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All News > Multiemployer Plans

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Segal Blend Explained
Segal Link to more items from this source
Sept. 16, 2022

"This article discusses: [1] The origins of the Segal Blend; [2] The purpose of withdrawal liability; [3] What's blended in Segal Blend; [4] The impact of the Segal Blend; [5] Arbitration and litigation about the Segal Blend; [6] The future for the Segal Blend."

Tags: Funding of DB Plans  •  Multiemployer Plans

What Employers Contributing to Multiemployer Plans That Receive 'Special Financial Assistance' Need to Know
Fox Rothschild LLP Link to more items from this source
[Guidance Overview]
Sept. 14, 2022

"[The Final Rule] clarifies that a condition on the receipt of SFA is that a [multiemployer plan] may not accept a collective bargaining agreement that allows for a reduction in the contribution rate, or a change in the basis on which the contributions are made that would yield a contribution obligation reduction, from what was set forth in a collective bargaining agreement as of March 11, 2021, including agreed-to contribution increases in those agreements."

Tags: Funding of DB Plans  •  Multiemployer Plans

Second Circuit Grants Benefit Fund's Audit Request Well Beyond CBA Coverage
Jackson Lewis P.C. Link to more items from this source
Sept. 12, 2022

"In a decision that bodes poorly for unionized employers, the U.S. Court of Appeals for the Second Circuit recently held that a union benefit fund was contractually entitled to conduct an audit whose scope far exceeded the bargaining unit for whom fund contributions were required. Since the employer did not produce evidence that the fund trustees' conduct of the audit breached their ERISA fiduciary duties, the court held that the fund was entitled to conduct the requested audit." [New York State Nurses Association Benefits Fund v. Nyack Hospital, No. 20-0378 (2nd Cir. Aug. 19, 2022)]

Tags: Health Plan Administration  •  Multiemployer Plans

PBGC FY 2021 Projections Report (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Sept. 12, 2022

63 pages. "PBGC's Multiemployer Program is likely to remain solvent to a point more than 40 years out. This is an improvement over last year's report, in which half of projected scenarios resulted in insolvency by the end of FY 2055. However, both reports show a high degree of uncertainty, with the most pessimistic downside scenarios continuing to show a risk of insolvency in the mid-2030s.... The Single-Employer Program's financial status has evolved from recent deficits to a positive net financial position projected to grow over the next 10 years. None of the projected scenarios result in PBGC's Single-Employer Program running out of money within the next 10 years."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Approves $28.3 Million in Special Financial Assistance for GWU Local 610 Plan
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Aug. 31, 2022

"[PBGC] has approved the application submitted to the [SFA] Program by the Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund (GWU Local 610 Plan). The plan, based in San Juan, Puerto Rico, covers 2,624 participants in the hospitality industry. The GWU Local 610 Plan became insolvent in June 2021.... The plan will receive $28.3 million in SFA, including interest to the expected date of payment to the plan."

Tags: Multiemployer Plans

Multiemployer Pension Plan Funding Status Has Improved
Segal Link to more items from this source
Aug. 18, 2022

"The percentage of calendar-year plans in the green zone increased to 77 percent in 2022, up from 72 percent in 2021. The average Pension Protection Act of 2006 funded percentage for all calendar-year plans increased to 92 percent in 2022, up from 89 percent in 2021.... Twenty-six calendar-year plans in the survey have already applied or are expected to apply for special financial assistance ... available under [ARPA.]"

Tags: Funding of DB Plans  •  Multiemployer Plans

Seventh Circuit Affirms Dismissal of Claims Seeking Roll Over of Accounts in Multiemployer Defined-Contribution Plan
Roberts Disability Law Link to more items from this source
Aug. 17, 2022

"The court also found that the trustees and the plan administrator did not violate their ERISA fiduciary duties by not amending the Plans to allow rollovers.... The court rejected Plaintiffs' alternative theory that ERISA Section 4235 requires a plan to transfer assets when an employer withdraws as a result of a change in the bargaining representative. This provision does not apply to defined-contribution plans.' [Dean v. Nat"l Prod. Workers Union Severance Tr. Plan, No. 21-1872 (7th Cir. Aug. 15, 2022)]

Tags: Multiemployer Plans

Payroll Auditing 101 for Trustees of Multiemployer Plans
Withum Smith+Brown, PC Link to more items from this source
Aug. 12, 2022

"In addition to helping insulate trustees from DOL audit risk by supporting plan financial statements, effective payroll audit programs help level the playing field for all contributing employers.... To be effective, the payroll audit program must be aligned with the trust collection policy, and both testing procedures and reporting should be tailored to specific plan needs."

