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News Items, by Subject

Multiemployer plans

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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)
Some Unions Turning to Variable Benefit Pension Plan Model
"[T]he $95 million New Orleans Carpenters Pension Plan, a plan close to 100% funded ... added a variable plan design for all benefits that have accrued since May. The basic premise ... is that benefits are adjusted up or down based on investment returns. The assumed rate of return ... determines whether benefits for all participants, including retirees, rise or fall on a plan year basis." (Pensions & Investments)
Ninth Circuit Clarifies Law on Partial Withdrawal Liability
"[T]he Ninth Circuit Court of Appeals clarified application of the credit for partial withdrawals, holding that the credit for partial withdrawal is applied before the application of the 20-year limitation on withdrawal liability payments." [GCIU-Employer Retirement Fund v. Quad/Graphics, Inc., No. 17-55667 (9th Cir. Dec. 7, 2018)] (Cheiron)
The Multiemployer Health Plan Landscape: A Ten-Year Look
"The total number of multiemployer health plans in the study declined steadily from 1,811 for the 2006 plan year to 1,594 in 2015. The majority of health plans ... offer dental, vision and life benefits in addition to health benefits.... The majority of plans ... cover both active and retired participants ... The plans in the study cover more than five million active and retired participants.... [and] reported more than 210,000 contributing employers." (International Foundation of Employee Benefit Plans [IFEBP])
[Opinion] Actually, the Central States Pension Plan Is Fully Funded
"There is another 'Central States' -- the Midwest Pension Plan sponsored by the Central States Joint Board ... [and] it's fully funded.... [U]nlike the Central States/Teamsters mob connections which ... resulted in such a corrupt management of their funds that the union was stripped of its ability to control those funds in 1982, the Central States Joint Board seems to have suffered no ill effects and may even have seen unexpected benefits: because pension funds were (partially) kept at the bank ($16 out of $93 million), its assumed asset return was 6% per year in 1999 and for six years thereafter, considerably lower than the average rate used that year, 7.2% (or, at median, 7%)." (Elizabeth Bauer, in Forbes)
[Guidance Overview] Surprise! You May Be Liable for Union Pension Plan Withdrawal Liability
"Shareholders of an incorporated business, partners in a partnership, or an alter ego or successor business may also be responsible for withdrawal liability if the participating employer does not pay the withdrawal liability to the pension plan. [This article provides] an explanation of the potential liability of individuals and entities, other than the employer, when the participating employer becomes insolvent and can't pay the withdrawal liability." (Frost Brown Todd LLC)
2019 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)
Asset Purchasers Beware: Constructive Notice of Seller's Union Pension Liability
"A recent 9th Circuit decision called out a common misconception -- in the form of 'incorrect legal advice' that the buyer received prior to closing -- that '[a]bsent an express assumption of liability, the Buyer does not assume the [withdrawal] liability' for a multiemployer pension plan. The decision went on to hold a private equity fund liable for $480,000 of withdrawal liability, even though all parties conceded that the purchaser had no actual notice of the liability." [Heavenly Hana LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plan, No. 16-15481 (9th Cir. June 1, 2018)] (The Wagner Law Group)
Understanding the Central States Pension Plan's Tale of Woe
"Had the plan been well-run and properly funded, and had principles of multi-employer plan design and the relevant legislation been designed to ensure long-term solvency rather than relying on new generations of contributors to make up for losses, Central States would have weathered these storms. But Central States was missing all this.... They had flaws in their plan design. And they were neither well-run nor properly funded." (Forbes)
Hatch, Brown Commit to Continued Work on Multiemployer Pension Crisis Past Nov. 30
"When the Joint Select Committee was created, it was expected members would vote on a package by this Friday. [Co-Chairs Orrin Hatch (R-UT) and Sherrod Brown (D-OH)] say that while they have made significant progress and a bipartisan solution is attainable, more time is needed and the committee will continue its work." (Joint Select Committee on Solvency of Multiemployer Pension Plans)
Panel Won't Meet Deadline on Fix for Multiemployer Pension Plans
"A bipartisan committee of lawmakers will miss a Friday deadline to reach an agreement on addressing financial shortfalls of multiemployer pension plans, meaning Congress is less likely to take up legislation on the matter before year's end. Both Republicans and Democrats on the panel said Thursday they nonetheless were close to agreeing on a proposal, and negotiations were expected to continue." (The Wall Street Journal; subscription may be required)
