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News Items, by Subject

Multiemployer plans

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How Multiemployer Pension Plans Can Extract More from Contributing Employers Than What They Bargained For
"The most significant extra-contractual obligation is withdrawal liability, a statutory exit fee imposed on employers that leave a plan that has unfunded vested benefits. However, even before a withdrawal, an employer's potential liability can also be affected by the plan rules adopted by the MEPP's trustees and other federal laws intended to encourage proper funding of the MEPPs[.]" [Bakery & Confectionary Union & Industry Int'l Pension Fund v. Just Born II, Inc., No. 17-1369 (4th Cir. Apr. 26, 2018)] (Jackson Lewis P.C.)
FASB Changes for Employee Benefit Plans with Master Trust Investments
"FASB issued Accounting Standards Update 2017-06 to provide additional guidance on disclosure of an employee benefit plan's interest in a master trust. The changes are aimed particularly at defined contribution plans, which generally have divided interests (rather than percentage interests) in master trusts. The guidance is effective for fiscal years beginning after December 15, 2018, and applies retrospectively to each period for which financial statements are presented." (McDermott Will & Emery)
Lawmakers Take Another Crack at Solving Multiemployer Pension Plan Problems
"[The] House Education and Labor Committee approved H.R. 397 ... The 26-18 vote on June 11 was on party lines. If eventually approved, the measure would help those financially ailing plans with 30-year repayable federal loans to shore up their assets and value, at affordable interest rates. The loans would come from a trust fund in the Treasury Department and plans seeking aid would have to prove the money would keep them solvent and able to provide current benefits." (People's World)
Multiemployer Pension Reform Bill Approved by House Education and Labor Committee
"Also known as the Butch Lewis Act, H.R. 397 would establish the Pension Rehabilitation Administration and a related trust fund within the Treasury Department to make loans to multiemployer plans in critical and declining status that are approved by Treasury to reduce benefits, or to plans that are already insolvent but not terminated." (Pensions & Investments)
House Education and Labor Committee Sets Vote on Multiemployer Reform Bill
"The bill, H.R. 397, also known as the Butch Lewis Act, would establish the Pension Rehabilitation Administration and a related trust fund within the Treasury Department to make loans to multiemployer plans in critical and declining status that are approved by Treasury to reduce benefits, or to plans that are already insolvent but not terminated. Treasury would issue bonds to finance the loan program." (Pensions & Investments)
America's Largest Musicians' Union Announces Pension Cuts
"Trustees of the American Federation of Musicians and Employers' Pension Fund (AFM-EPF) announced the evening of May 24 that they will apply to the U.S. Treasury for a reduction in member benefits, due to the AFM-EPF's 'critical and declining' status -- meaning the fund is projected to run out of money in 20 years.... Approximately 50,000 AFM members participate in the pension fund, and it's estimated that 20,000 of them will eventually see a reduction in their pension benefits." (National Public Radio [NPR])
Musicians' Union Pension Fund Preparing MPRA Application to Reduce Benefits
"As of March 31, the pension fund had $1.8 billion in assets and about $3 billion in liabilities, with a funding shortfall of $1.2 billion and a funding ratio of 60%. The plan's actuaries advised the board of trustees in May that it had entered critical and declining status for the plan year that began April 1 and is projected to be insolvent within 20 years." (Pensions & Investments)
Multiemployer Pension Funded Status Falters in 2018 (PDF)
"The estimated investment return for our simplified portfolio for the 12 months ending December 31, 2018, was about -5%, resulting in double-digit losses compared to plans' investment return assumptions. The average investment return assumption dropped from 7.34% in our Fall 2018 study to 7.26%. The aggregate funded percentage for multiemployer plans is estimated to be 74% as of December 31, 2018, down from 81% as of June 30, 2018." (Milliman)
Notes from Meeting of Actuaries 'Intersector Group' with PBGC, March 7, 2019 (PDF)
6 pages. Topics include: [1] PBGC organizational changes and priorities; [2] Pilot Mediation Program; [3] ERISA Section 4044 assumptions; [4] Is PBGC now using the information collected on de-risking to inform solvency projections? [5] Missing participants: update on any joint efforts among DOL, IRS, and PBGC to standardize what constitutes a diligent search for various purposes; [6] PBGC Guidance Plan; [7] Forms and instructions update; [8] Actuarial equivalence lawsuits; and [9] Proposed guidance on simplified withdrawal liability. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