Tags: Multiemployer Plans  •  Retirement Plan Administration

Multiemployer Pension Funding Study: Mid-Year 2022 Edition
Milliman Link to more items from this source
Aug. 11, 2022

"Milliman analysis shows a sharp decline in multiemployer plans' funded ratio from 91% to 80% in the first half of 2022.... The $6.7 billion in SFA under ARP that has been paid through June 30 has increased the aggregate funded percentage by about 1%. In total, [PBGC] estimates $74 billion to $91 billion in SFA will be paid, with a median estimated payout of $82 billion."

Tags: Funding of DB Plans  •  Multiemployer Plans

Sixth Circuit: In ERISA Suit for Late Benefit Fund Contributions, Presence of a Live Contract Is Not Necessary for District Court's Jurisdiction
Roberts Disability Law Link to more items from this source
Aug. 10, 2022

"[The Sixth Circuit held that while] in the end the Funds' claim may fail for the reason the district court gave (no live contract), that goes to the merits, not to the court's jurisdiction to hear the dispute. The court reversed the district court's dismissal of the Funds' claim for lack of subject-matter jurisdiction and remanded for further proceedings." [Operating Engineers' Local 324 Fringe Benefit Funds v. Rieth-Riley Constr. Co., No. 21-1229 (6th Cir. Aug. 8, 2022)]

Tags: Multiemployer Plans

PBGC Approves $85.2 Million in Special Financial Assistance for GCIU Local 119B Plan
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Aug. 2, 2022

"[PBGC] has approved the application submitted to the Special Financial Assistance (SFA) Program by the Pension Plan of the Printers League -- Graphic Communications International Union Local 119B (GCIU Local 119B Plan). The plan, based in East Farmingdale, New York, covers 1,213 participants ... [and] became insolvent in August 2021.... The plan will receive $85.2 million in SFA, including interest to the expected date of payment to the plan."

Tags: Funding of DB Plans  •  Multiemployer Plans

Big Changes for Employers Participating in Multiemployer Plans
Seyfarth Shaw LLP Link to more items from this source
[Guidance Overview]
July 26, 2022

"The PBGC released its new Final Rule on Special Financial Assistance ... which will ... subject contributing employers to higher withdrawal liability assessments compared to the Interim Final Rule.... [T]he D.C. Circuit rejected a plan's use of a risk-free discount rate for calculating withdrawal liability, placing into dispute withdrawal liability discount rates used by many plan actuaries ... Finally, the pending PBGC regulations on prescribed discount rate assumptions are coming soon. Employer beware."

Tags: Funding of DB Plans  •  Multiemployer Plans

PBGC Approves $715 Million in Special Financial Assistance for Western Pennsylvania Teamsters and Employers Pension Plan
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
July 26, 2022

"[PBGC] has approved the application submitted to the [SFA] Program by the Western Pennsylvania Teamsters and Employers Pension Plan. The plan, based in Pittsburgh, Pennsylvania, covers 21,110 participants in the transportation industry.... PBGC's approval ... enables the plan to restore all benefits suspended under the terms of MPRA and to make payments to retirees to cover prior benefit suspensions.... The plan will receive $715 million in SFA, including interest to the expected date of payment to the plan."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

D.C. Circuit Holds Withdrawal Liability Interest Rate Must Reflect Plan's Investment Policy
Littler Link to more items from this source
July 25, 2022

"This [ruling] calls into question the continued viability of a popular practice among some funds -- that of using an interest rate assumption for purposes of determining withdrawal liability that is much lower than the interest rate assumption used to determine a plan's minimum funding requirements." [United Mine Workers of America 1974 Pension Plan v. Energy West Mining Co., No. 20-7054 (D.C. Cir. Jul. 8, 2022)]

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Issues Final Rule Implementing ARPA Special Financial Assistance Program
Bolton Link to more items from this source
[Guidance Overview]
July 22, 2022

"This Alert addresses what's the same under the final rule, what's changed, and transition considerations for multiemployer plans that have already applied to receive SFA funding.... The changes implemented by the Final Rule, including the new rules relating to expanded investment options and the use of the bifurcated investment return assumptions, are available to plan sponsors that have already applied for SFA if they submit a revised or supplemental application."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

Multiemployer Plan Developments: PBGC Final Rule on Special Financial Assistance and Withdrawal Liability Actuarial Assumptions Litigation
The Wagner Law Group Link to more items from this source
[Guidance Overview]
July 22, 2022

"[The authors] anticipate that employers will challenge the withdrawal liability provisions of the Final Rule in arbitration or before the courts. In response, the PBGC will likely argue that SFA is meant to preserve plan benefits until 2051, not to subsidize employers, and that Congress gave PBGC an express delegation of rulemaking authority to set conditions on SFA in addition to PBGC's general delegation of rulemaking authority."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Finalizes Rule on Multiemployer Plan Special Financial Assistance
Mercer Link to more items from this source
[Guidance Overview]
July 21, 2022

