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January 20, 2017 May Be an Historic Day for Pension Plans
"As the American public focuses on January 20, 2017 as the beginning of the Trump administration, the day may also have historical significance for employee benefits law as the date on which a reduction in core pension benefits was permitted.... By January 20th, all participants in the Iron Workers Local 17 Pension Fund are required to have cast their ballots whether or not to reduce core benefits under [MPRA].... [T]he rescue proposal will be approved unless specifically rejected by a majority of plan participants.... Based upon the demographics of the fund it is predicted that the reductions in core benefits will be approved." (Jackson Lewis, vis Lexology)
[Guidance Overview] 2017 Key Administrative Dates and Deadlines for Calendar-Year Multiemployer Defined Benefit Plans (PDF)
3-page chart of key administrative dates and deadlines during 2017 for multiemployer defined benefit retirement plans subject to ERISA and the Internal Revenue Code, including Form 5500, Zone Certification, Notice of Endangered or Critical Status, Zone Surcharge, and more. (Milliman)
Stability in Percentage of Multiemployer Plans in the Green Zone (PDF)
"[A] majority of multiemployer plans -- 64 percent -- are in the green zone.... The average Pension Protection Act of 2006 funded percentage has also remained stable: 86 percent for zone certifications filed in the 12-month period ending on September 30, 2016 compared to 87 percent for the 12-month period ending on September 30, 2015. The percentage of plans in the red zone is 25 percent, with 10 percent of all plans certified as 'critical and declining.' ... These results are similar to the prior 12-month period." (Segal Consulting)
[Guidance Overview] Missing Participants: Gone But Not Forgotten
"On September 20, 2016, the PBGC issued proposed regulations expanding its missing participants program ... Certain modifications made in the proposed PBGC regulations may help further guide plan sponsors of ongoing plans on how to deal with missing participants. Though the current and proposed guidance applies only to terminated plans, it would seem prudent from a fiduciary standpoint to rely on similar principles, where applicable, when faced with missing participants in ongoing plans." (Trucker Huss)
Iron Worker Retirees Face Stacked Deck in Vote to Cut Pensions
"Nearly 2,000 Iron Workers in the Cleveland area will be voting by Jan. 20 to accept or reject cuts to their pensions, and the vote could pit active employees against retirees. It will be the first time a multiemployer pension fund will face such a vote, and the outcome could open the floodgates for dozens of other plans to take similar measures." (Bloomberg BNA)
Questionable Pension Asset Management Practices
"The New York State Teamsters Pension Fund is a multi-employer pension plan which is failing.... [It] appears that (a) opacity; (b) fees and expenses; and illiquidity, conflicts of interest and related risks, all have dramatically increased as the Fund's financial condition worsened -- all contrary to prudent fiduciary practice. In our experience, such a trifecta of imprudence is all-too-common among failing pensions." (STUMP)
[Official Guidance] Text of PBGC Requests for Information: Requests for Approving Certain Alternative Methods for Computing Withdrawal Liability; Settlement of Withdrawal and Mass Withdrawal Liability
"This is a request for information (RFI) to inform PBGC on issues arising from arrangements between employers and multiemployer plans involving an alternative 'two-pool' withdrawal liability method. PBGC seeks information from the general public and all interested stakeholders, including multiemployer plan participants and beneficiaries, organizations serving or representing retirees and other such individuals, multiemployer plan sponsors and professional advisors, contributing employers, unions, and other interested parties about these arrangements, including the various forms these arrangements may take, the terms and conditions that apply to new and existing contributing employers who enter into such arrangements, and the benefits and risks these arrangements may present to multiemployer plans and their participants, employers, the multiemployer pension insurance program, and other stakeholders in the multiemployer system." (Pension Benefit Guaranty Corporation [PBGC])
Proposed Multiemployer Composite Plans: Background and Analysis (PDF)
19 pages. "The composite plan proposal is the third element of a proposal by representatives of an organization of multiemployer pension and health plans to reform multiemployer DB pension plans.... Retired participants in composite plans would receive monthly benefit payments. However, the benefit amounts could increase or decrease, depending on the investment experience of the plan. The composite plan proposal contains a procedure to address situations in which plan assets fall below 120% of plan liabilities, such as could occur if there were investment losses. This realignment program includes proposed, though not mandatory, contribution increases and mandatory benefit reductions." [Report R44722, dated Dec. 29, 2016] (Congressional Research Service [CRS])
New York Teamsters May Have Their Pensions Cut, So What Went Wrong?
