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2018 Key Administrative Dates and Deadlines for Calendar-Year Multiemployer Defined Benefit Plans (PDF)
This three-page chart includes a descriptive list of the 'key' administrative dates and deadlines for multiemployer defined benefit plans regulated by ERISA and the Internal Revenue Code. (Milliman)
[Opinion] Proposed Loan Programs for Multiemployer Plans
"If the loan benefits retirees mostly and relies on active member contributions for repayment this is illegal and will not work.... If active members will object, what about employers? ... If contributions cannot repay the loan what of investment interest income? ... Do we assume that public pensions will remain silent if loans are available to private pensions?" (Burypensions)
Multiemployer Plans: Their Current Circumstances in Historical Context (PDF)
88 pages. "As of September 2017, the Treasury has approved only three of the 15 benefit-cut requests submitted ... [F]our applications still remain under review. So, while the ultimate effectiveness of MPRA still remains to be seen, it is clear that other solutions must be explored to meet the multiemployer challenge ... [T]here are 11 relatively large critical plans -- covering about 86,000 members -- that could become 'critical-and-declining' in the near term. Early action that focuses on some of these indicators might be able to stabilize other plans heading for trouble." [Sept. 29, 2017; posted on EBSA website Jan. 16, 2018] (IMPAQ International, for Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Second Application for Approval of a Proposed Suspension of Benefits Under Ironworkers Local Union 16 Pension Fund
"The proposed effective date for the benefit suspension is October 1, 2018.... The proposed suspension [provides] for different treatment of participants and beneficiaries ... The proposed reduction eliminates the thirteenth check for all pensioners, surviving spouses and beneficiaries who are receiving a thirteenth check, with the last such check to be issued in January 2018." [Submitted Dec. 28, 2017; posted on Treasury website Jan. 16, 2018] (U.S. Department of the Treasury)
Alaska Ironworkers Pension Plan, Second Application for Benefit Suspension or Reduction
"This application proposes that 26.5% of the participant's (or beneficiary's) benefit earned as of July 1, 2016 be suspended." [Submitted Dec. 19, 2017; posted on Treasury website Jan. 10, 2018; published in Federal Register on Jan. 18, 2018] (U.S. Department of the Treasury)
Seventh Circuit Applies Clear Error Standard to Review of Withdrawal Liability Arbitrator's CBA Interpretation
"[T]he Seventh Circuit applied the clear error standard of review to a withdrawal liability arbitrator's interpretation of the parties' underlying collective bargaining agreement (CBA) that required contributions to a multiemployer pension fund. The Court enforced the arbitrator's findings, a victory for the employer whose withdrawal liability was consequently reduced from over $600,000 to $0." [ Laborers' Pension Fund v. W.R. Weis Company, Inc. , Nos. 16-2079 & 16-2944 (7th Cir. Jan. 8, 2018)] (Seyfarth Shaw LLP)
'Composite' Solution for Multiemployer Plans in the Works
"[T]he Give Retirement Options to Workers (GROW) Act ... would facilitate a transition to what is being called a 'composite' retirement plan ... [which would combine] the key features of defined benefit and defined contribution plans. Proponents say that this new structure will give peace of mind to workers who will still receive lifetime income through the composite plan, while giving employers certainty in how much they will be required to pay into the system. Opponents ... argue that the option would divert much-needed funding from legacy DB plans." (National Association of Plan Advisors [NAPA])
[Opinion] Joint Statement Opposing 'Composite' Pension Legislation
"The composite legislative proposal does not ensure that earned pensions will be fully paid in either existing multiemployer pension plans or in newly created plans. The composite proposals put benefits at risk, even in those multiemployer plans that are well-funded today.... [M]oney that would be needed for the new composite plans will be taken from money needed to fund existing plans -- likely leading to underfunding of both plans -- without adequate benefit protections." (AARP; Int'l Ass'n of Machinists and Aerospace Workers; Int'l Brotherhood of Boilermakers; Musicians for Pension Security; Nat'l United Comm. to Protect Pensions; Nat'l Retirees Legislative Network; Pension Rights Center; Others)
