PBGC needs to estimate cash requirements for financial assistance to troubled mutliemployer pension plans, and other interested parties need for financial planning or to bargain over contribution increases. Multiemployer plans in reorganization that are or may become insolvent give these notices." [Forms submitted for approval: [1] Notice of Insolvency, and [2] Notice of Insolvency Benefit Level. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Notice of Failure to Make Required Contributions
"To implement a statutory requirement, PBGC requires contributing sponsors and parents of parent-subsidiary controlled groups of which a contributing sponsor is a member to submit Form 200 to notify PBGC of failures to make required payments. PBGC uses this information to make decisions regarding enforcement of statutory liens." [The form submitted for approval is Form 200, Notice of Failure to Make Required Contributions. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC Submission to OMB: Reportable Events
"Under PBGC regulations implementing ... ERISA, plan administrators and contributing sponsors must notify PBGC of certain reportable events. The reporting requirements give PBGC timely notice of events that indicate plan or contributing sponsor financial problems. PBGC uses the information provided in determining what, if any, action it needs to take." [Forms submitted for approval: [1] Form 10, Post-Event Notice of Reportable Events, and [2] Form 10-Advance, Advance Notice of Reportable Events. Includes a Supporting Statement.] (Pension Benefit Guaranty Corporation [PBGC])
[Guidance Overview] PBGC Issues Final Reportable Events Regs That Provide Additional Reporting Waivers
"[T]he PBGC believes that the new safe harbors are simpler, more flexible and easier to comply with than those provided in the proposed regulations. The PBGC anticipates that approximately 94% of plans and sponsors will be exempt from many reporting requirements under the final regulations. With the addition of the safe harbors and the shift in emphasis to a plan's risk of default, the final regulations provide pension plan sponsors with more waivers from the reporting requirements and are expected to result in a net reduction in reporting." (Practical Law)
[Official Guidance] Text of PBGC Final Regs: Electronic Filing Requirements for Multiemployer Plans
"This final rule requires 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. This final rule does not involve any conforming amendments reflecting the Multiemployer Pension Reform Act of 2014 (MPRA). The rule affects only notices to PBGC (not notices to participants or other parties)." (Pension Benefit Guaranty Corporation [PBGC])
IRS Hearing on Multiemployer Plan Benefit Suspensions Features Impassioned Voices (PDF)
"Generating particular interest was how the vote will be conducted, with many ... advocating that the IRS and Treasury reconsider the ban on paper ballots.... [One witness] said that many of the people who are served by multi-employer plans aren't computer literate and many may even still have rotary phones. He suggested that the agencies consider evaluating the need for paper ballots based on the industry, as some may be more suited for electronic voting than others." (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)
Asset Purchasers Face Escalating ERISA Liability Exposure
"Citing 7th Circuit ERISA precedent, the 9th Circuit recently expanded that successor principle ... The risk of potential successor withdrawal liability is particularly significant in cases where the asset purchaser essentially 'picks up business' where the predecessor left off.... The court noted that five of eight union employees worked in the same business location for the predecessor and successor companies, with the hiatus of some not being dispositive." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015)] (Paul Hastings LLP)
Text of Ninth Circuit Opinion Clarifying Factors for Determining Successor Liability for Construction Industry Employer (PDF)
35 pages. "Agreeing with the Seventh Circuit, the panel held that ... the most important factor in assessing whether an employer is a successor for purposes of withdrawal liability is whether there was substantial continuity in the business operations between the predecessor and the successor, as determined in large part by whether the new employer has taken over the economically critical bulk of the prior employer's customer base.... The panel held that the district court erred in weighing continuity of the workforce as the most important factor, and, moreover, applied an incorrect test to determine whether there was continuity of the workforce." [Resilient Floor Covering Pension Trust Fund Bd. of Trustees. v. Michael's Floor Covering, Inc., No. 12-17675 (9th Cir. Sept. 11, 2015) (U.S. Court of Appeals for the Ninth Circuit)
[Opinion] Testimony of Pension Rights Center to Treasury on Proposed Rules for Retiree Benefits Cuts Under MPRA
"Most of the retirees you are hearing from are participants in the Central States Teamsters plan. That is because their trustees have told them that their pensions are about to be cut. Estimates are that there are hundreds of thousands of other retirees who will also be affected. They just don't know it yet.... MPRA is unprecedented, overturning 40 years of law by allowing trustees to reduce the benefits of retirees in ongoing plans. It has also established a dangerous precedent that could lay the foundation for cuts in earned pensions well beyond the multiemployer sphere." (Pension Rights Center)
Retirees Call on Policymakers to Stop the Clock on Cuts to Their Multiemployer Pensions