"[T]he Teamsters fund was hurt badly by the steep market decline of 2008. Those overseeing the fund also tie its troubles to the decline of unionized employment in the trucking industry, which has translated into fewer contributions to the plan.... But an examination of the fund identified other pernicious forces: most notably, illiquid, opaque and high-cost investments. At least 40 percent of the fund is in so-called alternative investments, including expensive private equity deals, hedge funds and real estate. For a fund poised to suspend benefits, holdings like these are especially problematic." (The New York Times; subscription may be required)
[Opinion] Setting the Stage for 2017: Failing Multiemployer Pension Plans
"[Multiemployer pension plans will] come up politically this year, because there are a couple plans in really bad shape and Congress punted last year. Unlike public pensions, where they at least have some power to tax people to keep the cash flowing, many multiemployer plans have gone from lots-and-lots-of-employers to only-a-few-employers-in-a-dying-industry. The guarantees for [multiemployer plans] are extremely skimpy, so when these plans fail, it's a lot worse when single employer plans fail ... Supposedly, having multiple employers involved was supposed to make the guarantee more stable than if there were only a single employer sponsoring the pension. This doesn't work so well in struggling industries, like mining." (STUMP)
[Official Guidance] Text of Treasury Department FAQs on Participant Voting Procedures for Iron Workers Local 17 Application to Reduce Benefits (PDF)
"Ballots and explanatory materials are being mailed to all eligible voters on December 30, 2016. Voting ... closes at 5 p.m. EST on Friday, January 20, 2017.... If you vote by paper ballot, that ballot must be received by the vote administrator by January 20, 2017.... What is the effect of the vote? ... What do I do if I think that my post-reduction benefit estimate is incorrect? ... What are contact telephone numbers if I need help? ... How do I vote by telephone or internet ? ... How do I vote by paper ballot? ... What if I don't receive a paper ballot? ... After the votes are counted, Treasury must certify the results of the vote no later than January 27, 2017." (U.S. Department of the Treasury)
Seventh Circuit Finds Requirement to Contribute to Fringe Benefits Funds Can Extend Past Decertification
"Ultimately, the opinion appears to be driven by an increasing concern for the funding of multiemployer funds. The opinion mentions that the Funds had 'budgeted' for five years of contributions from RiverStone and recites that 'once [multiemployer plans] promise a level of benefits to employees, they must pay [the benefits] even if the contributions they expected to receive do not materialize.' ... By extension, this holding could also be applied to withdrawals of recognition and disclaimers of interest." [ Midwest Operating Engineers Welfare Fund v. Cleveland Quarry , Nos. 15-2628, 15-3221, 15-3861, 16-1870 (7th Cir. Dec. 20, 2016)] (Ogletree Deakins)
[Guidance Overview] Multiemployer Pension Benefits: Take a Hit Now or a Bigger Hit Later
"The success of the Iron Workers plan in implementing the voluntary reductions is an indication that plans now understand the standards they must meet in order to get Department of Treasury approval of their voluntary reductions.... Hopefully, with dozens and dozens of other multiemployer pension plans in critical and declining status, more plan trustees will see that voluntarily implementing a reduction in pension benefits to avoid insolvency may be more advantageous to their participants than facing the more-significant benefit cuts that would be imposed by the PBGC." (McDonald Hopkins)
Decertification Does Not End Employer Contribution Obligations to Multiemployer Funds
"The Seventh Circuit is not alone in finding that an employer's contractual obligations to participate in multiemployer funds can survive decertification, withdrawals of recognition, and disclaimers of interest. But there is a competing view. The Ninth Circuit has recognized that when a bargaining unit ceases to exist, be it by decertification or contract repudiation given the existence of a one-person bargaining unit, any existing contract becomes void, not voidable, ending the employer's obligation to contribute to employee benefit plans." [ Midwest Operating Engineers Welfare Fund v. Cleveland Quarry , Nos. 15-2628, 15-3221, 15-3861, 16-1870 (7th Cir. Dec. 20, 2016)] (Seyfarth Shaw LLP)