Fourth Circuit: District Court Misapplied ERISA Preemption Principles in Taft-Hartley Fund Dispute
"[T]he Fourth Circuit concluded that ... The state-law claims were not preempted, and the case should have proceeded as a breach of contract suit.... [T]he Fourth Circuit determined that the district court treated conflict preemption and complete preemption as opposing choices. The Fourth Circuit noted, however, that the jurisdictional issue implicating complete preemption was not present in this case." [ Greenbrier Hotel Corp. v. UNITE HERE HEALTH , No. 16-2116 (4th Cir. Jan. 3, 2018)] (Thomson Reuters Westlaw)
Setting Up for Success: Wellness Programs in a Multiemployer Setting (PDF)
"[S]uccessful wellness programs exhibit two characteristics that most multiemployer plans lack ...[E]stablishing a culture of wellness is typically an employer-centric activity that works best at a single workplace....[L]eadership is generally not visible to the membership on a day-to-day basis. Even if the chair of the board of trustees and the fund administrator are willing to lead by example by participating in wellness activities, the members may not be aware of it." (benefits magazine, a publication of the International Foundation of Employee Benefit Plans [IFEBP])
Pension Rights Center: The Year in Review (PDF)
"On November 16, Senator Sherrod Brown (D-OH) and Congress Richard Neal (D-MA) introduced comprehensive legislation to address the multiemployer pension crisis.... [T]he Pension Rights Center celebrated our 41st anniversary ... PRC staff fielded more than 1,600 calls from participants with pension and retirement savings plan problems in 49 states ... [PRC's] recoupment initiative ... is bringing together attorneys who represent plans and those who represent retirees to search for common ground on new rules to address this critically important problem.... [PRC] published fact sheets and blogs posts on the importance of pensions." (Pension Rights Center)
The Multiemployer Pension Plan Crisis: History, Legislation, and What's Next? (PDF)
52 pages. Topics include: [1] Is MPRA working? [2] What happens if nothing happens? [3] Potential solutions: (a) PBGC takeover of critical and declining status plans; (b) PBGC funding; (c) Partitioning of orphans; (d) Plan mergers; (e) Benefit modifications; (f) Variable defined benefit plans; (e) Composite plans; and (f) Loan program proposals. (U.S. Chamber of Commerce)
[Opinion] Joint Statement Opposing 'Composite' Pension Legislation
"The composite legislative proposal does not ensure that earned pensions will be fully paid in either existing multiemployer pension plans or in newly created plans. The composite proposals put benefits at risk, even in those multiemployer plans that are well-funded today." (Pension Rights Center and eight other employee and retiree organizations)
[Official Guidance] Text of Treasury Department Approval of Application to Reduce Benefits Under International Association of Machinists Motor City Pension Plan (PDF)
"Because a majority of voters identified as eligible by the Plan did not vote to reject the benefit reduction, the benefit reduction may go into effect. Treasury, in consultation with DOL and PBGC, has issued a final authorization to reduce benefits under the Plan as described in the Application, effective January 1, 2018, subject to the conditions described [in this letter]." (U.S. Department of the Treasury)
Recent Data on the Funded Status of Multiemployer Pension Plans (PDF)
"A majority of plans are in the green zone ... Most plans have a funded percentage above 70% and many are fully funded ... In the construction industry, a greater percentage of plans with fewer than 1,000 participants are in the red zone than larger plans ... Yet the industry as a whole remains overwhelmingly healthy with very few [critical and declining] plans -- only six in 2017." (Segal Consulting)
Proposed Legislation Would Create Multiemployer Pension Loan Program (PDF)
"The proposed Bill would create an agency in the Treasury Department ... [that] would make low interest rate loans to multiemployer defined benefit plans which are in critical and declining status.... The recipient plan would make interest-only payments for 29 years and a final balloon payment of interest and principal the 30th year.... The idea is that the plans receiving loans could earn enough money from plan's asset investments to pay back the loan and stabilize the plan and multiemployer system." (United Actuarial Services, Inc.)