[Official Guidance] Treasury Department Approval of Western Pennsylvania Teamsters and Employers Pension Fund Application for Reduction of Benefits (PDF)
"In consultation with the [DOL] and the [PBGC], Treasury has determined that the Fund 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.... [No] reduction of benefits can take effect before a vote of the participants and beneficiaries of the Fund with respect to the proposed reduction." (U.S. Department of the Treasury)
[Guidance Overview] PBGC Finalizes Revised Valuation and Notice Rules for Insolvent Multiemployer Plans
"Plan sponsors of certain terminated or insolvent plans will now be required to file with PBGC information about withdrawal liability payments and whether any employers have withdrawn but have not yet been assessed withdrawal liability.... Most annual updates to notices of insolvency benefit level are eliminated after the first notice if the plan is insolvent in the current plan year or is expected to be insolvent in the next plan year." (Buck)
PBGC Issues Final Regs Amending Valuation, Reporting, and Disclosure Rules for Terminated and Insolvent Multiemployer Plans
"The final regulations, which are substantially the same as [those proposed in July, 2018], change the reporting and disclosure requirements for multiemployer plans that are: Terminated by a mass withdrawal. In critical status and that are insolvent or expected to be insolvent." (Thomson Reuters Practical Law)
Notes from Meeting of Actuaries 'Intersector Group' with IRS, March 7, 2019 (PDF)
6 pages. Topics include: [1] Revenue Procedures 2017-56 and 2017-57; [2] Final Form 5500 Filings; [3] Substitute Mortality Tables (SMTs); [4] Market Rate of Return (ROR) Plans; [5] Multiemployer Technical Correction; [6] Adjusted Funding Target Attainment Percentages (AFTAPs) and Annuity Purchases; [7] Life Expectancy Tables; [8] Retiree Lump Sum Payments; [9] 'New Form 5500'; [10] Plan Factors; and [11] Guidance Plan. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
[Official Guidance] Text of PBGC Final Regs: Terminated and Insolvent Multiemployer Plans and Duties of Plan Sponsors
"The Pension Benefit Guaranty Corporation is amending its multiemployer reporting, disclosure, and valuation regulations to reduce the number of actuarial valuations required for smaller plans terminated by mass withdrawal, add a valuation filing requirement and a withdrawal liability reporting requirement for certain terminated plans and insolvent plans, remove certain insolvency notice and update requirements, and reflect the repeal of the multiemployer plan reorganization rules.... This rule is effective July 1, 2019." (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] Multiemployer Plan Reforms are Needed Before It's Too Late
"[I]ncreasing PBGC premiums alone will not save the multiemployer system. A variable-rate premium could encourage better funding. Without other reforms, however, it could drive more employers out of the system. Among the reforms that have been suggested are stakeholder premiums, changes to funding, withdrawal liability, and benefit adjustment rules, stronger governance rules, and clearer rules on plan termination and windup." (The Wagner Law Group)
[Official Guidance] Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Sheet Metal Workers Local Pension Fund
"The Board of Trustees of the Sheet Metal Workers Local Pension Fund ... has submitted an application to reduce benefits under the plan in accordance with [MPRA]. The purpose of this notice is to announce that the application ... has been published on the website of the Department of the Treasury, and to request public comments on the application from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the Sheet Metal Workers Local Pension Fund." (U.S. Department of the Treasury)
Withdrawal Liability Assessments: How to Identify Possible Default Defendants
"On preliminary motions, the Judge permitted a trial on a withdrawal liability default claim that a company alleged not to be party to a collective bargaining agreement mandating fund contributions nonetheless is jointly and severally liable on a controlled group basis, or on an alter ego, single employer or joint employer relationship basis. This occurred even though the company had different owners, filed separate tax returns, maintained separate bank accounts and kept separate financial records, and even though the court cited no evidence of an intent to avoid withdrawal liability." [Trustees of the National Retirement Fund v. Fireservice Management LLC, No. 17-4003 (S.D.N.Y. Apr. 17, 2019)] (Seyfarth Shaw LLP)
2019 American Bar Association Midwinter Meeting Report on Issues Unique to Jointly Administered Plans (PDF)
11-page report of 2018 regulatory and litigation developments. Topics include: [1] Legislation and regulation of jointly administered plans; [2] Substantive requirements of Section 302(c)(5) of the Taft-Hartley Act; [3] Criminal liability under Section 302 of the Taft-Hartley Act; [4] Actions to enforce the contribution obligation; [5] Funding rules for multiemployer plans; [6] Multiemployer Pension Plan Amendments Act -- plan termination insurance; [7] Coal Industry Retiree Health Benefit Act of 1992. (Employee Benefits Committee [EBC], American Bar Association)