"Retirees from Colorado, Illinois, Iowa, Massachusetts, Michigan, Missouri, Nebraska, North Carolina, Ohio, Tennessee, and Wisconsin came to testify at a Treasury hearing on regulations regarding the cuts, to lobby their Members of Congress, and to speak out at a press conference on Capitol Hill.... The vast majority of the people testifying at the hearing were retirees who would be harmed by cuts to their benefits. Pension Rights Center Director Karen Ferguson told Treasury, 'MPRA is unprecedented, overturning 40 years of law by allowing trustees to reduce the benefits of retirees in ongoing plans. It has also established a dangerous precedent that could lay the foundation for cuts in earned pensions well beyond the multiemployer sphere.' " (Pension Rights Center)
More Ways to be Hit With Multiemployer Pension Plan Withdrawal Liability
"ManWeb claimed that it could not be responsible for Old Company's obligation because the withdrawal liability did not arise until after the sale was completed.... The court concluded that the federal policy in this case was to provide protection to multiemployer plans in the event an employer withdraws. Although ManWeb did not have notice of the exact amount of the withdrawal liability since that could not be assessed until after the withdrawal occurred, ManWeb was aware that there was likely to be withdrawal liability." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Stinson Leonard Street)
[Guidance Overview] Detailed Voting Procedures Prescribed by IRS for Suspension of Benefits in Multiemployer Plan
"There must be a separate benefit package for each voter containing the voter's address and the individualized impact statement.... The regulations require voting to be collected and tabulated using an automated voting system that allows votes to be cast either electronically or through an interactive voice telephone system using a toll-free number." (Cheiron)
[Guidance Overview] Multiemployer Plan Benefit Suspension Voting Procedures Released (PDF)
"The IRS administers the vote, but they can choose to delegate distribution of the ballots and tabulation of the votes to one or more service providers.... The DOL has a role to play in the process as well. The IRS allocated the responsibility to the DOL to compose the statement in opposition to the proposed suspension compiled from comments received on the proposed suspension." (Buck Consultants at Xerox)
Asset Purchasers May Acquire Multiemployer Plan Withdrawal Liability as 'Successors'
"The Seventh Circuit ... found that the purchaser was aware of the seller's potential withdrawal liability owed to the plan because it engaged in due diligence and prepurchase negotiations and addressed withdrawal liability responsibility through an indemnification clause in the asset purchase agreement. The court reasoned that 'equity' mandated imposing common law notions of successor liability to multiemployer pension plans for the seller's withdrawal liability; otherwise, a 'liability loophole' would exist in this context if the notice requirement excluded contingent liabilities." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Morgan Lewis)
[Guidance Overview] IRS Issues Guidance on Participant Voting Requirement for Benefit Suspensions under MPRA
"The Guidance permits the Treasury, in consultation with the PBGC and the DOL, to establish additional policies and procedures to facilitate the vote, such as establishing a process for an eligible voter to challenge the vote.... The MPRA requires a ballot to contain a statement in opposition compiled from comments received during the approval process. The Guidance provides that this statement will be prepared by the DOL. The statement must be written in a manner that is readily understandable to the average plan participant and in a manner to ensure parity with the statement in support of the suspension." (McGuireWoods LLP)
Tables Provide Summary of Multiemployer Actuarial Certifications Received by IRS (PDF)
"The charts [in this document] are comparisons of the certification information received each year by status... The [first] chart reflects a sharp increase in plans in Critical Status occurring in 2009, most likely due to economic issues. Subsequent years show some, but not full recovery.... The [second] chart reflects a sharp increase in plans in Seriously Endangered Status occurring in 2009, most likely due to economic issues. Subsequent years show decreasing percentage with 2013 rates lower than 2008." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Temporary Regs: Administration of Multiemployer Plan Participant Vote on an Approved Suspension of Benefits Under MPRA
"A participant vote requires the completion of three steps. First, a package of ballot materials is distributed to eligible voters. Second, the eligible voters cast their votes and the votes are collected and tabulated. Third, the Treasury Department (in consultation with the PBGC and the Labor Department) determines whether a majority of the eligible voters has voted to reject the proposed suspension.... [T]he Treasury Department is permitted to designate a service provider or service providers to facilitate the administration of the vote.... Because the ballot for each eligible voter is accompanied by a unique identifier, the plan sponsor cannot itself distribute the ballot. Instead, the plan sponsor is responsible for furnishing a list of eligible voters so that the ballot can be distributed on the plan sponsor's behalf.... [B]allot packages be distributed no later than 30 days after the application has been approved and specify that the voting period begins on the ballot distribution date.... The temporary regulations do not provide for the collection of votes using paper ballots ... Within 7 days after the end of the voting period ... the Treasury Department (in consultation with the PBGC and the Labor Department) will either certify that a majority of all eligible voters has voted to reject the suspension or, if a majority of eligible voters did not vote to reject the suspension, issue a final authorization to suspend." (Internal Revenue Service [IRS])
