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News Items, by Subject

Multiemployer plans


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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)
[Guidance Overview] PBGC Issues Policy Statement on Calculating Withdrawal Liability
"[M]ore and more requests have been made to the PBGC to review proposals to adopt alternative terms and conditions to satisfy withdrawal liability in advance of a potential mass withdrawal.... PBGC is now required to perform case-by-case reviews and must review different contingencies with different probabilities of occurrence.... This published policy statement is, therefore, a way of informing all future parties to a proposed revision to a withdrawal liability payment scheme to understand what concerns the PBGC will likely have, so that time and resources for all parties can be minimized." (October Three Consulting)
PBGC Staff Express Concern Over Premium Reduction Strategy (PDF)
"Successful implementation of the two-step strategy could result in significant savings in PBGC premiums ... Plan sponsors essentially receive a full year of PBGC coverage, but only pay a partial year of premiums.... [T]he only purpose of the transaction appears to be avoiding PBGC premiums. While there is nothing inherently wrong with wanting to reduce PBGC premiums, it's not surprising to hear the PBGC push back on strategies which serve no other purpose." (Lockton)
[Official Guidance] Text of Treasury Department Letter Approving Ironworkers Local 16 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 ... section 432(e)(9) ... as added by MPRA. This notification is not a final authorization to implement the benefit reduction described in your application.... [N]o 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)
U.S. Multiemployer Pension Plan Withdrawal Liability Basics and Collectibility (PDF)
12 pages. "Federal law allows various methods for determining withdrawal liability ... To mitigate the withdrawing employer's burden to pay a large withdrawal liability all at once, the law allows payment over time. In general, the annual payment is intended to approximate the withdrawing employer's history of annual contributions to the plan. In reality, ... actual withdrawal liability payments are typically greater than the employer's history of contributions." (Society of Actuaries)
'Windfall' Recovery No Defense Under ERISA to Funds' Claim for Unpaid Contributions
"The employer ... had maintained health insurance and a 401(k) plan for its nonunion employees [outside the funds to which it had not made contributions]. These alternative benefits should offset the total award to the funds, the employer said. Otherwise, the employer reasoned, the funds would receive an unjust windfall recovery of contributions on behalf of employees for whom they had provided no benefits. The appellate court rejected this argument and affirmed the lower court's judgment in favor of the funds." [Kelly v. Gas Field Specialists, Inc., No. 17-2654 (3d Cir. June 19, 2018)] (Wolters Kluwer Law & Business)
Expanding Multiemployer Health Plan Coverage to Non-Bargaining Unit Employees
"Employers that contribute to multiemployer health plans on behalf of unionized employees often find it difficult to offer competitive health coverage to their nonunion employees. This is particularly true where an employer's nonunion workforce is small compared to its union workforce.... [A] large multiemployer health plan can typically offer competitive coverage because of the size of the covered group. And as long as some basic requirements are met, a multiemployer plan can extend the plan's coverage to (or create an entirely different tier of coverage for) employees who are not performing bargaining unit work." (Morgan Lewis)
A Tale of Two Teamsters Pension Plans
"Central States is among the approximately 130 plans that have projected they will run out of money in the next 20 years. That means the plan's members could lose their pension benefits. The Western Conference, on the other hand, is close to fully funded and in a good position to pay out pension benefits. So how did these two plans that were set up to provide pensions to workers in the trucking industry end up in opposite positions?" (Bloomberg BNA)
Data on Multiemployer Defined Benefit Pension Plans (PDF)
22 pages. "This report provides data on multiemployer DB plans ... First, the report categorizes the data based on plans' zone status in 2015. Next, it provides a year-by-year breakdown of the number of plans that are expected to become insolvent and the number of participants in those plans.... Finally, the report provides data on those employers whose plans indicate contributed more than 5% of the plans' total contributions ... in the 2015 plan year[.]" [R45187, July 26, 2018] (Congressional Research Service [CRS])
Health and Welfare Trusts Seek Increased Guidance Regarding Continuation Value (PDF)
"A variety of methods can be utilized to assess the financial status of a health and welfare trust. One of the most common methods is to estimate continuation value, or the amount of time that the trust can continue to cover the cost of benefits to its participants and pay for associated administrative, operating, and professional expenses, assuming no future income.... But what level of continuation value should a health and welfare trust target? While the question is common, the answer is complex and requires assessment and understanding of a variety of factors" (Milliman)
[Guidance Overview] Meeting of the American Academy of Actuaries Multiemployer Plans Committee and Representatives from the Department of the Treasury, PBGC, and DOL (PDF)