[Opinion] It's Time to Protect Union Pensions
"The Teamsters have been working diligently for years with key members of Congress trying to come up with a solution to this pension crisis. And with the release of new legislation last month, the union believes it has found it. The bill would boost financially troubled multi-employer pensions so they don't fail. It would create a new agency under the U.S. Treasury Department that would sell bonds in the open market to large investors such as financial firms. The dollars raised, in turn, would go to these retirement plans to stave off cuts or complete failure." (James Hoffa, via The Detroit News)
Union Fund Hit with Excessive Fee Suit
"Similar to many excessive fee lawsuits filed against single-employer plans, the complaint accuses a multiemployer plan of failing to leverage its bargaining power to obtain lower investment and recordkeeping fees." (PLANSPONSOR)
Multiemployer Pension Plans: Current Status and Future Trends (PDF)
71 pages. "At this stage, the majority of proposed solutions to the multiemployer challenge fall into two categories: alleviating the burden of orphaned members -- workers left behind when employers exit -- and providing subsidized loans -- either through direct government lending or government guarantees on private sector loans. Whatever the ultimate solution, a case can be made for a package that involves contributions from employers (tailored not to sink already fragile plans), from plan participants, and from taxpayers." (Center for Retirement Research at Boston College)
Underfunded Multiemployer Fund Proposes 'Two-Pool' Program
"[E]mployers who join the new pool will likely pay a withdrawal liability amount, possibly on a discounted basis, for past unfunded liability. They will then join the 'new pool,' which will be funded at a very high rate -- with reduced benefits -- to prevent future unfunded liability problems like those in the present plan.... [The] Fund's two-pool proposal may mark the first significant proposal by a large multiemployer pension plan since the proposal suggested by the Central States Pension Fund was rejected by the [PBGC] and The Treasury Department during 2016." (Polsinelli PC)
Senate HELP Subcommittee Examines the Mounting Multiemployer Pension Problem
"Members of the Subcommittee heard from the Honorable Tom Reeder, the Director of the [PBGC].... Reeder laid out the high stakes of finding a solution to preserve the pension plans promised to millions of workers and retirees.... PBGC's FY 2016 Projections Report shows that the [single-employer] program will be out of a deficit by 2022.... [T]he Multiemployer Program stands in stark contrast as financial conditions continue to worsen." (Committee on Education and the Workforce, U.S. House of Representatives)
[Opinion] Should Failing Multiemployer Pension Funds Get a Federal Bailout?
"A core challenge is that the financially distressed multiemployer pension plans are in shriveling industries. For example, the United Mine Workers plan has 10 retirees for every active member.... Bailing out pension funds by offering them unpayable loans simply kicks the can down the road and increases future deficits in a non-transparent manner. Worse, this approach could easily spread to public sector retirement plans, allowing them to maintain unsustainable benefit formulas." (The Fiscal Times)
[Opinion] American Academy of Actuaries Comment Letter to PBGC on Proposed Modification to 2017 Form 5500 Schedule MB (PDF)
"PBGC is proposing that basic supporting documentation ... be included as an attachment to Line 4f.... [T]he additional information would enhance the ability of PBGC to perform projections for plans in critical and declining status or which are otherwise approaching insolvency.... [With] one exception ... the additional information will not result in a significant burden for most plan actuaries, as they will have already performed the calculations requested in the supporting documentation." (Multiemployer Plans Committee, American Academy of Actuaries)
Five Ideas for Fixing Unionized Workers' Pension Crisis
"[T]he Multiemployer Pension Reform Act was intended to fix the troubled pension system, but it hasn't quite done the job. Lawmakers, as well as major employers such as United Parcel Service, have thrown out proposals for fixing the pension system. Almost all of the proposals call for some sort of loan program for the plans." (Bloomberg BNA)
Multiemployer Pension Plan Funding Nears Peak Since 2008 Crash
"The interim update by Milliman compared changes in estimated funding levels at U.S. multiemployer defined benefit (DB) plans from December 31, 2016, to June 30, 2017. The aggregate funded percentage for all plans is estimated to have improved to 81% as of June 30 from 77% at the end of 2016, with a multiemployer plan system shortfall reduced by $21 billion." (HR Daily Advisor)
Multiemployer Plan Pension Rescue Bill Proposed
"The bill creates a new agency within the Department of the Treasury called the Pension Rehabilitation Administration (PRA) to make loans to plans and to receive loan payments. The PRA would receive funding from government bonds.... A plan would receive the loan and be required to either purchase an annuity contract for benefits in pay status, or establish a bond portfolio that would match the anticipated payment stream for benefits in pay status. The plan would make interest payments on the loan until maturity." (Cheiron)
Multiemployer Solvency Crisis: Adjustments to the PBGC's Benefit Guarantee to Reduce Pressure on the Guarantee Fund (PDF)
