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Benefits in the News > By Subject >

Multiemployer plans

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[Opinion] Joint Select Committee Starts Process to Save Multiemployer System
"Based on the comments of Committee members [the Pension Rights Center is] hopeful that they will put aside their differences and work in a bipartisan fashion to develop a fair and comprehensive solution to the multiemployer crisis by year's end.... The Committee is charged with developing recommendations and legislative language that will 'significantly improve the solvency of multiemployer pension plans and the Pension Benefit Guaranty Corporation' by November 30th, 2018." (Pension Rights Center)
[Opinion] Senate 'Loan' Bill Is a Poorly Disguised Bailout for Private Pensions
"Do we want government to encourage private employers and unions to promise workers more than they can afford and then fail to set aside the money necessary to meet those promises? Because that's exactly what this proposal would do -- encourage the same reckless behavior that contributed to the $500 billion shortfall faced by roughly 1,300 multi-employer pension plans today. Unlike loans made in the private sector, which happen only where a legitimate expectation of repayment (and a risk-compensating interest rate) can be established, loans to insolvent pension plans would have a high expectation of default." (The Heritage Foundation)
Notes from Meeting of Actuaries 'Intersector Group' with IRS, October 11, 2017 (PDF)
8 pages. Topics include: [1] Mortality tables opt-out: plan sponsor's determination; [2] Partial lump sums: total benefits vs. bifurcation rules; [3] Spinoff issues for plans subject to section 436 restrictions; [4] Multiemployer plan issues; [5] Closed plans/discrimination; [6] Hurricane relief issues; [7] Phased retirement; [8] Pension Equity Plans; [9] Risk sharing designs. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
Notes from Meeting of Actuaries 'Intersector Group' with PBGC, October 11, 2017 (PDF)
6 pages. Topics include: [1] Terminated plans; [2] Section 4010 filings under the new rule; [3] Reportable events; [4] Multiemployer plan issues; [5] Plan terminations where an annuity provider cannot be found; [6] Insolvent multiemployer plans with active contributing employers; [7] Treasury Department interpretation of requirement to lift benefit suspensions after a merger between a distressed multiemployer fund and a larger healthy fund; [8] Missing participants; [9] New Code Section 430 mortality regulations. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
Senate Joins House in Naming of Union Plan Select Committee
"Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Charles Schumer (D-NY) have each named four members of their respective parties as Senate representatives on the Select Committee: Republican Senators Lamar Alexander (TN), Michael Crapo (ID), Orrin Hatch (UT), and Rob Portman (OH), and Democratic Senators Sherrod Brown (OH), Heidi Heitkamp (ND), Joe Manchin (WV), and Tina Smith (MN)." (Ascensus)
House Democratic Appointees to Multiemployer Pensions Committee Named
"Democratic Leader Nancy Pelosi (California) has appointed: Rep. Richard E. Neal of Massachusetts, Ways and Means Ranking Committee Member; Rep. Bobby Scott of Virginia, Education and Workforce Committee Ranking Member; Rep. Donald Norcross of New Jersey, Education and Workforce Committee; and Rep. Debbie Dingell of Michigan, Energy and Commerce Committee." (planadviser)
Senate Democrats Named to Multiemployer Committee
"Senate Democratic Leader Chuck Schumer of New York announced the Senate Democratic members: Sherrod Brown of Ohio, Joe Manchin of West Virginia, Heidi Heitkamp of North Dakota and Tina Smith of Minnesota." (Pensions & Investments)
Speaker Ryan Announces Appointees to Joint Select Committee on the Solvency of Multiemployer Pension Plans
"Speaker Ryan has named the following lawmakers to this select committee, which is charged with improving the solvency of multiemployer pension plans and the [PBGC]: [1] Rep. Virginia Foxx (R-NC), chairwoman of the House Education and the Workforce Committee; [2] Rep. Phil Roe (R-TN), House Education and the Workforce Committee; [3] Rep. Vern Buchanan (R-FL), House Ways and Means Committee; [4] Rep. David Schweikert (R-AZ), House Ways and Means Committee." (Speaker Paul Ryan, U.S. House of Representative)
Multiemployer 'Composite' Plan Bill Introduced in House
"[T]he proposal seeks to codify the 'composite' model developed by the National Coordinating Committee for Multiemployer Plans aimed at combining key features of defined benefit and defined contribution plans, and avoiding sliding into funding imbalance.... A Joint Statement by AARP, along with several unions and pension rights organizations, expressed opposition ... [and concern] that the move to composite plans would continue to allow underfunded plans to cut retiree pensions, and that pensions under the new composite arrangements would not be guaranteed." (Conduent)
U.S. Life Expectancy Is Not Declining for All Age Groups.