The Multiemployer Solvency Crisis: Estimates of the Cost and Impact of the Butch Lewis Act (PDF)
"Across 500 stochastic trials, the average number of participants in plans projected to become insolvent is 3.2 million in the baseline scenario, and 2.3 million if [the Butch Lewis Act (BLA)] is implemented.... In about 40% of trials, plans covering more than three million participants are projected to become insolvent, while in about 20% of trials we project that fewer than one million participants will be affected by plan insolvency.... Across the 500 trials, the average loan default rate was 52% ... While the loan maturity period is 30 years, BLA delays plans' insolvency by an average of only 16 years." (The Pension Analytics Group)
Rescue for Failing Multiemployer Pensions Not Expected from Joint Select Committee
"A November 30 deadline was set to report bipartisan legislation. But Republican and Democrat members could not agree on an 'equitable' solution, despite getting 'close' to a compromise ... The Committee's inability to report legislation comes in spite of an array of economists that have warned of massive macroeconomic implications of letting the pensions, and the [PBGC] fail." (BenefitsPro)
[Opinion] Multiemployer Pensions: Waiting for the Bailout
"[W]hat is being proposed is a partial bailout, and plan participants in failing plans need to realize that the alternative to a partial bailout is not a full bailout but getting a hell of a lot less than that partial bailout. Even if they managed to get a few top-ups for a few years from a congenial Congress and President (no matter the party), eventually the money situation will be that it will not be sustainable. So it won't be sustained. There are those where surviving just a couple more years will be good enough. But for the pension plan as a whole... they need something more long-term." (STUMP)
District Court Reaffirms Private Equity Partner Liability for Multiemployer Plan Contributions, Awards Damages and Attorneys Fees (PDF)
18 pages. "The private equity plaintiffs here chose in their calculus of risk and return to structure their business to breach what the First Circuit accurately characterized as 'fine lines' ... governing the circumstances in which withdrawal liability will be imposed upon those who invest in distressed businesses.... Any recalibration of the reasonable expectations of investors in companies with ERISA obligations must come from some source other than courts applying current applicable law.... [T]he Judgment of this court will be amended to include interest in the amount of not less than $2,253,787.76; liquidated damages in the amount of $903,307.80; ... [and] attorneys' fees and costs in the amount of $340,977.58."
[Sun Capital Partners III, LP v. New England Teamsters and Trucking Industry Pension Fund, No. 10-10921 (D. Mass. Nov. 26, 2018)] (U.S. District Court for the District of Massachusetts)
Struggling Multiemployer Plans See Help Ahead at Expense of Healthy Funds
"The draft proposal ... offers several measures to help struggling plans protect retiree benefits, including increasing the PBGC minimum guarantee level ... It even undoes benefit cuts already authorized by the Treasury Department under [MPRA], but plans within five years of insolvency would cut to the minimum benefit level and then be terminated.... [H]ealthy plans would also be squeezed by a requirement to use a more conservative discount rate when measuring liabilities." (Pensions & Investments)
The Single Biggest Problem for Multiemployer Pension Plans
"[I]ncreasing contributions, decreasing benefits or providing a federally backed loan all call the viability of the broader defined benefit system into question. If confidence in the system is eroded, the potential economic drags ... may become even more severe as participation decreases and employers see profitability come under pressure." (J.P. Morgan Asset Management)
Analysis Says Multiemployer Loan Program Will Not Help All
"The loan program idea introduced in legislation earlier this year is considered a way for some critically underfunded plans to extend projected insolvency dates and reduce the risk to the PBGC.... The analysis used 500 trials with asset returns varied stochastically to model plans projected to become insolvent within 30 years. According to the analysis, the average total number of participants in plans projected to become insolvent is 3.1 million in the baseline scenario, and 2 million if the loan program is implemented." (Pensions & Investments)
[Opinion] Time for Select Pension Committee to Shine as Midterms' Afterglow Dims
"When Congress passed a law back in February creating the Joint Select Committee on Solvency of Multiemployer Pension Plans, it gave the committee until November 30 to find a bipartisan solution to a looming plan insolvency crisis.... Congressional leaders set the committee's deadline after the election to ensure that committee members had several weeks to operate in a low political pressure environment to reach across the political divide and broker a compromise solution. That time has arrived, and affected retirees are keenly aware of the opportunity it presents." (Pension Rights Center)
[Official Guidance] Treasury Department Approves MPRA Benefit Reductions for Two Multiemployer Plans (PDF)