Despite Union's Decertification, Employer Must Contribute to Welfare Funds Until CBA Expires
"An employer was obligated to continue making contributions to welfare and pension funds until the expiration of the applicable collective bargaining agreement and it violated ERISA by halting such payments following the union's decertification, the Seventh Circuit ruled, affirming summary judgment in favor of the funds. Though the CBA became unenforceable by the union when it was decertified, the funds were still entitled to the agreed upon contributions and thus entitled to relief under ERISA[.]" [ Midwest Operating Engineers Welfare Fund v. Cleveland Quarry , Nos. 15-2628, 15-3221, 15-3861, 16-1870 (7th Cir. Dec. 20, 2016)] (Wolters Kluwer Law & Business)
Pension Plan Owes Rescue Petition Success to Past Rejection
"The Iron Workers fund changed its investment return assumptions in response to the department's denial of Central States' petition. It did so by altering the local plan's original flat annual 6.5 percent investment return assumption and replacing it with year-by-year return assumptions that were lower in early years and gradually increased in later years. The fund also informed its participants of the cuts using the department's model notice." (Bloomberg BNA)
PBGC Updates Early Warning Program Information
"In an effort to increase transparency about PBGC's single-employer Early Warning Program, PBGC recently enhanced and reorganized the information available on its website. Under this program, PBGC works with certain employers to preserve their pension plans and protect the retirement security of their workers and retirees. The updated information can be found on PBGC's Risk Mitigation & Early Warning Program webpage . We're also inviting dialogue on the program and encouraging practitioners to send technical questions to webmaster@pbgc.gov, with the goal of posting a new set of Early Warning Program FAQs in early 2017." (Pension Benefit Guaranty Corporation [PBGC])
[Opinion] Treasury Department Approves Devastating Pension Cuts for Cleveland Iron Workers' Retirees
" 'These cuts will devastate retirees who count on their pensions to make ends meet in retirement. We're extremely disappointed that the Treasury Department approved these cuts, and we're not sure why they did it,' said Karen Ferguson, the Center's Director. 'We're puzzled as to why the agency did not provide specific reasons for approving the application.' " (Pension Rights Center)
First Approval of MPRA Benefit Reduction Application Issued by Treasury Department, for Iron Workers Local 17
"The pension fund had $91.9 million in assets and $223.2 million in liabilities as of April 30, 2014, for a funding ratio of 41% ... Of its 2,064 participants, 640 are active. The plan is projected to become insolvent in 2032. The MPRA application ... called for reducing benefits 'indefinitely' to allow the plan to remain solvent with enough assets to pay the reduced level of benefits." (Pensions & Investments)
Treasury Department Letter Approving MPRA Benefit Reductions Proposed by Iron Workers Local 17 Pension Fund (PDF)
"In consultation with the [DOL] and the [PBGC], Treasury has determined [1] that the Plan is eligible to reduce benefits ... [2] that the Application satisfies the requirements of ... section 432(e)(9) of the Internal Revenue Code ... subject to your revision of the proposed Plan amendment included in your Application.... [T]he Application is approved, subject to your revision of the proposed amendment.... [No] suspension of benefits may take effect before a vote of the participants of the plan with respect to the suspension." (U.S. Department of the Treasury)
Two MPRA Suspension Applications Bite the Dust (PDF)
"The [ Ironworkers Local 16 Pension Fund denial letter ] explained that the Application used the 1983 Group Annuity Mortality Table (1983 GAM Table) which is significantly out of date.... [and] made no provision for mortality improvement for the period from 1983 to the proposed effective date of the suspension, or for the 30-year solvency projection period following the effective date of the suspension ... The [ Teamsters Local 469 Pension Fund denial letter ] explained that the Plan's own experience is that over 70% of participants receive a joint-and-survivor annuity. In its Application, the Plan assumes that 80% of all participants who have not commenced their benefits are married, and ... that 100% of the married participants will choose to waive their subsidized joint-and-survivor annuities and receive less valuable single-life annuities." (United Actuarial Services, Inc.)