"Shorter life expectancy (higher mortality) translates into reduced costs for pension plans.... In fact, the recent mortality rates observed for the retired population continue to support expected improvements in life expectancy for this group. Therefore, it is important for actuaries of multiemployer plans not to reverse their expectations for mortality improvement in response to the latest data. As additional experience emerges, there may be refinements necessary in the actuaries' assumptions for pension plans, but they should be based on longer-term trends." (Segal Consulting)
Bipartisan Multiemployer Hybrid Plan Bill Introduced in House
"Reps. Phil Roe, R-Tenn., and Donald Norcross, D-N.J., introduced H.R. 4997, the Give Retirement Options to Workers (GROW) Act, that would allow sponsors to create the composite plans. The idea is part of an effort in Congress to address struggling multiemployer plans, including proposals to create a federal loan program. The legislation is based on a proposal developed with the National Coordinating Committee for Multiemployer Plans." (Pensions & Investments)
Budget Bill Establishes Joint Committee to Address Solvency of Multiemployer Plans
"Even if the select committee is able to agree on a solution to the multiemployer program, there is still a long and difficult process before any bill can be enacted. Thus, it will be critical for members to hear from affected individuals and families. The cost to the Federal government may be a factor in any relief that is provided." (Cheiron)
Congress Establishes Committee to Address Multiemployer Pension Plan Crisis
"The creation of the bipartisan, bicameral Committee provides a unique opportunity for companies to address the issues related to multiemployer pension plans, including withdrawal liability.... While it is too early to address the Committee's direction, several large plans are facing imminent insolvency. Thus, it is likely that some legislation, whether narrow or broad in scope, has a possibility for passage by the end of the year." (Akin Gump)
House-Senate Committee Tasked with Solving Multiemployer Pension Crisis by Year-End
"The committee will be comprised of six senators and six House members, equally divided between Republicans and Democrats, who will be appointed by House and Senate leaders. It will have instructions to report a bill by the last week of November, and will be required to hold at least five public meetings. If at least four members from each party agree on a compromise, the solution the committee produces will be guaranteed an expedited vote on both the House and Senate floors with no amendments[.]" (Chief Investment Officer [CIO])
2018 Key Administrative Dates and Deadlines for Calendar-Year Defined Contribution Plans (PDF)
This four-page chart includes a descriptive list of the 'key' administrative dates and deadlines for calendar-year defined contribution plans regulated by ERISA and the Internal Revenue Code. (Milliman)
Special Pension Committee Formed in Congress to Come Up with Multiemployer Bill
"Sen. Sherrod Brown [D-Ohio] ... during the Senate budget deal reached Wednesday ... secured a guarantee that whatever the select pension committee comes up with will get an expedited vote on both the House and Senate floors. The committee will have to hold at least five public meetings, including at least one field hearing so committee members can hear directly from affected retirees, workers and businesses." (Pensions & Investments)
U.S. Multiemployer Pension Plan Contribution Indices, Updated Through 2015 (PDF)
"In 2015, more plans received sufficient contributions to maintain their unfunded liabilities as measured with funding discount rates -- 78% in 2015 compared with 76% in 2014. Also, more plans met a 15-year funding pace -- 55% in 2015, up from 50% in 2014.... 22% of plans received in sufficient contributions to maintain existing unfunded liabilities computed on the same basis, down from about 26% for 2014.... Aggregate unfunded liabilities increased slightly from about $129 billion for 2014 to about $133 billion for 2015, when measured with the actuarial discount rates, cost and asset methods used for funding purposes." (Society of Actuaries)
U.S. Multiemployer Pension Plan Withdrawals, 2009-2015 (PDF)
"On average over 2009-2015, 1.2% of all participating employers withdrew annually, affecting 18% of plans which covered 63% of all participants. In 2015, 0.8% of all employers withdrew, affecting 15% of plans which covered 63% of all participants. Based on a partial year of data for 2016, 1.3% of all employers withdrew, affecting 19% of plans that covered 67% of all participants.... While over half of plans' assessed withdrawal liabilities were less than one-tenth of 1% (0.001%) of plan liabilities, a small number of plans saw assessed withdrawal liabilities of more than 10% of plan liabilities." (Society of Actuaries)
U.S. Multiemployer Pension Plan Stress Metrics: Previous Benefit Cost and Previous Benefit Cost Ratio (PDF)