Status Update of Pension Plans with Approved MPRA Benefit Reductions
"So far there have been twelve plans approved for benefit cuts under MPRA ... And one plan that got a Proposal Approval letter but not a Final Authorization letter ... We now have data on one plan that has gone through a full year of benefit cuts as reported on their 5500 filings. Payouts dropped about 20% but there is still negative cash flow that projects to bankruptcy, if not in 10 years, then maybe 15." (Burypensions)
[Opinion] American Academy of Actuaries Comments to PBGC on Proposed Methods for Computing Withdrawal Liability under MPRA (PDF)
"PBGC might want to consider making a clearer statement in the regulations that the new rules apply prospectively only, to prevent unintended consequences with respect to prior withdrawal liability determinations.... PBGC would do well to consider clarifying that the simplified methods described in the proposed regulation are 'safe harbor' methods, but that alternate simplified methods could be appropriate as well.... PBGC might consider clarifying the point at which the de minimis credit under section 4201(b)(1) of ERISA is applied in determining an employer's withdrawal liability." (American Academy of Actuaries)
IBEW Local 237 Letter to IRS Withdrawing Application for MPRA Benefit Suspension (PDF)
"The Plan fully intends to submit ... a resubmission review under MPRA as soon as practicably possible. If not permitted, the Plan intends to submit a new application for approval of suspension of benefits under MPRA on or before June 30, 2019." (U.S. Department of the Treasury)
Multiemployer Plans: Current Pension Plan Issues, Legislation and Agency Guidance (PDF)
37 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics: [1] Financial assistance to insolvent multiemployer plans; [2] Projections report; [3] Final rule -- mergers and transfers; [4] Safe-harbor solvency tests; [5] Changes; [6] Dueling court decisions on Segal Blend and withdrawal liability ; [7] Successor withdrawal liability; [8] Joint Select Committee on Solvency of Multiemployer Plans; [9] Pending legislative proposals. (Employee Benefits Committee [EBC], American Bar Association)
[Guidance Overview] PBGC Proposes Simplified Methods for Withdrawal Liability Calculations
"While the proposed rule is not yet effective, multiemployer pension plans and their contributing employers alike should consider the potential impact of these simplified methods on withdrawal liability calculations.... [T]he simplified methods are optional and plans could continue to use alternative methods that are not specified in the PBGC's regulations.... PBGC is accepting public comments on the proposed regulation through April 8, 2019." (Proskauer Rose LLP)
[Opinion] American Academy of Actuaries Responses to House HELP Subcommittee Questions on Multiemployer Pension Crisis (PDF)
"[1] Have the changes to single employer plan funding rules, including the use of market rates to discount liabilities, under the Pension Protection Act of 2006 resulted in greater retirement security for participants of single employer plans? ... [2] How do multiemployer actuaries set the discount rate for multiemployer plan liabilities for funding purposes? ... [3] Dr. Naughton indicated that multiemployer plans have not collected 'actuarially sound' contributions from contributing employers. [a] What does that mean? [b] Is the system itself sound? [c] What should Congress consider to improve the viability of the system?" (American Academy of Actuaries)
Employer Withdrawal Activity Overview: U.S. Multiemployer Pension Plans (PDF)
10 pages. "The percentage of withdrawing employers dropped from 1.49% in 2009 to 0.85% in 2016, and the percentage of plans that experienced withdrawal fell from 18.5% in 2009 to 15.1% in 2016. However, at 60%, the percentage of participants in plans that experienced withdrawal was the same in 2009 and 2016, although the percentage slowly increased to 67% in 2013 before slowly declining to 2016. On average over 2009-2016, assessed withdrawal liabilities were 0.4% of aggregate plan liabilities for zone determination. But the impact on individual plans varied widely." (Society of Actuaries)
Contribution Analysis for U.S. Multiemployer Pension Plans (PDF)
"In 2016, 83% of plans that covered 69% of all MEPP participants received enough contributions to reduce their unfunded liabilities as measured with funding discount rates -- down from 86% of plans covering 78% of participants in 2015. The decrease stemmed in part from increased unfunded liabilities in 2016. Of the 83% of plans whose contributions were sufficient to reduce unfunded liabilities in 2016, half of them were on pace to eliminate unfunded liabilities within 8.3 years. Eighty percent of them were funding at a pace to eliminate unfunded liabilities within 16.8 years, and 90% of them were funding at a pace of 23.4 or fewer years." (Society of Actuaries)