EPCU Interim Report: Multiemployer Actuarial Certification Projects
"The purpose of this project is to collect and document actuarial certifications for multiemployer defined benefit plans required to be filed by PPA of 2006 and IRC Section 432.... MECA Project: 2008 was the first plan year certifications were required. At that time over 75% of the plans were in 'Green Status' indicating they were 'Neither Endangered nor Critical'. By 2009, the percentage of cases in 'Green Status' dropped to 31.80%; revealing a nearly complete reversal of plan funding. This was most likely due to the effects of the economic crisis. The 2012 filings show a significant improvement with 57.59% of certifications reporting their funding as 'Green Status'. Plans in the Critical, Seriously Endangered, or Endangered Status started to decline in number, which is a direct result of Legislative action under WRERA." (Internal Revenue Service [IRS])
Buyer Beware! Multiemployer Pension Plan Successor Liability Following an Asset Sale
"Recently ... the Seventh Circuit [held] that an asset purchaser could be liable for a seller's withdrawal liability triggered as a result of an asset sale, provided that the purchaser had known of the seller's 'contingent' withdrawal liability that would be triggered by the sale.... The court's reasoning that equity mandates imposing common law notions of successor liability to multiemployer pension plans is questionable given the ERISA Section 4204 exception to the general rule that a sale of assets otherwise would trigger a complete or partial withdrawal for the seller." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Morgan Lewis, via Lexology)
[Opinion] Pension Rights Center Comments to IRS on Rules for Retiree Benefit Cuts in Financially Troubled Multiemployer Pension Plans (PDF)
10 pages. "[This letter provides] specific comments intended to help improve the proposed regulations in seven substantive areas: [1] plan eligibility to suspend benefits; [2] post-suspension maintenance of records showing ongoing compliance with suspension conditions; [3] equitable allocation of benefit suspensions; [4] rules relating to disability benefits; [4] rules relating to benefits to alternative payees; [6] rules relating to participant voting; [7] rules relating to benefit improvements; [8] method of communicating with participants; and [9] the selection and function of the retiree representative." (Pension Rights Center)
[Opinion] Comments by American Academy of Actuaries on Proposed Regs on Suspensions of Benefits (PDF)
"The level of resources required could serve to discourage some plan sponsors from pursuing benefit suspensions, particularly because they cannot be certain that their applications will be approved. This concern would be most acute for small plans.... [The authors] suggest that the final regulations clarify that the actuary should base the projections to certify that the proposed suspensions are sufficient to avoid insolvency on the market asset value as of the end of the calendar year quarter preceding the date of certification." (American Academy of Actuaries)
[Opinion] Pension Rights Center Comments to PBGC on Partition Rules for Financially Troubled Multiemployer Plans (PDF)
"[These] comments will focus on five issues that bear directly on participants: [1] the content of the participant notices; [2] deficiencies in the required elements of the plan application; [3] the need for the PBGC to provide adequate technical and financial resources to the Participant and Plan Sponsor Advocate; [4] whether the statute makes benefit suspensions an absolute prerequisite for partition; and [5] how Title I of ERISA interacts with new Section 4233." (Pension Rights Center)
Ninth Circuit: Multiemployer Plan Calling Unpaid Contributions 'Plan Assets' Does Not Make Persons Controlling Contribution Payments ERISA Fiduciaries
"The Ninth Circuit recently held that a multiemployer pension plan cannot label unpaid contributions as 'plan assets' so as to impose ERISA fiduciary status on persons controlling the payment of employer contributions to the plan.... [T]he court rejected the reasoning of the Second and Eleventh circuits, which have held that unpaid [multiemployer plan] contributions can be plan assets if the plan documents expressly define plan assets to include unpaid contractually required contributions." [Bos v. Board of Trustees, No. 13-15604 (9th Cir. July 30, 2015)] (McGuireWoods LLP)
[Guidance Overview] Draft Instructions to IRS 2015 Forms 1094-C and 1095-C Give Clear Guidance to ALEs Contributing to Multiemployer Plans (PDF)
"Employers who contribute to a multiemployer plan that complies with the multiemployer interim guidance, can use the 1H/2E codes to report on employees for which it makes contributions to the plan. If such an ALE has other employees that are not covered by the multiemployer plan, it must also report those employees using the 1094/1095-C series forms. If such other employees are covered by an insured plan, the insurance company would do the reporting required under Part III of Form 1095-C." (United Actuarial Services, Inc.)