"Using funding discount rates, the median [Previous Benefit Cost (PBC)] was -$621 in 1999, indicating a small funding 'surplus' rather than an unfunded liability.... Using lower Current Liability discount rates, median PBCs generally increased since 2009 -- from $8,004 in 2009 to $11,271 in 2015, almost five times its funding discount rate equivalent ... Using funding discount rates, the median PBCR was 0% in 1999, indicating no unfunded liability. It peaked in 2009 at 61% and has declined to 54% in 2015.... Since 2009, annualized costs of unfunded liabilities outweigh the cost of current participants' benefit accruals for over half of plans." (Society of Actuaries)
Survey Results: Multiemployer Pension Plan Sponsors
"Nearly half (44%) of those polled plans' current funded status is 'endangered' or worse. Trustees with plans currently in the red zone status are not entirely confident the plan will meet the targets in its rehabilitation plan.... 62% of trustees polled are increasing contributions to alternative investment classes in an effort to improve overall health of the plan" (SEI)
2018 Key Administrative Dates and Deadlines for Calendar-Year Multiemployer Defined Benefit Plans (PDF)
This three-page chart includes a descriptive list of the 'key' administrative dates and deadlines for multiemployer defined benefit plans regulated by ERISA and the Internal Revenue Code. (Milliman)
[Opinion] Proposed Loan Programs for Multiemployer Plans
"If the loan benefits retirees mostly and relies on active member contributions for repayment this is illegal and will not work.... If active members will object, what about employers? ... If contributions cannot repay the loan what of investment interest income? ... Do we assume that public pensions will remain silent if loans are available to private pensions?" (Burypensions)
Multiemployer Plans: Their Current Circumstances in Historical Context (PDF)
88 pages. "As of September 2017, the Treasury has approved only three of the 15 benefit-cut requests submitted ... [F]our applications still remain under review. So, while the ultimate effectiveness of MPRA still remains to be seen, it is clear that other solutions must be explored to meet the multiemployer challenge ... [T]here are 11 relatively large critical plans -- covering about 86,000 members -- that could become 'critical-and-declining' in the near term. Early action that focuses on some of these indicators might be able to stabilize other plans heading for trouble." [Sept. 29, 2017; posted on EBSA website Jan. 16, 2018] (IMPAQ International, for Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Second Application for Approval of a Proposed Suspension of Benefits Under Ironworkers Local Union 16 Pension Fund
"The proposed effective date for the benefit suspension is October 1, 2018.... The proposed suspension [provides] for different treatment of participants and beneficiaries ... The proposed reduction eliminates the thirteenth check for all pensioners, surviving spouses and beneficiaries who are receiving a thirteenth check, with the last such check to be issued in January 2018." [Submitted Dec. 28, 2017; posted on Treasury website Jan. 16, 2018; published in Federal Register Jan. 25, 2018] (U.S. Department of the Treasury)
Alaska Ironworkers Pension Plan, Second Application for Benefit Suspension or Reduction
"This application proposes that 26.5% of the participant's (or beneficiary's) benefit earned as of July 1, 2016 be suspended." [Submitted Dec. 19, 2017; posted on Treasury website Jan. 10, 2018; published in Federal Register on Jan. 18, 2018] (U.S. Department of the Treasury)
Seventh Circuit Applies Clear Error Standard to Review of Withdrawal Liability Arbitrator's CBA Interpretation
"[T]he Seventh Circuit applied the clear error standard of review to a withdrawal liability arbitrator's interpretation of the parties' underlying collective bargaining agreement (CBA) that required contributions to a multiemployer pension fund. The Court enforced the arbitrator's findings, a victory for the employer whose withdrawal liability was consequently reduced from over $600,000 to $0." [Laborers' Pension Fund v. W.R. Weis Company, Inc., Nos. 16-2079 & 16-2944 (7th Cir. Jan. 8, 2018)] (Seyfarth Shaw LLP)
'Composite' Solution for Multiemployer Plans in the Works
"[T]he Give Retirement Options to Workers (GROW) Act ... would facilitate a transition to what is being called a 'composite' retirement plan ... [which would combine] the key features of defined benefit and defined contribution plans. Proponents say that this new structure will give peace of mind to workers who will still receive lifetime income through the composite plan, while giving employers certainty in how much they will be required to pay into the system. Opponents ... argue that the option would divert much-needed funding from legacy DB plans." (National Association of Plan Advisors [NAPA])
[Opinion] Joint Statement Opposing 'Composite' Pension Legislation
