Four multiemployer pension plans have applied to the Department of the Treasury to reduce their benefits, saying that if the reductions are not made, their funds will become insolvent.
The Board of Trustees of the Local 807 Labor-Management Pension Plan, a multiemployer pension plan, has submitted an application to the Department of the Treasury to reduce benefits. Under the plan’s proposal, the monthly pension benefit payments of any participant or beneficiary who is in pay status as of May 1, 2018, will be reduced by 39.5%. However, if a participant has more than 25 pension credits in retirement, the portion of their monthly pension benefit associated with the first 25 pension credits will be based on the highest 25 years of benefit accruals, including benefit accruals have have been reduced by 39.2%.
The Board of Trustees of the Toledo Roofers Local No. 134 Pension Plan, also a multiemployer pension plan, is proposing a two-step process to reduce its benefits. The first step is to eliminate any retirement subsidy on the benefits of participants, or their beneficiaries, who retired prior to the plan’s normal retirement age of 65. This will be achieved by recalculating the benefit to apply the full actuarial reduction factors that would have been applicable to the benefit based on the participant’s age at retirement had the participant retired subject to the same plan provisions that apply to benefits commencing after July 1, 2018, the effective date of the final removal of all early retirement subsidies for retirement prior to the normal retirement age of 65.
The second step would be that, after the application of step one, if the benefit is greater than 175% of the amount guaranteed by the Pension Benefit Guaranty Corporation (PBGC), the benefit will be brought down to 175% of the amount guaranteed by PBGC.
The Board of Trustees of the Southwest Ohio Regional Council of Carpenters Pension Plan, also a multiemployer pension plan, proposes reducing benefits for all participants, beneficiaries and alternate payees starting March 31, 2019. This also would be a two-step process. The first step of the recalculation would apply to the monthly benefit of each participant who retired with an annuity starting date prior to January 1, 2013. The participant’s monthly benefit would be recalculated to apply the early retirement (i.e. prior to age 62) reduction factors that would have been applicable to the participant’s age at retirement had the participant retired subject to the same provisions that apply to monthly benefits with an annuity starting date on or after January 1, 2013.
The second step of the recalculation would be an 8% reduction of the monthly benefit of every participant, beneficiary and alternate payee with a separate interest pension benefit. The recalculation would not be applied to accrued benefits earned on or after March 31, 2019.
The Board of Trustees of the Mid-Jersey Trucking Industry and Local No. 701 Pension Fund, a multiemployer pension plan, has identified five different groups of active participants and five different groups of non-active participants to ensure that the suspensions are equitably allocated. Participants hired after June 30, 2009, when benefit accrual levels were reduced by 50%, would have no benefit suspension. All other active participants would experience benefit suspensions because the trustees believe that benefit levels prior to July 2009 were too high. The board says that the fund is in critical and declining status and will become insolvent in 2030 unless the benefit reductions are approved.