Seventh Circuit Makes It Easier to Tag an Asset Purchaser with Seller's ERISA Multiemployer Pension Plan Withdrawal Liability
"The Seventh Circuit [found] that the requirement of successor foreknowledge of liability may be satisfied by notice of either existing or contingent liabilities. The Seventh Circuit maintained that, in the absence of this new rule, a 'liability loophole' would exist: because withdrawal liability is ascertainable only after withdrawal occurs, plan sponsors would be foreclosed from imposing successor liability on asset purchasers if the seller's withdrawal occurred after the asset sale but would be able to do so (under Seventh Circuit precedent) if the seller's withdrawal occurred before the asset sale." [Tsareff v. ManWeb Services, Inc., No. 14-1618 (7th Cir. July 27, 2015)] (Paul, Weiss, Rifkind, Wharton & Garrison LLP)
[Official Guidance] Text of Corrections to IRS Proposed Regs on Suspension of Benefits under the Multiemployer Pension Reform Act
"This document contains corrections to a notice of proposed rulemaking ... published in the Federal Register on Friday, June 19, 2015 (80 FR 352 62). The proposed regulations relate to multiemployer pension plans that are projected to have insufficient funds, at some point in the future, to pay the full benefits to which individuals will be entitled under the plans (referred to as plans in 'critical and declining status)." [Additional technical corrections issued here and here.] (Internal Revenue Service [IRS])
Looking Past Due Diligence for Benefit Plans in Mergers and Acquisitions (PDF)
"Corporate transactions involving the sale or purchase of another company or division are complex events. While employee benefit plans generally are considered in these transactions, the time and attention devoted to these plans are often minimal. This exposes the parties to additional risks, both in terms of direct costs and in long term administrative complexities. This article will review the various risks that often are undiscovered during the standard due diligence process. Health plans and retirement plans, including multiemployer plans, and executive compensation plans are all considered." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])
Multiemployer Pension Plans: Withdrawal Liability Is Mounting
"At least four plans, through their actuaries, have dramatically reduced the interest rate assumption to calculate withdrawal liability. Rather than using the plan's assumed rate of return, typically 7-8 percent, they have adopted the PBGC long term interest rate of slightly more than 3 percent to calculate the unfunded vested benefit liabilities and, hence, withdrawal liability. These interest rate changes are increasing the amount of withdrawal liability by 200-400 percent depending on the methodology used ... Employers in critical plans need to understand and manage this mounting withdrawal liability before it becomes so great that it exceeds the net worth of a company." (Ford & Harrison LLP)
Multiemployer Pension Plans: A Primer and Analysis of Policy Options (PDF)
29 pages. "[S]ome stakeholders have proposed new, alternative pension plan structures that they feel would avoid many of the problems inherent in the current multiemployer pension plan system. Possible solutions to plan underfunding could involve some combination of increased contributions from the employers that sponsor pension plans, cuts in future benefits to plan participants who are currently working, cuts in current benefits to retired participants, or financial assistance from the U.S. government." [Report No. R43305, dated July 24, 2015.] (Congressional Research Service [CRS])
Impact of the Multiemployer Pension Reform Act: 2015 Survey Results
"Six months after the passing of the Multiemployer Pension Reform Act of 2014 (MPRA), an International Foundation of Employee Benefit Plans survey finds multiemployer plans are closely monitoring and discussing the law, but few are taking any drastic measures." [Page includes infographic and 20-page report of survey results.] (International Foundation of Employee Benefit Plans [IFEBP])
[Guidance Overview] Treasury, PBGC Begin to Wrestle with Multiemployer Pension Plan Reforms (PDF)
"The success of the law will turn, first, on whether a political backlash dissuades plans from utilizing it and, second, whether the argument that limited cuts now are better than bigger cuts later will persuade participants not to vote down proposed reductions. Both of these considerations come together in the case of the 'systemically important' Central States plan. If participants disapprove a benefit suspension, will the Treasury Department overrule them? One recourse unhappy participants apparently do not have is litigation. MPRA denies them standing to challenge benefit suspensions in court, leaving perhaps only a potential constitutional challenge." (Steptoe & Johnson LLP)
Multiemployer Funds, PBGC Face Hurdles with Partitions