"The composite legislative proposal does not ensure that earned pensions will be fully paid in either existing multiemployer pension plans or in newly created plans. The composite proposals put benefits at risk, even in those multiemployer plans that are well-funded today.... [M]oney that would be needed for the new composite plans will be taken from money needed to fund existing plans -- likely leading to underfunding of both plans -- without adequate benefit protections." (AARP; Int'l Ass'n of Machinists and Aerospace Workers; Int'l Brotherhood of Boilermakers; Musicians for Pension Security; Nat'l United Comm. to Protect Pensions; Nat'l Retirees Legislative Network; Pension Rights Center; Others)
Fourth Circuit: District Court Misapplied ERISA Preemption Principles in Taft-Hartley Fund Dispute
"[T]he Fourth Circuit concluded that ... The state-law claims were not preempted, and the case should have proceeded as a breach of contract suit.... [T]he Fourth Circuit determined that the district court treated conflict preemption and complete preemption as opposing choices. The Fourth Circuit noted, however, that the jurisdictional issue implicating complete preemption was not present in this case." [Greenbrier Hotel Corp. v. UNITE HERE HEALTH, No. 16-2116 (4th Cir. Jan. 3, 2018)] (Thomson Reuters Westlaw)
Setting Up for Success: Wellness Programs in a Multiemployer Setting (PDF)
"[S]uccessful wellness programs exhibit two characteristics that most multiemployer plans lack ...[E]stablishing a culture of wellness is typically an employer-centric activity that works best at a single workplace....[L]eadership is generally not visible to the membership on a day-to-day basis. Even if the chair of the board of trustees and the fund administrator are willing to lead by example by participating in wellness activities, the members may not be aware of it." (benefits magazine, a publication of the International Foundation of Employee Benefit Plans [IFEBP])
Pension Rights Center: The Year in Review (PDF)
"On November 16, Senator Sherrod Brown (D-OH) and Congress Richard Neal (D-MA) introduced comprehensive legislation to address the multiemployer pension crisis.... [T]he Pension Rights Center celebrated our 41st anniversary ... PRC staff fielded more than 1,600 calls from participants with pension and retirement savings plan problems in 49 states ... [PRC's] recoupment initiative ... is bringing together attorneys who represent plans and those who represent retirees to search for common ground on new rules to address this critically important problem.... [PRC] published fact sheets and blogs posts on the importance of pensions." (Pension Rights Center)
The Multiemployer Pension Plan Crisis: History, Legislation, and What's Next? (PDF)
52 pages. Topics include: [1] Is MPRA working? [2] What happens if nothing happens? [3] Potential solutions: (a) PBGC takeover of critical and declining status plans; (b) PBGC funding; (c) Partitioning of orphans; (d) Plan mergers; (e) Benefit modifications; (f) Variable defined benefit plans; (e) Composite plans; and (f) Loan program proposals. (U.S. Chamber of Commerce)
[Opinion] Joint Statement Opposing 'Composite' Pension Legislation
"The composite legislative proposal does not ensure that earned pensions will be fully paid in either existing multiemployer pension plans or in newly created plans. The composite proposals put benefits at risk, even in those multiemployer plans that are well-funded today." (Pension Rights Center and eight other employee and retiree organizations)
[Official Guidance] Text of Treasury Department Approval of Application to Reduce Benefits Under International Association of Machinists Motor City Pension Plan (PDF)
"Because a majority of voters identified as eligible by the Plan did not vote to reject the benefit reduction, the benefit reduction may go into effect. Treasury, in consultation with DOL and PBGC, has issued a final authorization to reduce benefits under the Plan as described in the Application, effective January 1, 2018, subject to the conditions described [in this letter]." (U.S. Department of the Treasury)
Recent Data on the Funded Status of Multiemployer Pension Plans (PDF)
"A majority of plans are in the green zone ... Most plans have a funded percentage above 70% and many are fully funded ... In the construction industry, a greater percentage of plans with fewer than 1,000 participants are in the red zone than larger plans ... Yet the industry as a whole remains overwhelmingly healthy with very few [critical and declining] plans -- only six in 2017." (Segal Consulting)
Proposed Legislation Would Create Multiemployer Pension Loan Program (PDF)
"The proposed Bill would create an agency in the Treasury Department ... [that] would make low interest rate loans to multiemployer defined benefit plans which are in critical and declining status.... The recipient plan would make interest-only payments for 29 years and a final balloon payment of interest and principal the 30th year.... The idea is that the plans receiving loans could earn enough money from plan's asset investments to pay back the loan and stabilize the plan and multiemployer system." (United Actuarial Services, Inc.)