In letters dated November 8, 2018, the Treasury Department approved benefit reductions for two multiemployer plans: Plasterers Local #82 Pension Plan, and Plasterers & Cement Masons Local 94 Pension Fund. (U.S. Department of the Treasury)
[Opinion] Better to Split Up than Prop Up Troubled Multiemployer Pension Plans
"One idea being pushed aggressively by the sponsor community is actually no solution at all, and should be taken off the table as soon as possible: namely, propping up insolvent multiemployer plans with taxpayer-financed loans. To put it bluntly, the loan approach is unfair, irresponsible, and it wouldn't work. Such loans would essentially be a continuation of ill-considered policies that to date have failed, and would only cause the costs of pension underfunding to soar still further." (Charles Blahous, Manhattan Institute for Policy Research)
Can the Multiemployer Pension System Be Rescued by Subsidized Loans? (PDF)
"[The authors used the Multiemployer Pension Simulation Model (MEPSIM)] to simulate the effects of subsidized loans on the multiemployer pension system.... [1] In 30% of trials, the loan program has little or no impact on the number of plans projected to become insolvent.... [2] The net cost of the program -- [defined] as the present value of lending to plans minus the plans' repayments, computed at Treasury discount rates -- is an average of $56 billion across the 500 trials.... [3] In 55% of the stochastic trials, the projected reduction in the present value of PBGC assistance payments exceeds the net present value cost of the loan program.... [4] On average, across 500 trials, the loan program reduces the cost of insolvencies by about $3 billion[.]" (The Pension Analytics Group)
2019 Planning for ERISA Multiemployer Defined Benefit Plan Operations
"Brush up on the Multiemployer Pension Reform Act of 2014.... Update the 'Special Tax Notice' for eligible rollover distributions.... Review and analyze insurance coverage.... Get set to trigger automatic payments.... Identify lost participants with vested benefits.... Evaluate the need for plan amendments -- and deadlines.... Consider mortality and other assumptions.... Address escalating PBGC premiums.... Create or update your investment policy statement." (Buck)
Study: Multiemployer Pension Plan Crisis Has Deepened (PDF)
"As many as 121 multiemployer pension plans covering 1.3 million workers are underfunded by $48.9 billion and have informed regulators and participants that they could become insolvent within 20 years ... Cheiron's August 2017 study found 114 multiemployer pension plans were underfunded by $36.4 billion ... Some plans have since terminated because all the employers withdrew. Even after removing these plans, the number of failing multiemployer pension plans increased by 6.1 percent ... The plans in this year's study have total assets of $40.7 billion and liabilities of $89.6 billion." (Cheiron)
Sixth Circuit Expands Controlled Group and Successor Liability for Pension Plan Termination Funding
"[T]he court adopted the position taken by several other circuit courts in cases involving multi-employer plans, and extended its application to single-employer plans.... [B]uyers should consider one or more of the following actions when negotiating an asset purchase agreement: [1] A purchase price reduction based on the anticipated pension liability. [2] An escrow to cover the potential pension liability. [3] Indemnity provisions that address any pension liability imposed on the buyer. [3] Where available, consider pursuing the asset purchase in bankruptcy[.]" [PBGC v. Findlay Industries, Inc., No. 17-3520 (6th Cir. Sept. 4, 2018)] (King & Spalding)
These Retirees Are Pushing to Save Their Pensions
"The trio first got together, along with several other Teamsters, in a coffee shop in St. Paul, Minn. in 2014. They each put $20 into the kitty and started a grassroots effort called Defend Our Pensions-Minnesota. The organization works with similar groups in other states, including mine workers and iron workers also worried about losing their promised pensions." (Forbes)
Overview of MPRA 5500 Data
"There are now 24 distressed multiemployer plans that have submitted applications to cut benefits under MPRA. Putting the latest 5500 data filed by those plans into a spreadsheet tells a lot of stories ... First, an overview: Number of Plans: 24; Total participants: 520,765, including: Retirees: 260,280." (Burypensions)
[Official Guidance] Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: IBEW Local Union No. 237 Pension Fund
"The Board of Trustees of the IBEW Local Union No. 237 Pension Fund, a multiemployer pension plan, 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 IBEW Local Union No. 237 Pension Fund." (U.S. Department of the Treasury)
[Official Guidance] Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Western Pennsylvania Teamsters and Employers Pension Fund
"The Board of Trustees of the Western Pennsylvania Teamsters & Employers Pension Fund, a multiemployer pension plan, 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 Western Pennsylvania Teamsters & Employers Pension Fund." (U.S. Department of the Treasury)
Multiemployer Pension Solvency Discussions: What's Next?