"Using the Multiemployer Pension Simulation Model (MEPSIM), we project that about 130 multiemployer pension plans covering 2.1 million participants will become insolvent over the next 20 years, and that the [PBGC's] multiemployer guarantee fund -- the backstop against such insolvencies -- will itself be exhausted by 2027.... The adjustments to the guarantee that we examine within this paper have a significant downward impact on the present value of projected PBGC assistance payments, but the impact is not sufficient to prevent the exhaustion of the guarantee fund. Given the large number of plans heading towards insolvency, it is unlikely that a single policy action is available to stabilize the guarantee fund. Rather, several simultaneous actions will be required, among which a reduction of the guarantee can be considered." (The Pension Analytics Group)
PBGC Fiscal Year 2017 Annual Report: Multiemployer Program Deficit Widens; Single-Employer Program Continues to Improve
"[T]he deficit in [PBGC's] insurance program for multiemployer plans rose to $65.1 billion at the end of FY 2017, up from $58.8 billion a year earlier. The increase was driven primarily by the ongoing financial decline of several large multiemployer plans that are expected to run out of money in the next decade. PBGC's Single-Employer Insurance Program continued to improve as the deficit dropped to $10.9 billion at the end of FY 2017, compared to $20.6 billion at the end of FY 2016. The primary drivers of the continued improvement include premium and investment income and increases in the interest factors used to measure the value of future liabilities." (Pension Benefit Guaranty Corporation [PBGC])
Treasury Announces Voting Schedule for International Association of Machinists Motor City Pension Plan MPRA Benefit Reductions
"[T]he proposed benefit reductions will now be subject to a vote of participants and beneficiaries of the Plan. Ballots were mailed to participants and beneficiaries on November 16, 2017. The voting period opens November 16, 2017 ... and closes December 7, 2017[.]" (U.S. Department of the Treasury)
[Opinion] Senators Introduce Bills to Save Financially Troubled Multiemployer Plans and Protect Retirees
"These bills set up a new office in the Treasury Department called the Pension Rehabilitation Administration (PRA), which would receive proceeds from the issuance of Treasury bonds. This money would then be lent to financially-troubled plans as long as they meet certain criteria. The Pension Rights Center is particularly pleased that the loans would be used to fully pay the benefits of retirees and that the bill would require plans, which have already been approved to cut benefits under MPRA, to apply for these new loans and if approved, use that money to restore previously suspended benefits." (Pension Rights Center)
[Opinion] A Few Concerns About the Multiemployer Plan Bailout Bill
"If this is an arbitrage deal (like Pension Obligation Bonds (POBs) were supposed to be) then isn't the whole idea to invest the money in riskier investments for profit? Will these plans be able to consider the Treasury bond money as an asset of the trust without a corresponding liability so as to artificially reduce contributions like what is going on with POBs? What happens with plans that have already cut benefits?" (Burypensions)
[Opinion] The Mother of All U.S. Pension Bailouts?
"[Sen. Sherrod Brown's] bill will ensure more mediocrity as there will be no incentive whatsoever to change what is fundamentally plaguing large U.S. pensions. Your discount rate is too high? No problem, keep it. Your plan is chronically underfunded? No problem, just borrow from the U.S. Treasury in perpetuity. You have no risk-sharing in your plan? Who cares, Uncle Sam will backstop it all so you don't need risk-sharing or better governance." (Pension Pulse)
Sen. Sherrod Brown to Unveil Multiemployer Loan Program Legislation
"The bill ... would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates.... The bill would also fund a program at the [PBGC] to finance any remaining needs of pension plans borrowing from the new program." (Pensions & Investments)
[Official Guidance] Text of Treasury Department Letter Approving Benefit Reductions by International Association of Machinists Motor City Pension Plan (PDF)
"In consultation with the Secretary of Labor and the Pension Benefit Guaranty Corporation, Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA." [Letter dated Nov. 6, 2017] (U.S. Department of the Treasury)
The Continuing Downward Spiral and Death Knell of the Multi-Employer Defined Benefit Plan
"In 2012, the Fund amended the Rehabilitation Plan to include a provision stating that an employer withdrawing from the Fund was required to pay a portion of the Fund's accumulated funding deficiency in addition to the statutorily mandated withdrawal liability.... Westrock sought relief from that amendment ... declaration that the amendment violated ERISA. The district court never addressed the merits of the action but rather dismissed the complaint ... stating that Westrock lacked standing. The Eleventh Circuit, acknowledging that this was a case of first impression which turned on statutory interpretation, affirmed the district court. In doing so, it opined that civil actions under ERISA were limited only to those parties and actions which Congress specifically enumerated." [ Westrock RKT Co. v. Pace Industry Union-Management Pension Fund , No. 16-16443 (11th Cir. May 16, 2017)] (Jackson Lewis P.C.)