[Opinion] It's Time to Protect Union Pensions
"The Teamsters have been working diligently for years with key members of Congress trying to come up with a solution to this pension crisis. And with the release of new legislation last month, the union believes it has found it. The bill would boost financially troubled multi-employer pensions so they don't fail. It would create a new agency under the U.S. Treasury Department that would sell bonds in the open market to large investors such as financial firms. The dollars raised, in turn, would go to these retirement plans to stave off cuts or complete failure." (James Hoffa, via The Detroit News)
Union Fund Hit with Excessive Fee Suit
"Similar to many excessive fee lawsuits filed against single-employer plans, the complaint accuses a multiemployer plan of failing to leverage its bargaining power to obtain lower investment and recordkeeping fees." (PLANSPONSOR)
Multiemployer Pension Plans: Current Status and Future Trends (PDF)
71 pages. "At this stage, the majority of proposed solutions to the multiemployer challenge fall into two categories: alleviating the burden of orphaned members -- workers left behind when employers exit -- and providing subsidized loans -- either through direct government lending or government guarantees on private sector loans. Whatever the ultimate solution, a case can be made for a package that involves contributions from employers (tailored not to sink already fragile plans), from plan participants, and from taxpayers." (Center for Retirement Research at Boston College)
Underfunded Multiemployer Fund Proposes 'Two-Pool' Program
"[E]mployers who join the new pool will likely pay a withdrawal liability amount, possibly on a discounted basis, for past unfunded liability. They will then join the 'new pool,' which will be funded at a very high rate -- with reduced benefits -- to prevent future unfunded liability problems like those in the present plan.... [The] Fund's two-pool proposal may mark the first significant proposal by a large multiemployer pension plan since the proposal suggested by the Central States Pension Fund was rejected by the [PBGC] and The Treasury Department during 2016." (Polsinelli PC)
Senate HELP Subcommittee Examines the Mounting Multiemployer Pension Problem
"Members of the Subcommittee heard from the Honorable Tom Reeder, the Director of the [PBGC].... Reeder laid out the high stakes of finding a solution to preserve the pension plans promised to millions of workers and retirees.... PBGC's FY 2016 Projections Report shows that the [single-employer] program will be out of a deficit by 2022.... [T]he Multiemployer Program stands in stark contrast as financial conditions continue to worsen." (Committee on Education and the Workforce, U.S. House of Representatives)
[Opinion] Should Failing Multiemployer Pension Funds Get a Federal Bailout?