Multiemployer Plan Withdrawal Liability: Lessons from a Recent Seventh Circuit Decision
"[The Seventh Circuit] affirmed a district court's judgment ordering a group of closely held businesses and the group's owners to pay $640,900 in withdrawal liability, plus interest, liquidated damages, attorneys' fees and court costs. The defendants were found to have waived all defenses to the assessment because they failed to make interim payments and initiate arbitration over the liability." [Trustees of the Suburban Teamsters of Northern Illinois Pension Fund v. The E Company, No. 18-2273 (7th Cir. Jan. 29, 2019)] (McGuireWoods)
[Guidance Overview] 2018 Q&As: PBGC Meeting with ABA Joint Committee on Employee Benefits (PDF)
9 pages. Topics include: [1] Standard termination experience; [2] Reportable events experience; [3] Coverage webpage update; [4] Pilot mediation project; [5] Interagency issues relating to missing participants; [6] Premiums; [7] Early warning; [8] Rule on mergers and transfers between multiemployer plans; [9] Guidance regarding requests for approval of alternative method of withdrawal liability payments; and [10] Responses to PBGC's RFI. (Joint Committee on Employee Benefits [JCEB], American Bar Association)
Legislation Giving Participants More Say in MPRA Benefit Cuts Reintroduced in Senate
"The proposed Pension Accountability Act was introduced by Ohio Sens. Rob Portman, a Republican, and Sherrod Brown, a Democrat, both of whom served on last year's Joint Select Committee on Solvency of Multiemployer Pension Plans, which expired before a reform package could be approved. The bill amends the Multiemployer Pension Reform Act by making participant votes binding in all situations and only counting returned ballots." (Pensions & Investments)
House Holds Hearing on Multiemployer Pensions (PDF)
"The sense from the hearings has been that if the multiemployer pension system fails, the fall-out will not only devastate contributing employers, employees and retirees, [but also may] lead to the failure of other multiemployer plans and increase the burden on state, local and the federal government to provide 'safety-net' social services to the impacted." (United Actuarial Services, Inc.)
[Guidance Overview] PBGC Proposes Simplified Methods for Calculating Withdrawal Liability
"The requirement to disregard a benefit suspension in calculating the value of unfunded vested benefits would apply only for withdrawals that occur within the 10 plan years after the end of the plan year that includes the effective date of the benefit suspension.... The proposed regulations provide simplified methods for disregarding certain contribution increases when determining the allocation of unfunded vested benefits attributed to an employer and the annual withdrawal liability payment amount." (Littler)
[Guidance Overview] PBGC Proposed Regs Would Simplify Multiemployer Plan Withdrawal Liability Calculations
"[U]nder the proposal an employer's withdrawal liability is determined in two steps. First, the plan sponsor determines withdrawal liability payments based on the reduced plan benefits after taking into account the benefit reductions and benefit suspensions. Next, the plan sponsor adds to this the employer's proportional share of the value of the benefit reductions and benefit suspensions." (Buck)
PBGC Proposed Rule Provides Methods for Computing Withdrawal Liability (PDF)
"[T]he proposed withdrawal liability rules: [1] Reflect previous guidance on disregarding adjustable benefit reductions. [2] Provide simplified methods for complying with the [MPRA] requirements to disregard benefit suspensions. [3] Provide new guidance on which contribution increases should be reflected when determining an employer's withdrawal liability assessment and annual payment amount." (Milliman)
House Panel Hears Ideas for Solving 'Urgent' Multiemployer Crisis
"Without congressional action, participants in struggling plans face benefit cuts of 50% or more; when the PBGC multiemployer program itself becomes insolvent as projected to happen by 2025, those cuts will deepen to 90% ... Over a 30-year horizon, an estimated $32 billion to $103 billion in taxes would not be paid if some plan participants lose their pension benefits, while government social safety program costs could increase $170 billion to $240 billion." (Pensions & Investments)
[Opinion] Testimony of American Academy of Actuaries to Senate HELP Subcommittee: Why Congress Must Address the Multiemployer Pension Crisis (PDF)
12 pages. "The trustees of the plans that are projected to be insolvent face a very difficult situation.... The contribution rate increases needed to achieve recovery are so great that if they were imposed, the employers would be unable to remain in business or would choose to withdraw from the plans. For the plans that are unable to meet the criteria for benefit reductions under MPRA, they have no alternative other than to spend down their assets and wait for insolvency to occur.... Congress faces a dual challenge. Action is need ed to address the looming crisis that will occur when both plans and the PBGC exhaust their resources and reach the point of insolvency." (American Academy of Actuaries)