[Guidance Overview] SOA Mortality Improvement Scale MP-2017 Released
"Since the updated scale reflects more recent experience, it is likely a better estimate of future improvement than scale MP-2016, and with it comes the added benefit of lower liabilities. Sponsors who finalized accounting results earlier in the year may receive requests from auditors to quantify the effect of the new scale." (Cowden Associates, Inc.)
Employer Withdrawal Liability: Something to Consider Before Signing a CBA
"The CBA will likely not refer to withdrawal liability and the union is under no legal obligation to disclose this potential liability to you prior to signing the CBA.... Does the CBA require contributions to be made to one or more defined benefit pension plan(s)? If so, what is the funding status of the pension plans for which you would be obligated to contribute to under the CBA? ... Does the plan provide for a free look period? ... Will the union provide any indemnification for withdrawal liability?" (Graydon)
Sun Capital Redux: Private Equity Fund Seeks Declaratory Judgment on Controlled Group Liability for Portfolio Company's Pension Liabilities
"A complaint filed by Trilantic Capital Partners ... shows that multiemployer pension funds and the PBGC are continuing to pursue a strategy of asserting controlled group liability claims against private investment funds, and previews some of the facts that private investment funds may try to use to rebut those arguments. The complaint seeks a declaratory judgment holding that Trilantic is not in the 'controlled group' of one of its portfolio companies[.]" [Trilantic Capital Partners IV, LP v. United Food & Comm'l Workers Int'l Union-Ind. Pension Fund; New England Teamsters & Trucking Ind. Pension Fund; Nat'l Retirement Fund; and PBGC, No. 17-7485 (S.D.N.Y., complaint filed Sept. 29, 2017)] (Proskauer Rose LLP)
Loans by Federal Government to Multiemployer Plans Could Cost $7 Billion
"Advocates for multiemployer plans are putting the finishing touches on various federal proposals that would offer low-interest financing for struggling plans.... 55 pension funds designated as critical and declining with a combined $28 billion in net assets at the end of 2015 would be eligible for credit assistance. Under one proposal, the gross loan disbursement would be $23.3 billion payable over five years, with the favorable loan terms costing taxpayers $7.2 billion, without factoring in default risk, the researchers said; a one-third default rate on those loans would cost $10.9 billion." (Pensions & Investments)
Teamsters Pension Plan Warns Thousands of Beneficiaries That the Checks May Get Smaller
"The Western Pennsylvania Teamsters fund -- which has about 48 cents for every $1 in benefits it owes to retirees and workers -- notified participants in April that it is considering cutting benefits in order to insure that the fund doesn't become insolvent. The plan is expected to pay out nearly $129 million in benefits this year but will collect only about $54 million in contributions. If the current level of benefits is maintained, the fund is projected to run out of money in 2028." (Pittsburgh Post-Gazette)
Multiemployer Pension Funded Status Improved in First Six Months of 2017 (PDF)
"Multiemployer plan funding as of June 30, 2017, is nearing its best position since the market collapse of 2008. The aggregate funded percentage for multiemployer plans is estimated to have improved to 81% as of June 30, 2017, compared with 77% as of December 31, 2016, reducing the system's shortfall by $21 billion. The estimated investment return for our simplified portfolio for the first six months of 2017 was about 7.6%, far outpacing plans' investment return assumptions. The gap between the funded percentages of critical versus noncritical plans continues to widen." (Milliman)
IRS Work Plan Provides Focus for Examination of Multiemployer Plans
"The work plan states that for multiemployer plans the IRS will 'continue to examine plans that failed to properly calculate retirement benefits affecting service crediting and/or allocation/accruals, failed to make required minimum distributions, and/or failed to adjust benefits when retirement is delayed beyond the Normal Retirement Age' ... Late retirements pose several complex issues, the resolution of which depends on the plan's provisions and the age at which a participant retires." (Cheiron)
Alaska Ironworkers Pension Trust Withdraws Application fo MPRA Benefit Suspension (PDF)