"Unlike the old partition program, which just took financial responsibility for participants in orphaned plans and left a healthy plan intact, plans must now cut benefits for all participants.... It is also not a simple -- or inexpensive -- calculation to figure out whether applying for partitioning will be enough to save a plan ... Explaining it to plan participants could be equally daunting, especially along with benefit cuts.... PBGC officials estimated they could take on up to $60 million in payments and process up to six applicants per year." (Pensions & Investments)
[Opinion] Response of the Pension Rights Center to Editorial About the 'Keep Our Pension Promises Act of 2015'
"This legislation introduced by Senator Bernie Sanders, Representative Marcy Kaptur, and 11 other congressional co-sponsors, offers an economically workable solution to the cash-flow problems faced by severely-troubled multiemployer plans, including the Central States Teamster Pension Fund.... The Sanders-Kaptur legislation recognizes that a major problem for many multiemployer plans is that large numbers of employers have left the plans without paying sufficient withdrawal liability to fund the pensions of the retirees they have left behind." (Pension Rights Center)
Teamster Retirees' Campaign Against Pension Cuts Draws Support
"Less than six months after getting started, a grassroots campaign among Teamsters union retirees to protect their pensions appears to be picking up steam, attracting the support of presidential candidate Bernie Sanders and threatening to influence the outcome of the union's own leadership elections next year." (In These Times)
Current ACA Issues for Multiemployer Plans
"More than half of plans in the study ... remain grandfathered under the ACA, meaning they do not have to comply with some parts of the law. A large majority of plans in the study have not changed coverage for spouses. Most plans in the study have maintained coverage for retirees. The three most popular cost-management strategies that plans have implemented are [1] soliciting competitive bids from carriers/vendors, [2] implementing more intensive pharmacy management programs, and [3] increasing copayments." (Segal Consulting)
PBGC Partition Rules Give Clear Guidance, Will Help Preserve Plans (PDF)
"The rules aren't burdensome and let endangered plans understand the procedures they must follow before the PBGC can use its authority to approve partitions, [said W. Andrew Douglass, of Polsinelli PC].... Thomas C. Nyhan, [Central States Pension Fund's] executive director, said the plan's trustees are currently reviewing the guidance and 'will be working expeditiously to develop a fair rescue plan. Once that has been completed, we will be filing that rescue plan with Treasury and notifying all of our pension fund participants. We expect for that to happen sometime this summer.' " (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)
[Guidance Overview] PBGC Prescribes Program for Mulltiemployer Plan Partitions to Promote Preservation (PDF)
"PBGC sets out the application process and notice requirement for partitioning multiemployer plans. PBGC intends to provide guidance on facilitated mergers in a separate rulemaking. PBGC expects that fewer than 20 plans will be approved for partition over the next three years and that the total financial assistance they will provide will be less than $60 million per year." (Buck Consultants at Xerox)
[Guidance Overview] Multiemployer Plan Benefit Suspension Guidance Is Here (PDF)
"Plans with 10,000 or more participants must select a retiree representative -- a plan participant in pay status ... [who] advocates for the interests of the retired and deferred vested participants and beneficiaries of the plan throughout the suspension approval process.... Notice of proposed suspension must be provided, via written or electronic delivery, to all participants, beneficiaries, alternate payees, each employer with an obligation to contribute, and each employee organization representing plan participants for collective bargaining purposes[.]" (Buck Consultants at Xerox)
[Guidance Overview] Guidance on MPRA's Rules for Benefit Suspension and Plan Partition
"The time between the submission of a 'suspension-only' application and its approval generally will be at least nine months. Preparation of the application is not included in that period and should begin as soon as possible for plans that need approval as early as possible.... [P]lans in the early stages of considering a future suspension and/or partition should spend time now looking at their participant data to determine if it is sufficient to support the numerous calculations and determinations that will be required." (Segal Consulting)
[Guidance Overview] Regulatory Guidance Issued on Plan Benefit Suspensions and Plan Partitions for Multiemployer Pension Plans at Risk of Insolvency
"Since a partition applicant must show it has taken 'all reasonable measures' -- including benefit suspensions -- to avoid insolvency, the PBGC expects that plans seeking partitions will also apply for proposed suspension of benefits. Therefore, the PBGC strongly recommends that plan sponsors file concurrent applications for partition and suspension of benefits. If a plan seeks both a suspension of benefits and a plan partition, the partition must occur first." (Jackson Lewis P.C.)