Canaries in the Coal Mine on Pension Bailouts
"Participants in the United Mine Workers of America 1974 (UMWA) Pension Plan are unlikely to see any significant cuts in their benefits primarily because the average retiree receives about $6,900 annually, far less than the PBGC guarantee ... [It] is those health care benefits that will cease for 22,000 retirees at the end of this year that primarily worries senators like West Virginia's Joe Manchin[.]" (Burypensions)
More Ways to be Tagged with Withdrawal Liability
"The Seventh Circuit found that it was common knowledge that many multiemployer pension funds are underfunded and therefore have withdrawal liability. Because the son had been active in the father's business, the son would know about the collective bargaining agreement and the obligation to contribute to the pension fund.... Consequently, the court of appeals refused to uphold a decision of the district court that the son necessarily had no knowledge of the withdrawal liability. According to the Seventh Circuit, knowledge of that liability is important to holding a successor responsible for the liability." [ Board of Trustees of the Automobile Mechanics' Local No. 701 Union and Industry Pension Fund v. Full Circle Group, Inc. , No. 15-2497 (7th Cir. June 24, 2016)] (Stinson Leonard Street)
CBO Cost Estimate for S. 3470, the Miners Protection Act of 2016
"S. 3470 would authorize payments for health and pension benefits for certain retired or disabled coal miners and their eligible dependents.... CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting the bill would reduce direct spending, on net, by $7 million and increase federal revenues by $67 million over the 2017-2026 period. Considering both the direct spending and revenue effects, we estimate that enacting S. 3470 would reduce budget deficits, on net, by $74 million over the 2017-2026 period." (Congressional Budget Office [CBO])
Taking the Taft-Hartley Defined Contribution Plan to the Next Level (PDF)
"This paper will explain the merits of moving the defined contribution plan from a balance forward, periodic-valued, trustee-directed plan to a daily-valued, self-directed plan that participants can view and monitor every day in order to make more informed decisions about their retirement.... [T]rustees have an increased fiduciary responsibility to ensure these plans are being run efficiently and in the best interests of the participants and their beneficiaries. Bringing the plan into a daily-valued environment that allows the participant to direct their investments offers [additional] advantages[.]" (Milliman)
Pension Rescue Rejection Letters May Be Road Map for Other Plans
"Multiemployer pension plans seeking government approval to suspend benefits have a handy tool that could help them get that approval -- the government's rejection letters shooting down every proposed cut so far.... Although the decision letters address specific plan applications, they communicate what Treasury wants to see before it will sign off on cuts ... The level of detail in Treasury's letters far exceed what the agency needed to tell the rejected plans, but was quite informative for other potential plan applicants." (Bloomberg BNA)
DOL Investigating Timely Payment of Pensions to Terminated Vested Participants Nationwide (PDF)
"[T]rustees should consider taking steps now to help ensure that they will not be caught off-guard if they receive a notice for one of these investigations.... [1] Determine whether the plan has the necessary data to identify the terminated vested participants ... who are about to about to become or who already are eligible for payment.... [2] Notify terminated vested participants who are about to become eligible for payment at NRA or to be required to start payment at age 70-1/2 ... [3] Inform terminated vested participants who are at or who have passed their required age 70-1/2 payment date that their payments must begin, and take steps to initiate payment as soon as possible.... [4] Investigate the treatment of uncashed checks under the plan." (Segal Consulting)
[Opinion] Composite Bill: Another Threat to Multiemployer Pension Plans
"The draft composite bill could turn well-funded pension plans into poorly-funded plans while also allowing for cuts to retirees' and active workers' benefits in both the old and new plans. The Center is working with a broad coalition of organizations -- including AARP, the International Brotherhood of Teamsters, the Western Conference of Teamsters, the International Brotherhood of Boilermakers, and the United Steelworkers -- to oppose the composite bill." (Pension Rights Center)
[Official Guidance] Text of Extension of Comment Period on Application by New York State Teamsters Multiemployer Plan for Reduction in Benefits