"The legislators have been asked to propose bipartisan legislation by November 30 ... What possible changes are being explored by the Joint Select Committee? [1] Federal loans ... [2] Financial assistance from the PBGC ... [3] Mandating more conservative discount rates for multiemployer DB plans ... [4] Composite plans ... [5] PBGC multiemployer program premium changes." (International Foundation of Employee Benefit Plans [IFEBP])
[Opinion] Pension Cuts Law Makes Mockery of American Democratic Principles
"About 130 multiemployer pension plans ... are facing insolvency within the next 10 to 20 years.... MPRA was constructed to have retirees pay the bulk of plan financial shortfalls even though retirees are not responsible for the plans' financial problems.... [T]he law presumes that all members approve the cuts unless they cast a 'no' vote disapproving the cuts. Thus, if people do not return ballots -- casting neither a 'no' nor a yes' vote -- these non-returned ballots are counted as a 'yes,' which retirees view as deeply unfair." (Pension Rights Center)
Understanding the Building and Construction Industry Exemption to Withdrawal Liability
"Employers that have common ownership must be cautious because withdrawal liability will be triggered if any entity in the same controlled group performs covered work without resuming contributions to the pension plan. Moreover, if withdrawal liability is triggered, any entity in the controlled group could potentially be responsible for paying that liability." (Greensfelder, Hemker & Gale, P.C., for Associated General Contractors of Missouri)
Joint Select Committee Facing November 30 Deadline to Vote on Report and Proposed Legislative Language (PDF)
"According to law, by [Nov. 30], the Committee shall vote on: [1] a report that contains a detailed statement of the findings, conclusions and recommendations of the Joint Committee; and [2] proposed legislative language to carry out the recommendations.... Upon receipt of the approved proposed legislative language, the language shall be introduced in the Senate on the next day on which the Senate is in session ... The statute sets strict rules governing the process of the Senate's concerning any motion to proceed to the consideration of the Bill." (United Actuarial Services, Inc.)
Flat Returns Through First Half of 2018 Have Dampened Funding Progress for Multiemployer Plans (PDF)
"The estimated investment return for our simplified portfolio for the first six months of 2018 was about 0.2%, below plans' investment return assumptions. This has resulted in noncritical plans 'giving back' some of the funded status gains made in 2017, and critical plans falling further behind. The aggregate funded percentage for multiemployer plans is estimated to be 81% as of June 30, 2018, down from 83% at the end of last year. The gap between the funded percentages of critical versus noncritical plans is widening." (Milliman)
Teamsters Local 805 Benefit Reduction Approved by Treasury Department
"It is the second application for the local. At the time of the original application in March 2017, Local 805 had $51.7 million in assets and 2,065 participants, and was projected to be insolvent within six years." (Pensions & Investments)
[Official Guidance] Text of Treasury Department Approval of Application for Reduction of Benefits by Local 805 Pension Fund (PDF)
"In consultation with the [DOL and PBGC], Treasury has determined that the Fund is eligible to reduce benefits under MPRA and that your application satisfies the requirements of ... section 432(e)(9) of the Internal Revenue Code, as added by MPRA.... 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)
[Guidance Overview] How to Help a Plan in Need: PBGC Issues Final Regs on Multiemployer Plan Mergers
"The final regulations provide guidance on permissible multiemployer pension plan mergers, and the PBGC's role in such mergers, including [1] general requirements for multiemployer pension plan mergers and transfers (including applicable definitions); [2] rules and requirements (including procedural requirements) for facilitated plan mergers ... and [3] language clarifying that the PBGC may waive the requirement that a plan preserve accrued benefits following a merger in the event of a simultaneous benefit suspension and merger." (Morgan Lewis)
Many Red-Zone Plans on Road to Recovery, but Plans in Critical and Declining Status Need Additional Assistance (PDF)
"The average market-value funded percentage for all red-zone [multiemployer pension] plans grew by 4 percentage points since 2010.... Most current red-zone plans have been red since shortly following the global financial crisis of 2008 and 2009 when they suffered severe asset losses.... The ratio of inactive to active participants is a key component of a plan's outlook, especially in having the resilience to recover from a financial or other shock.... Over the last 10 years, the average contribution rate for current red-zone plans has increased more than 50 percent, irrespective of the shade of red." (Segal Consulting)
[Official Guidance] Text of PBGC Notice of Request for Approval of Special Withdrawal Liability Rules: United Food and Commercial Workers International Union