[Guidance Overview] IRS and PBGC Issue Regulations under MPRA
"Notice of the application for a suspension of benefits is required to be provided to participants, beneficiaries of deceased participants, and alternate payees, and is not met simply by mailing to the last known address of an individual. A plan sponsor will have to make reasonable efforts to communicate with participants beyond the mailing to the last known address. The regulations set out the content of the notice. The notice may have to be revised once the final regulation is issued. After reasonable efforts, any participants or beneficiaries of deceased participants (eligible voters) who could not be located will be treated as voting 'no' in the same percentage as those who could be located." (Cheiron)
[Guidance Overview] PBGC Issues Interim Final Rule on Multiemployer Pension Plan Partitions Under MPRA
"As the PBGC discusses in the preamble to the rule, a significant minority of financially troubled multiemployer plans are projected to become insolvent over the next two decades. Plans that seek to maintain solvency may need to rely on the tools provided by MPRA, including plan partitions and suspension of benefits. As the preamble notes, most plans that will require a partition will also require a benefit suspension." (Practical Law Company)
Survey of Multiemployer Plans' Zone Status: 2015 Results for Calendar-Year Plans (PDF)
"A majority of plans are in the green zone. The ratio between the number of active and inactive participants is a key indicator of zone status. The average PPA '06 funded percentage is 88 percent for 2015 calendar-year plans and 87 percent for plans with zone certification filing deadlines between April 1, 2014 and March 31, 2015.... Of the 2015 calendar-year plans, 65 percent are in the green zone. A similar percentage (63 percent) of plans in the larger group is also in the green zone." (Segal Consulting)
[Guidance Overview] IRS, PBGC Issue Guidance on Multiemployer Plan Benefit Suspensions and Plan Partitions
"The Guidance provides that benefit suspension applications can be submitted beginning June 19, 2015, but also indicates that any submitted applications likely will not be approved prior to consideration of public comments on the proposed regulations and the subsequent issuance of final regulations. Moreover, applications submitted before the issuance of final regulations may need to be revised (including potential revisions to participant notices) or supplemented to take into account any differences that might be included in the final regulations. For these reasons, some struggling multiemployer plans may choose not to submit applications for benefit suspensions until final regulations are issued." (McGuireWoods LLP)
[Official Guidance] Text of IRS Rev. Proc. 2015-34: Application Procedures for Approval of Benefit Suspensions for Certain Multiemployer Defined Benefit Pension Plans Under Section 432(e)(9) (PDF)
31 pages. "This revenue procedure prescribes the application process for approval of a proposed benefit suspension in accordance with Section 432(e)(9)(G) and provides a model notice that a plan sponsor proposing a benefit suspension may use to satisfy the content and readability requirements of Section 432(e)(9)(F)(ii) and (iii)(II).... This revenue procedure does not affect the standards that will be applied in reviewing an application for a suspension of benefits under Section 432(e)(9)." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Temporary Regs: Suspension of Benefits under the Multiemployer Pension Reform Act of 2014
55 pages. "This document contains temporary regulations under section 432(e)(9) that, together with proposed regulations ... and Rev. Proc. 2015-34, implement section 432(e)(9) as required by the statute.... The temporary regulations in this document, which are applicable immediately, provide sufficient guidance to enable a plan sponsor that wishes to apply for approval of a suspension of benefits to prepare and submit such an application, and to enable the Department of the Treasury to begin the processing of such an application. The temporary regulations provide general guidance regarding section 432(e)(9), including guidance regarding the meaning of the term 'suspension of benefits,' the general conditions for a suspension of benefits, and the implementation of a suspension after a participant vote.... The provisions of the temporary regulations and proposed regulations are expected to be integrated and issued as a single set of final regulations with any changes that are made following consideration of the comments received." (Internal Revenue Service [IRS])
[Official Guidance] Text of IRS Notice of Proposed Rulemaking and Public Hearing: Suspension of Benefits under the Multiemployer Pension Reform Act of 2014