"A core challenge is that the financially distressed multiemployer pension plans are in shriveling industries. For example, the United Mine Workers plan has 10 retirees for every active member.... Bailing out pension funds by offering them unpayable loans simply kicks the can down the road and increases future deficits in a non-transparent manner. Worse, this approach could easily spread to public sector retirement plans, allowing them to maintain unsustainable benefit formulas." (The Fiscal Times)
[Opinion] American Academy of Actuaries Comment Letter to PBGC on Proposed Modification to 2017 Form 5500 Schedule MB (PDF)
"PBGC is proposing that basic supporting documentation ... be included as an attachment to Line 4f.... [T]he additional information would enhance the ability of PBGC to perform projections for plans in critical and declining status or which are otherwise approaching insolvency.... [With] one exception ... the additional information will not result in a significant burden for most plan actuaries, as they will have already performed the calculations requested in the supporting documentation." (Multiemployer Plans Committee, American Academy of Actuaries)
Five Ideas for Fixing Unionized Workers' Pension Crisis
"[T]he Multiemployer Pension Reform Act was intended to fix the troubled pension system, but it hasn't quite done the job. Lawmakers, as well as major employers such as United Parcel Service, have thrown out proposals for fixing the pension system. Almost all of the proposals call for some sort of loan program for the plans." (Bloomberg BNA)
Multiemployer Pension Plan Funding Nears Peak Since 2008 Crash
"The interim update by Milliman compared changes in estimated funding levels at U.S. multiemployer defined benefit (DB) plans from December 31, 2016, to June 30, 2017. The aggregate funded percentage for all plans is estimated to have improved to 81% as of June 30 from 77% at the end of 2016, with a multiemployer plan system shortfall reduced by $21 billion." (HR Daily Advisor)
Multiemployer Plan Pension Rescue Bill Proposed
"The bill creates a new agency within the Department of the Treasury called the Pension Rehabilitation Administration (PRA) to make loans to plans and to receive loan payments. The PRA would receive funding from government bonds.... A plan would receive the loan and be required to either purchase an annuity contract for benefits in pay status, or establish a bond portfolio that would match the anticipated payment stream for benefits in pay status. The plan would make interest payments on the loan until maturity." (Cheiron)
Multiemployer Solvency Crisis: Adjustments to the PBGC's Benefit Guarantee to Reduce Pressure on the Guarantee Fund (PDF)
"Using the Multiemployer Pension Simulation Model (MEPSIM), we project that about 130 multiemployer pension plans covering 2.1 million participants will become insolvent over the next 20 years, and that the [PBGC's] multiemployer guarantee fund -- the backstop against such insolvencies -- will itself be exhausted by 2027.... The adjustments to the guarantee that we examine within this paper have a significant downward impact on the present value of projected PBGC assistance payments, but the impact is not sufficient to prevent the exhaustion of the guarantee fund. Given the large number of plans heading towards insolvency, it is unlikely that a single policy action is available to stabilize the guarantee fund. Rather, several simultaneous actions will be required, among which a reduction of the guarantee can be considered." (The Pension Analytics Group)
PBGC Fiscal Year 2017 Annual Report: Multiemployer Program Deficit Widens; Single-Employer Program Continues to Improve
"[T]he deficit in [PBGC's] insurance program for multiemployer plans rose to $65.1 billion at the end of FY 2017, up from $58.8 billion a year earlier. The increase was driven primarily by the ongoing financial decline of several large multiemployer plans that are expected to run out of money in the next decade. PBGC's Single-Employer Insurance Program continued to improve as the deficit dropped to $10.9 billion at the end of FY 2017, compared to $20.6 billion at the end of FY 2016. The primary drivers of the continued improvement include premium and investment income and increases in the interest factors used to measure the value of future liabilities." (Pension Benefit Guaranty Corporation [PBGC])
Treasury Announces Voting Schedule for International Association of Machinists Motor City Pension Plan MPRA Benefit Reductions
"[T]he proposed benefit reductions will now be subject to a vote of participants and beneficiaries of the Plan. Ballots were mailed to participants and beneficiaries on November 16, 2017. The voting period opens November 16, 2017 ... and closes December 7, 2017[.]" (U.S. Department of the Treasury)
[Opinion] Senators Introduce Bills to Save Financially Troubled Multiemployer Plans and Protect Retirees
"These bills set up a new office in the Treasury Department called the Pension Rehabilitation Administration (PRA), which would receive proceeds from the issuance of Treasury bonds. This money would then be lent to financially-troubled plans as long as they meet certain criteria. The Pension Rights Center is particularly pleased that the loans would be used to fully pay the benefits of retirees and that the bill would require plans, which have already been approved to cut benefits under MPRA, to apply for these new loans and if approved, use that money to restore previously suspended benefits." (Pension Rights Center)
[Opinion] A Few Concerns About the Multiemployer Plan Bailout Bill
"If this is an arbitrage deal (like Pension Obligation Bonds (POBs) were supposed to be) then isn't the whole idea to invest the money in riskier investments for profit? Will these plans be able to consider the Treasury bond money as an asset of the trust without a corresponding liability so as to artificially reduce contributions like what is going on with POBs? What happens with plans that have already cut benefits?" (Burypensions)
[Opinion] The Mother of All U.S. Pension Bailouts?