Retirement Benefits for Millions May Be Slashed Without PBGC Reforms, Says GAO
"The increasing fragile PBGC finances for insuring multiemployer plans in unionized industries such as trucking and baking have long been a concern with a deficit running at $54 billion, but GAO cautions single employer plan insurance could also be at risk as well." (Forbes)
PBGC Proposes Simplified Methods for Withdrawal Liability Calculations
"The major technical difficulty in applying the simplified methods arises from the requirement that increases in contributions required to meet a funding improvement plan (FIP) or rehabilitation plan (RP) must be disregarded. This requires the plan administrator to adjust each employer's contribution history by removing only those contributions due to an increase required to meet a FIP or RP. Plan administrators should examine the proposed simplifications to determine whether they provide any substantial reduction in the administrative burden." (Cheiron)
[Opinion] The Troubling Decline in Private Sector DB Plan Coverage: Write to Your Senators (PDF)
"The Butch Lewis Act (S. 2147) ... is another proposed federal government rescue program to throw taxpayer dollars at a social problem... [P]rivate sector defined benefit plans pose a much larger set of problems due to the declining pension coverage of private sector employees whose pension benefits are not subject to collective bargaining." (H. C. Foster and Company)
Public Agency Participation in ERISA Multiemployer Pension Plans
"Because practically all Taft-Hartley plans originated among unions and employers in the private sector, they are subject to ERISA and participants' benefits are, to some extent, 'insured' by the [PBGC].... What surprises many cities and special districts that participate in these trusts is that, under certain circumstances, the trusts can and must require the participating employers to contribute additional sums -- above and beyond what is called for in the applicable [Memorandum of Understanding]." (Best Best & Krieger LLP)
Common Multiemployer Plan Reporting Pitfalls for Employers
"Understanding common errors in benefit reporting will help you avoid shocking discrepancy letters from payroll auditors about owing unreported benefit contributions to a multiemployer plan.... Hours worked versus hours paid ... Omitted weeks ... Probationary periods and extended coverage ... Report all eligible employees ... Reconcile remittances to employee payroll deductions." (Lindquist CPA)
Piling On: Corporations Support the New York Times in Multiemployer Pension Calculation Dispute
"Several large employers are disputing how much money the New York Times owes a union multiemployer pension fund. Recently, six companies ... filed an amicus brief supporting the New York Times in its case before the US Court of Appeals for the Second Circuit.... The underlying issue in this case involves an actuarial method called the 'Segal Blend,' which often is used to value unfunded vested benefits and calculate withdrawal liability (an exit fee) from a union multiemployer pension plan." (McDermott Will & Emery)
Participants' ERISA Retaliation Claim Dismissed
"A federal district court in Illinois held that participants in a multiemployer pension plan failed to plausibly allege that plan fiduciaries retaliated against them in violation of ERISA Section 510 by refusing to consider their employer's offer to settle its withdrawal liability to the plan.... The district court dismissed the participants' claim as implausible, pointing to the participants' admission that the plan fiduciaries refused to consider the employer's proposal both before and after the participants filed suit." [Campbell v. Whobrey, No. 16-4631 (N.D. Ill. Jan. 14, 2019)] (Proskauer's ERISA Practice Center)
Court Finds Union's Withdrawal Liability Indemnification Obligation of Limited Duration
"Five days before the expiration of the final CBA in February 2014, the union disclaimed interest in represented the employer's bargaining unit members and notified the employer it would not be renewing the CBA upon its expiration. This resulted in the employer permanently ceasing to have an obligation to contribute to the plan, resulting in a withdrawal from the plan and the assessment of withdrawal liability against the employer in excess of $680 thousand dollars.... The sole issue before the Third Circuit on appeal was whether the district court properly held that the union's indemnification obligation did not cover withdrawal liability imposed after the expiration of the CBA.... The Court found that the employer could not withdraw and trigger withdrawal liability until it 'permanently ceased to have an obligation to contribute,' and that such cessation could not occur until the termination of the CBA." [Nitterhouse Concrete Prod., Inc. v. Glass, Molders, Pottery, Plastics & Allied Workers Int'l Union, No. 18-1429 (3d Cir. Feb. 6, 2019; unpub.)] (Jackson Lewis P.C.)
