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<< Older News  |  January 15, 2021

News

All News > Multiemployer Plans

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PBGC's Final Regs Include Simplified Methods for Calculating Withdrawal Liability for Employers Leaving Multiemployer Pension Plans
Thomson Reuters Practical Law Link to more items from this source
[Guidance Overview]
Jan. 14, 2021

"The final regulations incorporate statutory changes under the Multiemployer Pension Reform Act of 2014 (MPRA). The final regulations also provide simplified methods for calculating withdrawal liability."

Tags: Multiemployer Plans

Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Roofers Local No. 88 Pension Fund
U.S. Department of the Treasury Link to more items from this source
[Official Guidance]
Jan. 13, 2021

"The Board of Trustees of the Roofers Local No. 88 Pension Fund ... has submitted an application to reduce benefits under the plan in accordance with [MPRA].... [T]he application ... has been published on the website of the Department of the Treasury ... Comments must be received by February 26, 2021."

Tags: Funding of DB Plans  •  Multiemployer Plans

Text of PBGC Final Regs: Adjustment of Civil Penalties for Inflation
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Jan. 12, 2021

"On December 23, 2020, the Office of Management and Budget issued memorandum M-21-10 on implementation of the 2021 annual inflation adjustment pursuant to the 2015 Act.3The memorandum provides agencies with the cost-of-living adjustment multiplier for 2021, which is based on the Consumer Price Index (CPI-U) for the month of October 2020, not seasonally adjusted. The multiplier for 2021 is 1.01182. The adjusted maximum amounts are $2,259 for section 4071 penalties and $301 for section 4302 penalties."

Tags: Multiemployer Plans

Text of PBGC Final Regs: Methods for Computing Withdrawal Liability Under the Multiemployer Pension Reform Act
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Jan. 7, 2021

74 pages. "[PBGC] is amending its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers and Notice, Collection, and Redetermination of Withdrawal Liability. The amendments 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 amendments also provide simplified withdrawal liability calculation methods."

Tags: Multiemployer Plans  •  PBGC

Editor's Pick Final UBIT Regs Likely to Affect Many Benefit Plan Investors
Groom Law Group Link to more items from this source
[Guidance Overview]
Dec. 30, 2020

"While the Notice and Proposed Regulations provided some helpful approaches to simplify the new rules for benefit plan investors, the IRS resisted making additional changes along these lines in the Final Regulations. For example, the IRS did not increase the thresholds for 'qualifying partnership interests' described in the Proposed Regulations and rejected the request of some commenters to grandfather partnership interests held before August 21, 2018. Similarly, the IRS declined to allow aggregation of all investment activities by benefit plans, regardless of the ERISA policy considerations cited by commenters. Nevertheless, the Final Regulations did make some important changes to the Proposed Regulations[.]"

Tags: Multiemployer Plans  •  Retirement Plan Investments

On the Bailouts That Didn't Happen, Part 1: Multiemployer Pensions
STUMP Link to more items from this source
[Opinion]
Dec. 24, 2020

"There are two reasons that multiemployer pensions have to be addressed: [1] The federal government partially created the problem [2] Central States Teamsters plan, which has hundreds of thousands of participants, is going to fail in a few years and take down all MEP backing in the PBGC.... This is going to be the first really large private-sector retirement issue, before we hit the end of the Social Security Trust Fund or a large public pension fund running out of assets."

Tags: Multiemployer Plans  •  PBGC

Text of Instructions for 2020 IRS Form 5330: Return of Excise Taxes Related to Employee Benefit Plans (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Dec. 23, 2020

14 pages, Dec. 11, 2020. "What's New: [1] Tax on multiemployer plans in endangered or critical status. Schedule F, line 2b, requires the number of days included in the period beginning the first day following the close of the 240-day period and ending on the day the rehabilitation plan is adopted.... [2] Tax on prohibited transactions (section 4975). The instructions for Schedule C note that a section 403(b) tax sheltered annuity plan is not subject to the section 4975 excise tax."

Tags: Multiemployer Plans  •  Reporting to Government Agencies  •  Retirement Plan Administration

Unionized Hotels Should Consider Withdrawal Liability When Deciding to Cease Operations
Hotel Business Link to more items from this source
Dec. 18, 2020

"For hotel owners and operators with a unionized workforce that contribute to a multiemployer defined benefit pension plan on behalf of those workers, withdrawal liability may become due in connection with temporary or permanent closures. It is often unexpected and unplanned for, and in some instances can be a staggeringly high cost.... [It] may impact the end result as perhaps remaining open is less financially burdensome than triggering withdrawal liability[.]"