"On September 28, 2016, the Department published a notice of availability and request for comments regarding an application to Treasury to reduce benefits under the New York State Teamsters Conference Pension and Retirement Fund in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to reopen the comment period to provide more time for interested parties to provide comments." (U.S. Department of the Treasury)
2017 Planning for ERISA Multiemployer DB Plan Operations (PDF)
"The calendar provided in this [article] will help you set up your own schedule of activities to address as the year progresses so that you do not miss important deadlines for your qualified plans.... [It includes] a number of key issues for you to consider (along with the calendar deadlines) as we head into 2017." (Xerox HR Services)
The Financial Condition of the PBGC Multiemployer Program
25 presentation slides. "Multiemployer plans have approximately $1 trillion in defined benefit (DB) pension liabilities covering 10 million private-sector employees in unionized industries ... [M]ost systems have significant underfunding.... Unfunded pension liabilities: burden public and private employers and their current employees; create uncertainty about benefits for beneficiaries; expose the federal government to losses from PBGC's insurance of private pensions. Underfunding has been exacerbated by: structural problems with the funding of pension plans ... employers' switching from defined benefit to defined contribution plans; a weak economy." (Congressional Budget Office [CBO])
Treasury Announces Conference Call with Participants in the Ironworkers Local 17 Pension Plan
"In addition to the written comments already received, Treasury is providing an opportunity for all plan participants to provide feedback on the application. Special Master Kenneth R. Feinberg and Treasury staff are hosting a conference call for any Ironworkers 17 participants and beneficiaries who wish to call and provide comments on the application. The teleconference will be Wednesday, November 30, 2016 at Noon Eastern Time." (U.S. Department of the Treasury)
[Opinion] Too Underfunded for MPRA?
"[T]he new administration will have to come to grips with the United Mine Workers of America 1974 Pension Plan, whose $4.1 billion in assets and $9.7 billion in liabilities makes it too severely underfunded to qualify for MPRA reductions.... About $2.3 billion out of the $3.8 billion that the plan supposedly had in assets as of June 30, 2015 was a guess." (Burypensions)
[Opinion] Modernizing Multiemployer Pensions
"By providing trustees important flexibility to manage the composite plan effectively and responsibly, the proposal will help provide workers a stable, secure annuitized benefit when they retire.... [By] including strict funding requirements that will ensure composite plans are responsibly managed, the proposal will provide retirees greater certainty and financial stability for the years ahead." (Committee on Education and the Workforce, U.S. House of Representatives)
Multiemployer Pension Funded Status Has Been Steady So Far in 2016 (PDF)
"The aggregate funded percentage for multiemployer plans is estimated to be 76% as of June 30, 2016, compared with 75% as of December 31, 2015. For most multiemployer pension plans, estimated 2016 investment experience through June 30, 2016, was over 3%, just slightly below expected returns. About one-half of the total underfunding for multiemployer plans continues to be attributable to plans that are less than 65% funded. Of the 300+ critical plans, about 40% are projected to be insolvent at some point. Can these plans be helped by benefit suspension provisions of [MPRA]?" (Milliman)
Treasury Denies Teamsters Local 469 Application to Reduce Pension Benefits
"The pension fund assumed an annual investment return of 7.25% for the entire 45 years projected in the application to achieve solvency. [Treasury's Special Master Kenneth Feinberg] said those assumptions were not reasonable because they did not use appropriate investment forecast data, were overly optimistic, and inappropriate given a negative cash flow and other factors." (Pensions & Investments)
Text of Treasury Department Denial of Application for Suspension of Benefits by Teamsters Local 469 Pension Fund (PDF)
"[A]fter reviewing the Application and consulting with PBGC and DOL, Treasury has determined that the suspensions described in the Application fail to satisfy the requirement set forth in Kline-Miller 'that the proposed benefit suspensions, in the aggregate, be reasonably estimated to achieve, but not materially exceed, the level that is necessary to avoid insolvency', because the zero-takeup assumption regarding spousal survivor benefits and the investment return assumption used for this purpose are not reasonable." (U.S. Department of the Treasury)