[Official Guidance] Treasury Department Approval of Southwest Ohio Regional Council of Carpenters Pension Plan Application for Reduction of Benefits (PDF)
"In consultation with the [DOL] and the [PBGC], Treasury has determined that the Fund 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.... [No] reduction of benefits can take effect before a vote of the participants and beneficiaries of the Fund with respect to the proposed reduction." (U.S. Department of the Treasury)
[Guidance Overview] PBGC's Proposed Regs Include Simplified Methods for Calculating Withdrawal Liability for Employers Leaving Multiemployer Pension Plans
"The proposed regulations incorporate statutory changes under the [PPA] and [MPRA], which require plan sponsors to disregard certain benefit reductions and contribution increases when calculating an employer's withdrawal liability and annual withdrawal liability payments. The proposed regulations also provide simplified methods for calculating withdrawal liability." (Thomson Reuters Practical Law)
Multiemployer Solvency Crisis: An Analysis of Proposed Adjustments to the PBGC's Benefit Guarantee
"[I]ncreasing the PBGC's benefit guarantee to $70 per year of service leads to a $44 billion increase in the projected present value of PBGC assistance payments. Freezing the plan five years before projected insolvency and cutting benefits to their guaranteed levels under current law leads to a $33 billion reduction in projected PBGC assistance payments. If implemented together, [these two provisions] lead to a $34 billion increase in projected PBGC assistance payments." (The Pension Analytics Group)
[Opinion] House Multiemployer Bill Emulates Single-Employer DB Risk Strategies -- With a Twist
"[T]he Rehabilitation for Multiemployer Pensions Act (RMPA) recently introduced in the House by Representative Richard Neal (D-MA) ... proposes to address multiemployer DB risk using two strategies single-employer plans have been increasingly implemented over the past decade: [1] Purchasing annuities to transfer risk permanently to an insurance company. [2] Hedging interest rate risk using liability driven investing (LDI) strategies featuring high quality, duration matched bonds.... Putting the uncertainty of the PRA loan repayments aside, the bill protects retiree pensions better than anything else being proposed." (The Principal Blog)
[Official Guidance] Treasury Department Approval of Toledo Roofers Local No. 134 Pension Fund Application for Reduction of Benefits (PDF)
"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. This notification is not a final authorization to implement the benefit reduction described in your application. Pursuant to Code section 432(e)(9)(H), no reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction." (U.S. Department of the Treasury)
[Official Guidance] Treasury Department Approval of Mid-Jersey Trucking Industry and Local 701 Pension Fund Application for Reduction of Benefits (PDF)
"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. This notification is not a final authorization to implement the benefit reduction described in your application. Pursuant to Code section 432(e)(9)(H), no reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction." (U.S. Department of the Treasury)
[Official Guidance] Text of PBGC Proposed Regs: Methods for Computing Withdrawal Liability, Multiemployer Pension Reform Act of 2014
68 pages. "[PBGC] proposes to amend its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers and Notice, Collection, and Redetermination of Withdrawal Liability. The proposed amendments would implement statutory provisions affecting the determination of a withdrawing employer's liability under a multiemployer plan and annual withdrawal liability payment amount when the plan has had benefit reductions, benefit suspensions, surcharges, or contribution increases that must be disregarded. The proposed amendments would also provide simplified withdrawal liability calculation methods." (Pension Benefit Guaranty Corporation [PBGC])
Multiemployer Pension Reform Efforts Continue After Demise of Congressional Joint Select Committee, Part 2