Tags: Funding of DB Plans  •  Multiemployer Plans

Multiemployer Pensions: Assessing the Financial Challenges (PDF)
Institute for Pension Fund Integrity [IPFI] Link to more items from this source
Dec. 16, 2020

"A number of underlying problems face multiemployer pension plans and the historical trends that have exacerbated their current standing.... Several prominent multiemployer pension plans in the United States stand out for their endangered status.... The federal government has historically taken actions through legislation and regulatory efforts to reform multiemployer pension plans. While well-intentioned, these reforms have generally failed to produce meaningful reform to save the largest and most in-need pensions in the country."

Tags: Multiemployer Plans

PBGC Statement of Regulatory and Deregulatory Priorities (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Dec. 11, 2020

"[M]odernization modifications PBGC is considering at this time are to the interest, mortality, and expense load assumptions used to determine the present value of benefits under the asset allocation regulation (for single-employer plans) and for determining mass withdrawal liability payments (for multiemployer plans) ... PBGC expects to finalize a rule that would simplify how multiemployer plans calculate withdrawal liability where changes in contributions or benefits are, by statute, to be disregarded in that calculation ... PBGC also plans to propose a rulemaking that would add a new part 4022A to PBGC's regulations to provide guidance on determining the monthly amount of multiemployer plan benefits guaranteed by PBGC."

Tags: Multiemployer Plans  •  PBGC  •  Retirement Plan Policy

PBGC 2020 Annual Report (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Dec. 10, 2020

153 pages. "The Single-Employer Insurance Program's positive net position of $15.5 billion reflects an improvement of $6.8 billion compared to FY 2019. While currently financially healthy, the Single-Employer Insurance Program remains exposed to more than $176 billion in underfunding in pension plans sponsored by financially weak companies that could potentially become claims to PBGC. The Multiemployer Insurance Program continues to face a crisis ... and is highly likely to become insolvent in 2026. The Multiemployer Insurance Program remains severely underfunded with a negative net position of $63.7 billion, compared to $65.2 billion a year earlier. It remains clear that legislative reform is necessary to avert insolvency[.]"

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

Senate Talks Multiemployer Crisis, Expanding Retirement Coverage
Pensions & Investments Link to more items from this source
Dec. 10, 2020

"The Senate Finance Committee's subcommittee on Social Security, pensions, and family policy held a hearing [December 9] on the challenges facing Americans' retirement security. While talk mostly focused on legislation aimed at improving defined contribution plans, there were hopeful signs of a potential compromise to deal with the multiemployer pension crisis."

Tags: Multiemployer Plans  •  Retirement Plan Policy

Eleventh Circuit Court Backs PBGC in Pension Liability Challenge
American Retirement Association [ARA] Link to more items from this source
Dec. 9, 2020

"[T]he court found that an Illinois corporation that went bankrupt and dissolved under state law in the 1990s was still liable for pension obligations a decade later. You know you're in some uncharted waters when an appellate court ruling opens by explaining that 'from the confluence of bankruptcy, employee benefits, and corporations law comes this most unusual case.' " [PBGC v. 50509 Marine LLC, No. 19-14968 (11th Cir. Nov. 24, 2020)]

Tags: Multiemployer Plans

The Importance of Monitoring Withdrawal Liability
Jackson Lewis P.C. Link to more items from this source
Dec. 9, 2020

"An uninformed employer may be tempted to cease participation to avoid the rising costs of employer contributions to these plans.... Even for a relatively small bargaining unit, exiting an underfunded plan can result in a multimillion-dollar assessment. In mergers and acquisitions, multiemployer plan liabilities can jeopardize the deal or cultivate post-closing litigation, unless properly addressed in the asset purchase agreement or stock purchase agreement."

Tags: Funding of DB Plans  •  Multiemployer Plans

Kroger Withdraws from UFCW Pension Fund to Start New Variable Plan
Pensions & Investments Link to more items from this source
Dec. 4, 2020

"The grocers and the UFCW created the UFCW and Employer's Variable Annuity Pension Plan for future benefits ... The UFCW International Union-Industry Pension Fund, Mokena, Ill., had $6.1 billion in assets as of June 30, 2019, and was 53.5% funded, according to the most recent Form 5500, which showed 83,656 participants, mostly active. Kroger and Stop and Shop are listed as the largest annual contributors, at $44.7 million and $23.4 million, respectively, followed by Albertsons at $10.6 million."

Tags: Multiemployer Plans  •  Retirement Plan Design

Multiemployer Plan Audits During a Pandemic: Mitigating the Employer’s Risk
Jackson Lewis P.C. Link to more items from this source
Nov. 19, 2020

"A global pandemic has not stopped multiemployer plans from conducting employer payroll audits.... [The DOL] has yet to issue formal guidance outlining procedures for these audits or provide any reprieve for employers during the COVID-19 pandemic. Responding to these audits can be time-consuming, invasive, and costly. COVID-19 has further complicated the logistics of a traditional in-person audit. It is important for employers to understand their obligations and develop cost-effective strategies to mitigate the risks associated with these audits and the alternatives to an in-person audit."