Multiemployer Defined Benefit Pension Plans: A Primer and Analysis of Policy Options (PDF)
30 pages. "Congress established separate PBGC programs to insure single and multiemployer DB pensions. For example, PBGC becomes the trustee of terminated single employer DB pension plans. PBGC does not become the trustee of multiemployer DB pension plans; rather, it makes loans to insolvent multiemployer DB plans so the plans may continue to pay participants' guaranteed benefits. Although PBGC has sufficient resources to make loans to smaller multiemployer DB plans, the insolvency of a large multiemployer DB pension plan would likely result in a substantial strain on PBGC's multiemployer insurance program." [Report R43305, dated Nov. 3, 2016.] (Congressional Research Service [CRS])
[Opinion] Speech by Karen Friedman at the American Academy of Actuaries' Annual Meeting and Public Policy Forum
"[T]here are two big problems that need to be solved. The first is ensuring that the PBGC is able to continue to pay benefits for the insolvent plans that it is already committed to supporting. The second is to solve the problem of so-called 'critical and declining' plans -- but not by allowing these plans to make the harsh benefit cuts authorized by MPRA. The MPRA cutback provisions must be repealed! And, of course, saving severely underfunded plans will make it a lot easier to ensure that the PBGC will have the capacity to meet its obligations to insolvent plans." (Pension Rights Center)
Text of Treasury Department Denial of Application for Suspension of Benefits by Ironworkers Local 16 Pension Fund (PDF)
"[A]fter reviewing the Application and consulting with PBGC and DOL, Treasury has determined that the suspensions described in the Application fail to satisfy the requirement set forth in Kline-Miller 'that the proposed benefit suspensions, in the aggregate, be reasonably estimated to achieve, but not materially exceed, the level that is necessary to avoid insolvency', because the mortality and the hours of service assumptions used for this purpose are not reasonable." (U.S. Department of the Treasury)
Teamsters Group Funds Forensic Investigation of $1.6 Billion New York State Teamsters Pension
" 'Retired and active Teamsters in New York are now facing crippling cuts under new pension legislation. Throughout 2016 we have been fundraising for an independent forensic investigation, and have decided to 'leave no stone unturned' with a goal to understand better how we got to this point,' said Mark Greene of [Teamsters Alliance for Pension Protection]." (Forbes)
Central States Not Entitled to Reimbursement From Insurers
"Central States sought to recover $343,000 from the insurers. The parties disputed the coordination-of-benefit clauses, and each side argued that the clauses made the other primarily liable for the beneficiaries' medical expenses." [ Central States, Se. & Sw. Areas Health & Welfare Fund v. Am. Int'l Grp., Inc. , No. 15-2237 (7th Cir. Oct. 24, 2016)] (Bloomberg BNA)
Application for Benefits Suspension: Automotive Industries Pension Plan
"The Automotive Industries Pension Plan application proposing benefit suspensions can be found [at the linked page]. The application is organized by the items specified in Revenue Procedure 2016-27. The Automotive Industries Pension Plan application is currently being reviewed and the review is expected to take several months." (U.S. Department of the Treasury)
Honoring the PBGC Guarantee for Multiemployer Plans Requires Difficult Choices (PDF)
11 pages. "Reform options include premium increases in a variety of structures, resources from outside the system, and alternatives that could increase the stability of ongoing multiemployer plans in an effort to reduce the need for PBGC financial assistance. None of the options are ideal, and they require difficult sacrifices, possibly from parties who had no role in the creation of the problem. But it is clear that if nothing is done, the guarantees promised to the participants in multiemployer plans will not be fully honored." (American Academy of Actuaries)
Criminal Charges Filed Against Contributing Employer for Mail Fraud Based on Filing False Remittance Information (PDF)
"[A] civil action by several ERISA-governed multiemployer fringe benefit funds ... against two companies for unpaid fringe benefit contributions apparently triggered a CRIMINAL action by the Department of Justice against the companies ' owners and the companies ... for mail fraud and other criminal violations based upon the use of the U.S. Mail to file false contribution remittances." (United Actuarial Services, Inc.)