"The Plan's proposed amendment would be effective for withdrawals occurring under ERISA section 4205(a)(1) during the 3‑year testing period ending June 30, 2014, or any subsequent plan year and for any withdrawals occurring under sections 4203 and 4205(a)(2) of ERISA on or after July 1, 2013. Thus, the proposed amendment is intended to apply to cessations of the obligation to contribute that have already occurred.... There are two employers that may be eligible for relief from withdrawal liability under the proposed amendment if it is approved." (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] Pension Rights Center Comments to the Joint Select Committee on Solvency of Multiemployer Pension Plans
"The letter includes ... [1] An explanation of how this emerging crisis developed and a critique of [the Multiemployer Pension Reform Act of 2014 (MPRA)], which reversed the key promise of ERISA: that a plan cannot take away benefits that employees and retirees have already earned. [2] A description of the principles that should guide this Committee in developing its proposed legislation, including the repeal of [MPRA] and restoration of benefits already cut under that misguided statute. [3] The reasons that the so-called 'composite' legislation cannot be a part of a solution." (Pension Rights Center)
PBGC Issues Final Rules on Facilitated Mergers of Multiemployer Plans
"Sponsors of plans considering a merger or transfer of assets and liabilities will not have to alter their planning to reflect the proposed new solvency requirements or the other proposed changes to the existing rules. Plans that are critical and declining may well wish to explore the possibility of merging with a sister plan that is better funded and request financial assistance.... Given the current state of the PBGC's multiemployer program, which is facing insolvency, there may likely not be sufficient funds available to assist smaller and possibly even medium sized plans for whom a facilitated merger would avoid insolvency." (Cheiron)
Notes from Meeting of Actuaries 'Intersector Group' with PBGC, April 4, 2018 (PDF)
6 pages. Topics include: [1]  Distress terminations; [2] Update of PBGC assumptions; [3] De-risking activity; [4] Premium filings; [5] Multiemployer plan alternative withdrawal liability payment arrangements; [6] Multiemployer plan sponsors freezing legacy plans and starting new, separate plans. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
Multiemployer Defined Benefit Pension Plans: A Primer (PDF)
"Multiemployer DB plans are of current concern to Congress for several reasons ... 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 R43305, Sept. 24, 2018] (Congressional Research Service [CRS])
[Opinion] American Academy of Actuaries Letter to Joint Select Committee on Solvency of Multiemployer Pension Plans (PDF)
"[A] loan program could protect participant benefits by helping distressed multiemployer plans return to sound financial footing.... The most direct way for Congress to improve the financial strength of the PBGC would be to increase the current premium level.... Another way to increase funding to PBGC's multiemployer program is to deduct premium payments from benefit payments made to participants in all plans covered by the program.... The Committee could also consider whether the PBGC should have broader authority to proactively restructure distressed plans to enable them to remain solvent.... [T]he Committee might consider whether accrued plan benefits should become adjustable after restructuring." (American Academy of Actuaries)
[Official Guidance] Text of Treasury Department Approval of Application to Reduce Benefits by Ironworkers Local Union 16 Pension Fund (PDF)
"The Fund identified 1,044 participants and beneficiaries who were eligible to vote, and ballots were delivered successfully to 1,038 of these individuals by the vote administrator.... 496 returned a ballot; 352 (or 33.9% of all eligible voters) voted to reject the benefit reduction, 144 voted to approve the benefit reduction and 542 did not return a ballot....Because a majority of voters identified as eligible by the Fund did not vote to reject the benefit reduction, the benefit reduction is permitted to go into effect. Treasury, in consultation with DOL and PBGC, has issued a final authorization to reduce benefits under the Fund as described in the Application, effective October 1, 2018, subject to the conditions described [in this letter]." (U.S. Department of the Treasury)
[Official Guidance] Text of PBGC Approval of Special Withdrawal Liability Rules: Alaska Electrical Pension Plan of the Alaska Electrical Pension Fund
"The Plan's proposed amendment would be effective for withdrawals occurring on or after January 1, 2017, and would create special withdrawal liability rules for employers contributing to the Plan whose employees work under a contract or subcontract with federal government agencies governed by the Service Contract Act ... provided that substantially all of the employees for whom the employer is required to make a contribution work under a service contract.... PBGC has determined that the plan amendment adopting the special withdrawal liability rules will apply only to an industry that has characteristics that would make the use of special withdrawal liability rules appropriate, and [2] will not pose a significant risk to the insurance system. Therefore, PBGC hereby grants the Plan's request[.]" (Pension Benefit Guaranty Corporation [PBGC])