74 pages. "This document contains proposed regulations relating to multiemployer pension plans that are projected to have insufficient funds, at some point in the future, to pay the full benefits to which individuals will be entitled under the plans (referred to as plans in 'critical and declining status).... MPRA requires the Secretary of the Treasury, in consultation with the [PBGC] and the Secretary of Labor, to approve or deny applications by these plans to reduce benefits. As required by MPRA, these proposed regulations, together with temporary regulations being published at the same time, provide guidance implementing these statutory provisions. These proposed regulations would affect active, retired, and deferred vested participants and beneficiaries of multiemployer plans that are in critical and declining status as well as employers contributing to, and sponsors and administrators of, those plans." (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Interim Final Regs: Partitions of Eligible Multiemployer Plans
63 pages."This document contains an interim final rule prescribing the application process and notice requirements for partitions of eligible multiemployer plans under title IV of [ERISA], as amended by the Multiemployer Pension Reform Act of 2014 (MPRA).... PBGC is soliciting public comments ... As under prior law, PBGC's decision to order a partition is discretionary. Unlike prior law, however, the statute requires PBGC to make a determination not later than 270 days after the date such application was filed ... In addition, section 4233(a)(2) states that not later than 30 days after submitting an application for partition, the plan sponsor shall notify the participants and beneficiaries of such application, in the form and manner prescribed by regulations issued by PBGC... Section 4233(b) of ERISA contains five statutory conditions that must be satisfied before PBGC may order a partition... Under the new withdrawal liability rule, if an employer withdraws fro m the original plan within 10 years following the date of the partition, withdrawal liability is computed under section 4201 with respect to the original plan and the successor plan[.]" (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] Responding to the Multiemployer Pension Reform Act
"The law was passed ostensibly to 'save' deeply troubled underfunded multiemployer plans, but really what the law does is allow trustees to balance the books on the backs of retirees -- the most vulnerable.... [A] report by the hedge fund BlackRock [says] point-blank that the new Multiemployer Pension Reform Act of 2014 may lead to what they euphemistically call other 'reform' in corporate pension plans. They suggest that the new law may offer a 'useful model' for other pension plans facing imminent distress. In other words, what happens to multis will happen to everyone, and the only ones to benefit are the corporations, the trustees, and the hedge funds. Is that the America we want?" (Karen Friedman, of the Pension Rights Center)
Multiemployer Pension Plan Mortality Study (PDF)
"[M]ultiemployer plan liabilities and costs are likely to be lower than what would be expected using the recently released Society of Actuaries (SOA) RP-2014 Blue Collar Mortality Tables.... [M]ost industries experienced more deaths than anticipated by the RP-2014 Blue Collar tables. For example, with a ratio of 1.15, iron workers experienced 15 percent more deaths than predicted by the RP-2014 Blue Collar tables. One possible explanation is that the data used by the SOA to create the Blue Collar tables is based largely on information from single-employer plans in a limited set of blue-collar industries and includes virtually no input from multiemployer plans." (Segal Consulting)
[Guidance Overview] Final Rule on Limited Wraparound Coverage Under the ACA
"[L]imited 'wraparound' benefits are considered 'excepted benefits,' which means they are not be subject to the [ACA's] group health plan mandates, such as the prohibition on annual dollar limits. [Topics addressed in this article are:] [1] Limited wraparound coverage is a pilot project ... [2] Requirements for any limited wraparound coverage ... [3] Specific rules for limited wraparound coverage for part-time employees or retirees ... [4] Requirements for limited wraparound coverage for full-time employees ... [5] Implications for plan sponsors." (Segal Consulting)
[Guidance Overview] Notes from Meeting of Actuaries Intersector Group with PBGC, April 16, 2015 (PDF)
7 pages. Topics include: [1] Status of PBGC's internal review of assumption methodology; [2] Mortality, including projection scales; [3] Early warning program; [4] 4062(e) change; [5] Standard termination post-distribution certification; [6] Critical and Declining (C&D) plan notice; [7] Benefit Suspensions under MPR; and [8] Partition authority under MPRA. (American Academy of Actuaries)

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