"[T]he Plan hereby withdraws its Application filed on March 30, 2017 for approval of benefit suspension under [MPRA]. The Plan fully intends to file with the Treasury Department a new application for approval of suspension of benefits under the MPRA on or before December 29, 2017." (U.S. Department of the Treasury)
ERISA Provides No Means for Employer to Challenge Multiemployer Plan Changes
"The case raises a rarely litigated legal question: Can an employer use [ERISA] to challenge changes made to an underfunded multiemployer pension fund's rehabilitation plan? The judge Oct. 17 said no, explaining that ERISA only allows employers to bring a narrow subset of claims against the union benefit funds covering their workers." [ Keyes Fibre Corp. v. Pace Indus. Union-Management Pension Fund , No. 17-613 (M.D. Tenn. Oct. 17, 2017)] (Bloomberg BNA)
2016 Funding Status Update for Multiemployer Plans Seeking MPRA Benefit Suspensions
"Now that 5500 filing season is over and most of the 2016 forms are searchable on the DOL website [this article provides] the status of union plans that have applied for benefit suspensions under MPRA with links to their latest 5500 filing and a focus on the worst funded plan with a reported funded ratio of 2.99% (yes that is the funded ratio and not the RPA interest rate)." (Burypensions)
The Building and Construction Industry Exemption to Withdrawal Liability
"Withdrawing employers in the 'building and construction industry' ... can be completely exempt from liability, provided three requirements are met ... The term 'building and construction industry' is not expressly defined in ERISA.... 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)
Central States Funding Update after MPRA Benefit Reduction Denial
"[N]egative net cash flow of over $2 billion annually for a fund that likely has about $14 billion left in it now means depletion fairly soon considering that those benefit payouts would continue to grow as revenue sources dry up. Assuming no revenue infusions (federal bailout) the percentage that benefits need to be cut corresponding to the years until asset depletion assuming those cuts would look something like this: 0% - 8 years; 30% - 13 years; 50% - 20 years[.]" (Burypensions)
Another Union Plan Withdraws Its MPRA Benefit Reduction Application
"The Southwest Ohio Regional Council of Carpenters Pension Plan out of Austintown, OH was the fifteenth (and last) multiemployer plan to file for benefit suspensions under MPRA. [On Friday, Oct. 13,] a letter popped up on the MPRA website withdrawing that application." (Burypensions)
House and Senate Bills Would Provide Loans for United Mine Workers Pension Fund
"Bipartisan legislation creating an emergency loan program allowing the United Mine Workers of America 1974 Pension Plan, Washington, to avoid insolvency was introduced Tuesday in the House and Senate. As of June 30, 2016, the pension fund had $4.1 billion in assets and $6.17 billion in liabilities, but with more than 10 times as many retirees as active participants, it is only 39.8% funded by actuarial standards." (Pensions & Investments)
The Reality of the Multiemployer Pension Reform Act
"MPRA was intended to provide multiemployer plan trustees with the difficult, but necessary tools required to restore their troubled plans to solvency, and protect retirees from the even larger benefit reductions that the retirees will see when their plans go insolvent and subject to the PBGC guarantee ... [Of] the three MPRA application approvals to date, all had previously applied to the Treasury and then withdrew ... Each plan then resubmitted their application and went through the process again.... [In] order to reapply, an organization must pay for revised actuary projections, and inform participants again that their benefits are going to be cut." (PLANSPONSOR)
Operational Risk Is the Achilles' Heel of DC Plans
"Recommended first steps to an integrated approach to managing operational risk include: [1] Review committee charters ... contracts and job descriptions ... [2] Catalogue planned audits and assessments ... [3] Request a copy of your key service providers' cybersecurity policies and business-continuity plans, and ask for annual updates.... [4] Check the investment policy ... [5] Review service providers' reports[.]" (Segal Consulting)
High Prescription Drug Cost Trends Projected to Be Lower for 2018
"Drug trends for actives and early retirees are expected to remain in the double-digits, continuing to be much higher than medical trend. Price inflation -- not utilization -- is the leading driver of trend... [T]he cost increases of pharmacy benefits now exceed the cost increases of inpatient hospital claim expenses or physician claim expenses ... [O]nce specialty Rx paid through the medical plan is added to Rx paid through PBMs, the cost of Rx is larger than inpatient, outpatient and professional services for some plans." (Segal Consulting)