"The rule makes a few notable changes to last year's interim final rule (IFR), but otherwise leaves the SFA program mostly intact. The final rule takes effect Aug. 8, but won't apply to any plan that has already received SFA unless the plan files a supplemented application under the final rule. This article reviews the final rule's provisions of most interest to employers."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Issues Final Regs for Multiemployer Plans Applying for Special Financial Assistance
Groom Law Group Link to more items from this source
[Guidance Overview]
July 20, 2022

"Under the final regulation, separate prescribed interest rates apply to the plan's existing assets and the SFA.... The final regulation ... significantly expands the ability of plans to invest SFA in securities other than investment-grade corporate bonds, allowing up to 33% of SFA to be invested in 'return-seeking assets' (RSAs).... [T]he final rule conditions receipt of SFA on a plan phasing-in the recognition of the SFA over time for purposes of calculating withdrawal liability."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC's Final Rule for Multiemployer Pension Rescue Includes Key Changes
Proskauer Link to more items from this source
[Guidance Overview]
July 20, 2022

"[T]he changes will result in higher amounts of financial assistance for many plans and should make it more likely that plans receiving assistance will stay solvent through at least 2051 as ARPA intended.... [1] Amount of assistance ... [2] Investment return assumption ... [3] MPRA conundrum ... [4] Permissible investments ... [5] Withdrawal liability."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

DC Circuit Says Discount Rate Used for Withdrawal Liability Must Be Similar to Discount Rate Used for Funding
October Three Consulting Link to more items from this source
July 18, 2022

"[T]he court held that, if the assumptions used in the withdrawal liability calculation are to reflect anticipated experience under the plan, the discount rate should reflect the plan's actual investments. Under this standard, using PBGC rates to determine withdrawal liability would not be appropriate, as they reflect the underwriting practices of insurance companies in pricing annuities and not the investments in any particular plan." [United Mine Workers of America 1974 Pension Plan v. Energy West Mining Co., No. 20-7054 (D.C. Cir. Jul. 8, 2022)]

Tags: Funding of DB Plans  •  Multiemployer Plans

D.C. Circuit Rules That Past Is Prologue in Withdrawal Liability Dispute
Kantor & Kantor Link to more items from this source
July 15, 2022

"In 2015, the plan was predicted to be bankrupt as early as 2022. That didn't happen because of a government bailout. But this reality begs the question whether it makes sense to impose a discount rate that assumes the plan would have continued to earn something close to 7.5% on its assets during the relevant time period. Or does applying such an assumption simply shift the costs of withdrawal from the participating mining company to the taxpayers and the plan, thereby incentivizing employers such as Energy West to withdraw, doing precisely what Congress was seeking to avoid." [United Mine Workers of America 1974 Pension Plan v. Energy West Mining Co., No. 20-7054 (D.C. Cir. July 8, 2022)]

Tags: Funding of DB Plans  •  Multiemployer Plans

Biden's Pension 'Guarantee' Illegally Stretches the Law to Bail Out Unions
Aharon Friedman, via The Hill Link to more items from this source
[Opinion]
July 15, 2022

"Forcing taxpayers with losses in their own retirement plans to selectively bailout severely mismanaged union plans is bad enough. But the [PBGC] rule finalized changing the statutory interest rate to increase the taxpayer funds plans receive is completely without statutory authority."

Tags: ARPA  •  Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Finally Publishes Final Rule on Special Financial Assistance Program
Seyfarth Shaw LLP Link to more items from this source
[Guidance Overview]
July 13, 2022

"The Final Rule contains a number of significant developments and amendments from the interim final rule, including for example, expanding investment options for SFA assets, providing for separate interest rate assumptions for SFA versus non-SFA assets, loosening restrictions for benefit increases, and adding a new condition for phased recognition of SFA assets in calculating withdrawal liability. The Final Rule becomes effective on August 8, 2022."

Tags: ARPA  •  Funding of DB Plans  •  Multiemployer Plans

More Bad News for Employers in the PBGC Final Rule for Special Financial Assistance
Jackson Lewis P.C. Link to more items from this source
[Guidance Overview]
July 13, 2022

"Under the interim rule, the entire amount of SFA was included as a plan asset for all recipients. The final rule changes this by including a 'phase-in' approach for certain SFA recipients. These calculations can be complex[.]"

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Issues Final Rules on Special Financial Assistance
Cheiron Link to more items from this source
[Guidance Overview]
July 13, 2022

"While the final regulations are a step in the right direction, they may still leave many plans receiving assistance insolvent by 2052. Plans that suspended benefits under the Multiemployer Pension Reform Act of 2014 (MPRA) will be able to restore suspended benefits and remain solvent."

Tags: ARPA  •  Funding of DB Plans  •  Multiemployer Plans

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