"Eligible plans could apply for a loan in an amount needed to fund the plan's obligations for the benefits of participants and beneficiaries in pay status at the time the loan is made. Plans that receive a loan would then be required to fund the plan's obligations to those in pay status in one of the following ways: [1] purchasing annuity contracts from an insurance company ... [2] investing the loan proceeds in a cash or fixed income (bond) portfolio designed to match the specific benefit liabilities ... [3] invest in some other portfolio prescribed by the Secretary of the Treasury in regulations." (Morgan Lewis)
2019 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)
Options for Construction Companies Facing Withdrawal Liability
"[1] Do nothing; [2] Pay it; [3] Use subcontractors; [4] A stock sale of the company; [5] An asset sale of the company; [6] Negotiate with the plan; [7] Terminate your obligations under the CBA." (Greensfelder)
[Opinion] Why a Federal Taxpayer Bailout for Union Pensions Is a Bad Idea
"The loan approach is based on the idea that if the plans get a low-interest loan from the government, and then invest the proceeds in risky assets and target a high return, the loan can be repaid in full.... In fact, the proposal now in Congress is similar to disastrous pension obligation bond issues under which state and local governments went on to sell bonds to the public and put the proceeds at risk in investments that they hoped would earn high returns." (Joshua Rauh, in the Washington Times)
Ninth Circuit Allows Pension Fund to Wipe Out Credit for Prior Partial Withdrawal Liability
"Affirming the district court, and discounting a 33-year old PBGC opinion letter to the contrary, the Ninth Circuit held that the credit for the prior partial withdrawal is applied before the application of the 20-year cap on payments, drastically increasing the amount of payable withdrawal liability. Because the order in which these items are applied can significantly alter the amount of liability, the decision will likely be used by pension funds to decrease or even eliminate the credit for which withdrawn employers would otherwise qualify." [GCIU-Employer Retirement Fund v. Quad Graphics, Inc., No. 17-55667 (9th Cir. Dec. 7, 2018)] (Conn Maciel Carey)
House Ways & Means Committee Chairman Introduces Legislation to Address Multiemployer Pension Crisis
"The bill establishes the Pension Rehabilitation Administration (PRA), a new agency within the Department of the Treasury, authorized to issue bonds in order to finance loans to 'critical and declining' status multiemployer pension plans, plans that have suspended benefits, and some recently insolvent plans currently receiving financial assistance from the [PBGC]." (Committee on Ways and Means, U.S. House of Representatives)
PBGC Premiums Rise Again in 2019; Other Minor Filing Changes Noted
"The flat-rate premium rises to $80 per participant, up from $74. The variable-rate premium for these types of plans is also now higher, at $43 per $1,000 of unfunded vested benefits ... The flat-rate premium for [multiemployer] plans is $29 per participant, rising from $28.... The PBGC also revised the instructions regarding disaster relief to reflect recent changes made to the agency's practices in this area." (HR Daily Advisor)
Defined Benefit Plan Liability with Facility Sales, Restructurings and Cessations
"In certain cases of a facility sale, restructuring or cessation, recently released information by the [PBGC] leaves many unanswered questions about plan sponsor liability for single-employer defined benefit plans." (McDermott Will & Emery)
Are You Liable for Unfunded Pensions? Don't Ignore Successor Liability, Part 2
"How can buyers protect themselves? [1] Thoroughly investigate potential Title IV liabilities prior to the closing.... [2] With an actuary's help, review the plan's funding notices and status and any available liability estimate from the plan. [3] Investigate the seller's financial situation to assess the likelihood that seller will not pay any pension liability assessment. [4] Consider special purchase agreement provisions ... [5] Be cautious about using ERISA Section 4204 to avoid a withdrawal on the sale." (Cohen & Buckmann, P.C.)
Multiemployer Plan Bailout Outlook for 2019
"The two major takeaways from the work of the Joint Select Committee were: [1] all 8 Democratic members strongly supported some type of loan program but were willing to consider other options in addition to the loan program; [2] a majority of Republican members ... strongly opposed a loan program and preferred a solution that relied on the PBGC to assume a significant portion of the financial crisis[.]" (Burypensions)
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