Tags: Multiemployer Plans

Beware of Possible Union Pension Plan Withdrawal Liability
Frost Brown Todd LLC Link to more items from this source
Nov. 19, 2020

"Tips on avoiding withdrawal liability.... [1] Don't sign a collective bargaining agreement ... without reviewing the current plan financial information, the plan document and the plan participation or joinder agreement.... [2] [S]ome multiemployer pension plans purporting to be well funded for government reporting purposes use a lower interest rate for calculating withdrawal liability than they use for funding purposes, which will result in withdrawal liability when you might not otherwise expect it.... [3] [P]ersonal assets such as rental real estate in an unincorporated business could be exposed to withdrawal liability if that business is in 'common control' with the business that participates in the multiemployer pension plan."

Tags: Funding of DB Plans  •  Multiemployer Plans

The Spectre of Multiemployer Pension Failures Haunts This Election
Karen Friedman, via The Hill Link to more items from this source
[Opinion]
Oct. 30, 2020

"It's imperative that a new COVID-19 relief package -- whenever it's passed -- shore up multiemployer pensions ... [If] this piece of the retirement system is allowed to collapse, it would not only hurt current and future pensioners, it would deal an outsized blow to the employers who contribute to their plans, and to the economy.... Many of these plans are hurtling toward insolvency, while others are deteriorating from the economic fallout of the pandemic. The stakes are so high in some states that the issue could swing the election."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  Retirement Plan Policy

Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Carpenters Pension Trust Fund-Detroit and Vicinity Pension Fund
U.S. Department of the Treasury Link to more items from this source
[Official Guidance]
Oct. 29, 2020

"The Board of Trustees of the Carpenters Pension Trust Fund -- Detroit & Vicinity 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[.]"

Tags: Multiemployer Plans

Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Arizona Bricklayers’ Pension Trust Fund
U.S. Department of the Treasury Link to more items from this source
[Official Guidance]
Oct. 29, 2020

"The Board of Trustees of the Arizona Bricklayers' Pension Trust 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[.]"

Tags: Multiemployer Plans

Editor's Pick PBGC Report: Benefit Provisions in Multiemployer Defined Benefit Pension Plans (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Oct. 20, 2020

34 pages, Oct. 2020. "This supplement to PBGC's Databook provides a detailed study of the plan provisions available to active workers in multiemployer defined benefit pension plans based on data compiled from [2016] Form 5500 filings for 582 multiemployer defined benefit pension plans which, in aggregate, cover approximately 90% of the total universe of active workers covered by all multiemployer defined benefit plans.... This study analyzes benefit provisions ... by industry classification, by plan funding 'zone status' and by amount of current liability. The primary focus is on the structure and amount of the plans' main benefit accrual formula."

Tags: Multiemployer Plans

Lone In-Review MPRA Filing
Burypensions Link to more items from this source
Oct. 19, 2020

"In late July the Building Material Drivers Local 436 Pension Fund out of Valley View, OH was the last multiemployer plan to file to cut benefits. According to the the MPRA website they are the only plan currently in review ... [T]hey may have another problem that could deplete more of their dwindling assets. [EFAST] shows that the plan's 5500 for 2019 has not been filed by the October 15, 2020 deadline opening up the possibility of recently increased penalties."

Tags: Funding of DB Plans  •  Multiemployer Plans

PBGC Releases 2021 Premium Rates
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Oct. 15, 2020

PBGC has determined the premium rates applicable for 2021 plan years in accordance with the indexing rules of ERISA § 4006.

Tags: Multiemployer Plans  •  PBGC  •  Retirement Plan Administration

Policy Options for Multiemployer Defined Benefit Pension Plans
Congressional Research Service [CRS] Link to more items from this source
Oct. 15, 2020

34 pages. "Many policy options have been discussed ... by policymakers and stakeholders. Not all options directly address the solvency of financially distressed multiemployer plans or PBGC ... The options include: [1] assistance for financially troubled multiemployer plans with subsidized loans or partitions; [2] changes to the maximum benefit limit imposed on plans when they receive PBGC financial assistance; [3] changes to PBGC's premium structure; [4] stricter funding rules; and [5] alternative pension plan designs." [R45311 updated Oct. 14, 2020]

Tags: Multiemployer Plans  •  Retirement Plan Policy

Supreme Court Ends Attempt to Impose Company Pension Liabilities on Private Equity Funds
Paul Weiss Rifkind Wharton & Garrison LLP via Lexology Link to more items from this source
Oct. 14, 2020

"With the Supreme Court's denial, the Sun Capital litigation appears to have reached its conclusion. While this represents a win for the Sun Capital defendants, this outcome leaves the First Circuit's endorsement of a 'trade or business' theory of withdrawal liability under ERISA undisturbed, as well as its incorporation of a multi-factor test for determining whether multiple funds could together constitute a 'partnership-in-fact' for these purposes." [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019; cert. pet. denied Oct. 5, 2020)]

Tags: Multiemployer Plans


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