[Opinion] Pension Rights Center Comment Letter to Treasury Department on Application for Benefits Suspension Submitted by Iron Workers Local 17 Pension Plan (PDF)
"[We] urge the Treasury Department to reject the application ... on the ground that it does not satisfy the relevant statutory criteria for approval of the application. Specifically: [1] The application does not demonstrate that the proposed cuts will ensure that the plan will remain solvent for 30 years; [2] The application fails to show that the plan's trustees have taken all reasonable steps to avoid insolvency; [3] The proposed benefit suspensions are not equitably distributed across the participant and beneficiary population; and [4] The notice provided to participants was not written in a manner so as to be understood by the average plan participant." (Pension Rights Center)
[Opinion] The MPRA: One Size Fits No One
"In the two years since the passage of the [Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA)], nothing has happened except expenditures of a great deal of money by multi-employer funds to obtain the relief from the Treasury and a hue and cry from [senators] who now regret having voted in favor of legislation that has caused such human suffering. They then penned a common letter to the Treasury Department demanding that the lengthy and costly application by the Central States and Southeast Pension Fund be denied. Central States' application was subsequently denied." (Jackson Lewis P.C.)
Tea Leaves Offer Clues to Coming Pension Rescue Petitions
"[T]he lower the ratio of active employees to total participants, the more likely a plan would be to file a petition.... Having a ratio that is too low could mean that a plan is susceptible to having its petition rejected for being too financially troubled to avoid insolvency. The Central States plan had an active to total participant ratio of about 16 percent, while the Road Carriers Local 707 Pension Fund, which also had its petition rejected, had a ratio of about 18 percent." (Bloomberg BNA)
[Guidance Overview] New Guidance on Plan and Large Employer Reporting Under the ACA
"[C]ontributing employers to multiemployer plans will continue to report their offers of coverage to employees for whom they contribute to a multiemployer plan in the same way they reported these offers for 2015.... The most significant change in Form 1095-C reporting is that for 2016 large employers will now be required to report 'conditional' offers of coverage to spouses." (Segal Consulting)
Notes from Meeting of Actuaries 'Intersector Group' with IRS, September 2016 (PDF)
5 pages. Topics include: [1] Guidance timing and priorities ... [2] Instructions for 2015 Form 5500 Schedule H/I line 4L and Form 5500-SF line 10f ... [3] Updating outdated mortality tables ... [4] Current processing time for approvals of shortfall and other funding method requests ... [5] Valuation of variable-annuity plans for funding, 417(e), etc.... [6] Multiemployer Pension Reform Act (MPRA) suspensions ... [7] Church plan litigation ... [8] Treating early retirement factors as benefits, rights, and features for nondiscrimination testing ... [9] Intersector Group suggestion to offer a special one-time determination letter opportunity within the next two years, solely for hybrid plans forced to change their interest crediting rate to comply with the final rules (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
Notes from Meeting of Actuaries 'Intersector Group' with PBGC, September 2016 (PDF)
4 pages. Topics include: [1] MPRA exclusion of certain contribution increases required by funding improvement and rehabilitation plans from withdrawal liability -- timing and scope of regulations ... [2] MPRA partitions -- evolution of PBGC philosophy on non-impairment provision ... [3] Policy on refunding premiums when sponsor learns a participant died with no spouse/beneficiary entitled to plan benefits several years in the past ... [4] 4010 filings ... [5] Viability of PBGC multiemployer program ... [6] Discussion issues raised by PBGC representatives. (American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA])
Criminal Liability for Failure to Contribute to Multiemployer Benefit Fund?
"[This case] represents a troubling expansion of liability from civil to criminal. Further, imposition of criminal liability for something (double-breasted operations) described as 'neither uncommon nor inherently unlawful' is similarly disturbing. Finally, also worrying is [that] the determination of the sufficiency of the sophisticated elements of a lawful double-breasted operation will be up to a jury in a criminal proceeding." [ U.S. v. Thompson , No. 16-10014 (D. Mass. Sept. 13, 2016)] (Jackson Lewis P.C.)