"[Sen. Sherrod Brown's] bill will ensure more mediocrity as there will be no incentive whatsoever to change what is fundamentally plaguing large U.S. pensions. Your discount rate is too high? No problem, keep it. Your plan is chronically underfunded? No problem, just borrow from the U.S. Treasury in perpetuity. You have no risk-sharing in your plan? Who cares, Uncle Sam will backstop it all so you don't need risk-sharing or better governance." (Pension Pulse)
Sen. Sherrod Brown to Unveil Multiemployer Loan Program Legislation
"The bill ... would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates.... The bill would also fund a program at the [PBGC] to finance any remaining needs of pension plans borrowing from the new program." (Pensions & Investments)
[Official Guidance] Text of Treasury Department Letter Approving Benefit Reductions by International Association of Machinists Motor City Pension Plan (PDF)
"In consultation with the Secretary of Labor and the Pension Benefit Guaranty Corporation, Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA." [Letter dated Nov. 6, 2017] (U.S. Department of the Treasury)
The Continuing Downward Spiral and Death Knell of the Multi-Employer Defined Benefit Plan
"In 2012, the Fund amended the Rehabilitation Plan to include a provision stating that an employer withdrawing from the Fund was required to pay a portion of the Fund's accumulated funding deficiency in addition to the statutorily mandated withdrawal liability.... Westrock sought relief from that amendment ... declaration that the amendment violated ERISA. The district court never addressed the merits of the action but rather dismissed the complaint ... stating that Westrock lacked standing. The Eleventh Circuit, acknowledging that this was a case of first impression which turned on statutory interpretation, affirmed the district court. In doing so, it opined that civil actions under ERISA were limited only to those parties and actions which Congress specifically enumerated." [Westrock RKT Co. v. Pace Industry Union-Management Pension Fund, No. 16-16443 (11th Cir. May 16, 2017)] (Jackson Lewis P.C.)
[Guidance Overview] SOA Mortality Improvement Scale MP-2017 Released
"Since the updated scale reflects more recent experience, it is likely a better estimate of future improvement than scale MP-2016, and with it comes the added benefit of lower liabilities. Sponsors who finalized accounting results earlier in the year may receive requests from auditors to quantify the effect of the new scale." (Cowden Associates, Inc.)
Employer Withdrawal Liability: Something to Consider Before Signing a CBA
"The CBA will likely not refer to withdrawal liability and the union is under no legal obligation to disclose this potential liability to you prior to signing the CBA.... Does the CBA require contributions to be made to one or more defined benefit pension plan(s)? If so, what is the funding status of the pension plans for which you would be obligated to contribute to under the CBA? ... Does the plan provide for a free look period? ... Will the union provide any indemnification for withdrawal liability?" (Graydon)
Sun Capital Redux: Private Equity Fund Seeks Declaratory Judgment on Controlled Group Liability for Portfolio Company's Pension Liabilities
"A complaint filed by Trilantic Capital Partners ... shows that multiemployer pension funds and the PBGC are continuing to pursue a strategy of asserting controlled group liability claims against private investment funds, and previews some of the facts that private investment funds may try to use to rebut those arguments. The complaint seeks a declaratory judgment holding that Trilantic is not in the 'controlled group' of one of its portfolio companies[.]" [Trilantic Capital Partners IV, LP v. United Food & Comm'l Workers Int'l Union-Ind. Pension Fund; New England Teamsters & Trucking Ind. Pension Fund; Nat'l Retirement Fund; and PBGC, No. 17-7485 (S.D.N.Y., complaint filed Sept. 29, 2017)] (Proskauer Rose LLP)
Loans by Federal Government to Multiemployer Plans Could Cost $7 Billion
"Advocates for multiemployer plans are putting the finishing touches on various federal proposals that would offer low-interest financing for struggling plans.... 55 pension funds designated as critical and declining with a combined $28 billion in net assets at the end of 2015 would be eligible for credit assistance. Under one proposal, the gross loan disbursement would be $23.3 billion payable over five years, with the favorable loan terms costing taxpayers $7.2 billion, without factoring in default risk, the researchers said; a one-third default rate on those loans would cost $10.9 billion." (Pensions & Investments)
Teamsters Pension Plan Warns Thousands of Beneficiaries That the Checks May Get Smaller
"The Western Pennsylvania Teamsters fund -- which has about 48 cents for every $1 in benefits it owes to retirees and workers -- notified participants in April that it is considering cutting benefits in order to insure that the fund doesn't become insolvent. The plan is expected to pay out nearly $129 million in benefits this year but will collect only about $54 million in contributions. If the current level of benefits is maintained, the fund is projected to run out of money in 2028." (Pittsburgh Post-Gazette)

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