PBGC Finalizes Facilitated Merger Rules for Multiemployer Plans (PDF)
"PBGC's final regulation omits proposed changes to plan solvency provisions ... Commenters were concerned that the revised tests would 'make mergers and transfers more difficult or prohibit them, would substantially expand burden for plan sponsors, and would restrict options for plans.' ... In addition to updates and reorganization of the existing regulations, the final regulation outlines the process to be followed for multiemployer plan mergers[.]" (Buck)
PBGC Issues Final Regs on Mergers and Transfers Between Multiemployer Plans
"PBGC recognized that ERISA Section 4231(b)(2) would bar a plan merger or transfer that happens at the same time as a benefit suspension under ERISA Section 305(e)(9). To permit a merger or transfer in these circumstances, the PBGC added a new subsection which provides that it may waive the requirement concerning the preservation of accrued benefits if the benefit suspension and transfer or merger happen simultaneously." (Thomson Reuters Practical Law)
Taft-Hartley Pension Plans: The Long and Difficult Road Traveled
"Between 2008 and 2009, the number of active employed participants in the median pension plan in the construction industry plummeted 13%, with further declines over the next several years. As a result, the average funding status for most plans is yet to return to 2007 levels, ... even as most investment portfolios and financial markets have staged a strong comeback since the recession." (NEPC)
Multiemployer Pension Crisis Fix Would Cost $34 Billion -- Far Less Than First Estimated
"The finalized estimate for the Butch Lewis Act of 2017 (S.2147), which would provide government-backed loans to financially struggling plans while avoiding cuts to retiree benefits, is significantly less than a previous 10-year estimate that the measure would cost the government up to $100 billion[.]" (Bloomberg BNA)
[Official Guidance] Text of PBGC Final Regs: Mergers and Transfers between Multiemployer Plans
66 pages. "This final rule makes one major and numerous minor changes to PBGC's regulation on Mergers and Transfers Between Multiemployer Plans. The major change is the addition of procedures and information requirements for a voluntary request for a facilitated merger to implement MPRA's changes to section 4231 of ERISA. This final rule also reorganizes and updates existing provisions of PBGC's regulation." (Pension Benefit Guaranty Corporation [PBGC])
AICPA Working Draft of Chapter on Multiemployer Benefit Plans (PDF)
149 pages. "[This working draft has] been developed by the AICPA Multiemployer Plans Task Force to assist preparers of multiemployer plan financial statements in preparing [those] financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) and to assist auditors in auditing and reporting on such financial statements in accordance with generally accepted auditing standards." (American Institute of Certified Public Accountants [AICPA])
Considerations When Adding Participant Loans to a Taft-Hartley Defined Contribution Plan (PDF)
"In a corporate DC plan, loan payments are predominantly made through payroll deductions. Taft-Hartley plans normally do not offer this repayment option due to employers of the plan not being involved in the loan process.... As a result of leaving the option to make payments in the participant's hands, potential for the loan to default in a Taft-Hartley plan can be much higher than in a corporate plan." (Milliman)
Treasury Department Approves Two Multiemployer Applications to Cut Benefits
"Western States Office and Professional Employees Pension Fund ... submitted its third application ... to reduce benefits 30% for active participants, terminated vested participants and retirees under the age of 80, to avoid insolvency that was projected to happen by 2036.... Iron Workers Local 16 Pension Fund ... reapplied ... to reduce benefits starting Oct. 1. Without the reductions -- an average of 20% in benefit cuts -- it is projected to be insolvent by 2032.... Officials at both plans were notified ... that final authorization will happen after plan participants vote on the proposed plan[.]" (Pensions & Investments)
[Official Guidance] Text of PBGC Submission for OMB Approval: Survey of Multiemployer Pension Plan Withdrawal Liability Information
"PBGC is proposing to collect information about withdrawal liability that is owed by withdrawn employers of terminated and insolvent multiemployer pension plans.... On June 21, 2018, PBGC published a notice of its intent to request OMB approval of [a] survey of multiemployer pension plan withdrawal liability information ... No comments were received on the proposed submission of information collection. PBGC is requesting that OMB approve PBGC's use of this survey for three years." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Laborers Local 265 Pension Plan
"The Board of Trustees of the Laborers Local 265 Pension Plan, a multiemployer pension plan, has submitted an application to reduce benefits under the plan in accordance with the Multiemployer Pension Reform Act of 2014 (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[.]" (U.S. Department of the Treasury)
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