Furniture Workers' Pension Fund Applies for Benefits Suspension
"The pension is in 'critical and declining' status, and is projected to become insolvent by 2021 ... With $180 million in actuarial liabilities projected for July, the fund would be 30 percent funded at that time ... The board seeks for the pension benefits to be suspended May 1, 2017. A suspension would drop monthly benefits from $238 on average to $219, yielding an overall reduction of $12 million." (The Tennessean)
Lawmaker Warns Against Stealth Passage of Pension Revamp
"[Rep. Joseph Courtney (D-Conn.) said] that it's 'still theoretically possible for the proposal to be debated in the committee and amended during the post-election lame-duck session.' Yet, he said he sees many parallels between this bill and the way the MPRA bill was passed two years ago as part of an omnibus bill. During the hearing, Courtney said it's 'common sense' that there isn't time left to amend the bill and questioned the timing of the draft bill hearing. Later, he said he suspects this bill, which is supported by many of the same groups that supported the MPRA, is part of a similar strategy used to pass that law." (Bloomberg BNA)
[Opinion] Joint Statement of Unions and Other Organizations Opposing Consideration of 'Composite' Pension Legislation
"The composite legislation does not go nearly far enough to ensure the retirement security of our members and other participants in multiemployer pension plans. The draft provides inadequate funding for composite plans and weakens the funding base for existing (legacy) plans ... Protecting the benefits of workers in legacy plans would require deep cuts to active workers in composite plans in times of market instability.... [C]omposite plans are exempt from paying PBGC premiums ... When combined with plan failures, the PBGC will be saddled with significant new liabilities at the same time an already underfunded multiemployer insurance program is depleted of funds." (International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Teamsters, United Steelworkers, National Retirees Legislative Network, and the Pension Rights Center)
House Subcommittee Holds Hearing on Multiemployer 'Composite Plan' Proposal
"[T]he draft proposal would authorize 'composite' multiemployer plans, an innovative retirement plan option for workers and employers. The proposal represents the next step in the committee's ongoing efforts to strengthen retirement security and improve the multiemployer pension system." (Health, Employment, Labor, and Pensions Subcomittee of the Committee on Education and the Workforce, U.S. House of Representatives)
Senate Committee Approves Funding for Mine Workers' Pension Plan
"The mine workers bill, whose supporters say will have a floor vote by the end of the year, was approved 18-8. It would allow the use of surplus funds from the Abandoned Mine Land Reclamation Fund, which currently goes to the U.S. Treasury. Without the funds, the pension fund could become insolvent and overwhelm the [PBGC]." (Pensions & Investments)
Multiemployer Plan Application for Benefit Suspension: New York State Teamsters Conference Pension and Retirement Fund
"The New York State Teamsters Conference Pension and Retirement Fund application proposing benefit suspensions can be found [at the link]. The application is organized by the items specified in Revenue Procedure 2016-27." (U.S. Department of the Treasury)
[Official Guidance] Text of PBGC Draft Forms and Instructions for Proposed Expanded Missing Participants Program
"PBGC [has issued] a proposed rule that would expand its existing Missing Participants Program to cover terminated 401(k) and other defined contribution plans and certain defined benefit plans that are not currently covered by the Program.... These forms are for information purposes only. PBGC-insured single-employer plans in the process of doing a standard termination should use the current forms to report missing participants." (Pension Benefit Guaranty Corporation [PBGC])
[Official Guidance] Text of PBGC FAQs on Proposed Expanded Missing Participants Program
"Why is PBGC proposing a missing participants regulation? ... Will terminating plans be required to use PBGC's Missing Participants Program? ... How will the program work for defined contribution plans that choose to use it? ... What are the benefits to plans and participants of PBGC's proposed defined contribution Missing Participants Program? ... Did PBGC coordinate with other federal agencies? ... What types of defined contribution plans could use the Missing Participants Program? ... Does PBGC propose any changes to the current program for single-employer PBGC-insured defined benefit plans? ... When will the proposed expanded Missing Participants Program be available? ... Under the proposal, will plans pay a fee to participate in the Missing Participants Program? Where can I find more information about this proposal?" (Pension Benefit Guaranty Corporation [PBGC])

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