14 pages; meeting held Feb. 23, 2018. Topics discussed: [1] Denials and withdrawals to date; [2] Reasonableness of actuarial assumptions; [3] Application review process; [4] Pre-application conferences; [5] Revenue Procedure 2017-43; [6] Non-standard mortality assumptions; [7] Resubmission considerations; [8] Investment return assumptions; [9] PBGC discussion topics. In addition, this document includes notes from follow-up discussions with Treasury that occurred after the meeting on two topics: [1] Investment return assumptions; and [2] Survivorship bias in assumed new entrants. (American Academy of Actuaries)
UPS Retirees Bring First Challenge to Legality of Pension Cuts under MPRA
"The lawsuit is the first to challenge the Multiemployer Pension Reform Act [MPRA] ... [which] allows a multiemployer plan to request Treasury's approval to cut benefits if the plan shows that doing so would avoid insolvency. The retirees seek to hold the U.S. government liable for engaging in an 'uncompensated taking of their property' by authorizing -- through the Treasury -- those pension cuts. The retirees, who participate in the New York State Teamsters Conference Pension and Retirement Fund, seek to represent 21,250 similarly situated workers." [King v. U.S., No. 18-1115 (Fed. Cl., complaint filed July 31, 2018)] (Bloomberg BNA)
PBGC Proposes Valuation and Notice Requirements for Insolvent Multiemployer Plans
"Insolvent plans receiving financial assistance (whether terminated or not) and plans terminated by plan amendment that are expected to become insolvent could generally perform actuarial valuations less frequently than currently required. Additionally, the proposal would eliminate some notice requirements for insolvent plans." (Conduent)
Retired UPS Workers File Lawsuit Challenging Treasury Department Approval of Pension Cuts under MPRA (PDF)
"Three retired UPS workers filed a lawsuit today against the federal government on behalf of themselves and a proposed class of approximately 22,000 other retirees. The suit alleges that the government acted to protect its own financial interests when it enabled a pension plan to cut each Plaintiffs' pension by 29%, reducing the likelihood that the government-run [PBGC] would go insolvent. The suit revolves around the Department of Treasury's controversial decision from September 2017 to permit a New York pension fund to reduce each Plaintiff 's monthly pension payment -- an amount that had fully vested and for which the PBGC was the insurer if the fund defaulted." [King v. U.S. (Fed. Cl., complaint filed July 31, 2018)] (Messing & Spector LLP)
[Official Guidance] Four Multiemployer Plans Submit Applications to Reduce Benefits Under MPRA
The Treasury Department has announced submission of benefit reduction applications, and posted those applications, for four multiemployer plans: (U.S. Department of the Treasury)
Segal Blend Rejected as Discount Rate for Determining Withdrawal Liability
"The Segal Blend is not prohibited as a matter of law, but [the court found it] was inappropriately applied as it was lower than the actuary's best estimate of anticipated plan experience in the long-term and included interest rates for assets that were not included in the Fund's portfolio." [The New York Times Co. v. Newspapers & Mail Deliverers'-Publishers' Pension Fund, No. 17-6178 (S.D.N.Y. Mar. 26, 2018)] (Wolters Kluwer Law & Business)
How the Multiemployer Pension System Affects Stakeholders
Video of hearing held July 25, 2018. Testimony from witnesses: [1] Mr. James P. Naughton, Northwestern University; [2] Mr. Joshua D. Rauh, Ph.D., Hoover Institution, Stanford University; [3] Mr. Kenneth Stribling, Retired Teamster; [4] Mr. Timothy P. Lynch, Morgan, Lewis & Bockius LLP. (Joint Select Committee on Solvency of Multiemployer Pension Plans)
[Guidance Overview] PBGC Issues Policy Statement on Alternative Terms and Conditions to Settle Withdrawal Liability
"[As] a general policy goal in evaluating a proposal, the PBGC looks to whether the trustees have supported their conclusion that the proposed alternative terms and conditions would 'realistically maximize' the collection of withdrawal liability and projected contributions relative to the withdrawal liability rules under ERISA. The PBGC must be convinced that the alternative terms are in the interests of participants and beneficiaries, do not create an unreasonable risk of loss to the PBGC insurance program, and are otherwise not inconsistent with Title IV of ERISA." (Segal Consulting)
[Official Guidance] Mid-Jersey Trucking Industry and Local No. 701 Pension Fund Applies for Approval to Reduce Benefits under MPRA
"The Board of Trustees of the Mid-Jersey Trucking Industry and Local No. 701 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[.]" (U.S. Department of the Treasury)
[Official Guidance] Southwest Ohio Regional Council of Carpenters Pension Plan Applies for Approval to Reduce Benefits under MPRA
"The Board of Trustees of the Southwest Ohio Regional Council of Carpenters 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[.]" (U.S. Department of the Treasury)
[Official Guidance] Toledo Roofers Local No. 134 Pension Plan Applies for Approval to Reduce Benefits under MPRA
"The Board of Trustees of the Toledo Roofers Local No. 134 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[.]" (U.S. Department of the Treasury)
[Official Guidance] Local 807 Labor-Management Pension Plan Applies for Approval to Reduce Benefits under MPRA
"The Board of Trustees of the Local 807 Labor-Management 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[.]" (U.S. Department of the Treasury)
 
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