AndyH

Plan Merger pros and cons

9 posts in this topic

Sponsor has two frozen union plans, each with about 350 participants.

Looking to develop pros and cons of a merger. Each plan about 80% funded. No 436 restrictable benefits.

Pros including one valuation, one audit, one Trust, resulting fee savings.

Cons include need to pay estimated PBGC premium filings, perhaps additonal PBGC reporting, record keeping requirements of merger, IRS merger filing and documentation.

Anybody willing to add or elaborate?

Share this post


Link to post
Share on other sites

Suspect that bargaining agreements would require approval from all unions involved. Confusion might arise as different compensation/service computation periods, eligibility for early, normal, disability, and death benefits, vesting service crediting, vesting schedule, standard forms of payment, distribution options, etc. between the two plans. If one plan subject to possible restrictions and the other is not, then combining plan may cost more to cure restrictions. If one or both plans frozen 9/2005, then be sure amendment doesn't eliminate 436 grandfather. Make sure that non-prescribed actuarial assumptions still make sense.

Share this post


Link to post
Share on other sites

Who is responsible for investment decision-making/supervision in each plan? If Union reps are involved with each plan, might not be workable or even politically correct to have a mixed marriage.

Share this post


Link to post
Share on other sites
Who is responsible for investment decision-making/supervision in each plan? If Union reps are involved with each plan, might not be workable or even politically correct to have a mixed marriage.

Single employer plan run solely by management so I don't see that as an issue, but thanks for raising it.

Edited by AndyH

Share this post


Link to post
Share on other sites

I assumed it was a single E plan but sometimes if you're negotiating yourself out of a multiemployer plan the union may insist that it be represented on board of trustees or investment committee.

Share this post


Link to post
Share on other sites
Suspect that bargaining agreements would require approval from all unions involved. Confusion might arise as different compensation/service computation periods, eligibility for early, normal, disability, and death benefits, vesting service crediting, vesting schedule, standard forms of payment, distribution options, etc. between the two plans. If one plan subject to possible restrictions and the other is not, then combining plan may cost more to cure restrictions. If one or both plans frozen 9/2005, then be sure amendment doesn't eliminate 436 grandfather. Make sure that non-prescribed actuarial assumptions still make sense.

Again, no 436 issues but the possible benefit provision differences would be a headache for HR and for the actuary, good points, thanks. Don't know if they outweigh the possible fee savings though.

Share this post


Link to post
Share on other sites
I assumed it was a single E plan but sometimes if you're negotiating yourself out of a multiemployer plan the union may insist that it be represented on board of trustees or investment committee.

This is a DB plan, would a union really care if their benefits are guaranteed about what kind of investments the plan uses?

Share this post


Link to post
Share on other sites
I assumed it was a single E plan but sometimes if you're negotiating yourself out of a multiemployer plan the union may insist that it be represented on board of trustees or investment committee.

This is a DB plan, would a union really care if their benefits are guaranteed about what kind of investments the plan uses?

Unions will care about anything the bargaining agreement empowers them to care about.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now