[Official Guidance] Text of Treasury Department Notice of Multiemployer Pension Plan Application to Reduce Benefits: Western States Office and Professional Employees Pension Fund
"The Board of Trustees of the Western States Office and Professional Employees Pension Fund (WSOPE 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 submitted by the Board of Trustees of the WSOPE Pension Fund has been published on the Treasury website, and to request public comments on the application from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the WSOPE Pension Fund." (U.S. Department of the Treasury)
IRS Revises Procedures for Multiemployer Plan Benefit Suspensions (PDF)
" Revenue Procedure 2017-43 modifies the submission and notice requirements for suspension of benefits applications. Under the revised procedures, if the IRS identifies an error in the application after it is submitted, it will ask for additional materials to correct the error, instead of rejecting the application. The latest guidance also includes [additional] changes[.]" (Prudential)
[Opinion] New York State Teamsters' Pensions to Be Slashed Because of Unfair Law
"[T]he workers and retirees overwhelmingly voted against the cuts (71% of votes cast were against cuts; 29% votes were in favor of cuts). However, the way the vote was structured anybody who DIDN'T cast a ballot -- was counted as a yes vote. Because 60% of the ballots were not returned, this flipped the vote.... MPRA is a bad bill and the cut-back provisions, including these ridiculously unjust voting provisions, have to be repealed." (Pension Rights Center)
Kroger to Leave Central States Pension and Start New Plan
"Kroger Co.... intends to complete its withdrawal from the Central States, Southeast and Southwest Areas Pension Fund, likely on Sept. 16, and move some 2,100 active plan participants to a new traditional pension ... That date marks the expiration of Kroger's collective bargaining agreement with the Teamsters. The withdrawal from the fund is expected to be completed under terms of a new bargaining agreement reached between the company and union in March 2017." (Bloomberg BNA)
Treasury Approves New York State Teamsters Benefit Reductions
"The pension fund is the third multiemployer fund to receive approval for benefit reductions under the Kline-Miller Multiemployer Pension Reform Act of 2014, and the largest to date. As of Jan. 1, the plan was 37.8% funded, with $1.28 billion in assets and $3.39 billion in liabilities. While 9,788 participants voted against the plan and only 4,081 voted for it, another 20,767 did not vote, leaving only 28.26% of the total vote opposed. The law requires 50% to stop it." (Pensions & Investments)
[Official Guidance] Text of Treasury Department Letter Approving Benefit Reductions by New York State Teamsters Conference Pension and Retirement Fund (PDF)
"Because a majority or eligible voters did not vote to reject the benefit reduction, the benefit reduction may 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, 2017, subject to [certain] conditions[.]" (U.S. Department of the Treasury)
[Discussion] Withdrawal Liability Calculation: Use the Pool Method When Contribution History Incomplete?
"I handle the administration for a construction fund. It is my understanding that the IRS has required that a construction fund to use the Presumptive method to calculate withdrawal liability. This fund has never needed to do a withdrawal liability calculation until now. This method requires 20 years worth of contribution history for the Fund but the Administrator can only give me 11 years worth of information. Can we instead use the pool method because the information simply isn't available?" (BenefitsLink Message Boards)
[Official Guidance] PBGC to Provide Early Financial Assistance to Furniture Workers Multiemployer Pension Plan
"The early financial assistance from PBGC, together with benefit reductions that are required as a condition for receiving PBGC assistance, will help the plan to avoid insolvency and to pay benefits to participants.... Under the partition, PBGC provides early financial assistance by moving a portion of the plan's guaranteed benefit obligations to a new, separate plan that will have its costs reimbursed by PBGC." (Pension Benefit Guaranty Corporation [PBGC])

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