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May 19 — The Central States pension fund's pursuit of a rescue plan with the Treasury Department has ended.
The large, financially troubled multiemployer plan said May 19 that in the wake of the rejection of its first petition, it wouldn't submit to Treasury a new plan to cut the benefits of participants and retirees in an attempt to avoid the fund's insolvency.
Thomas C. Nyhan, the executive director and general counsel of the Central States, Southeast and Southwest Areas Pension Fund, said in a statement that the fund concluded that “due to the passage of time,” the fund “can no longer develop and implement a new plan that complies” with the final regulations under the Multiemployer Pension Reform Act issued by Treasury on April 26 (81 PBD, 4/27/16). “Therefore, there will be no new rescue plan,” he said.
In an earlier discussion on the petition process, Nyhan told Bloomberg BNA that Treasury had failed to inform the fund of changes from those proposed regulations pertaining to short-term investment expectations—revisions that were issued in final rules only days before the department announced it was rejecting Central States' petition. “These 11th hour changes were in our view inappropriate and, in effect, doomed the application,” Nyhan said by e-mail May 11 (92 PBD, 5/12/16).
Treasury rejected Central States' proposal May 6, saying the fund's investment return assumptions were too optimistic and that therefore, the fund failed to show that the proposal would prevent the fund's insolvency (89 PBD, 5/9/16).
The Central States fund remains in critical and declining status, and it said that it's projected to run out of money in less than 10 years.
In the new statement, Nyhan called on those “who suggested that there is a better way to fix this critical problem,” including members of Congress, “to deliver on real solutions that will protect the retirement benefits of Central States participants.”
In the coming months, Nyhan said that he and the fund “will do everything in our power to support a legislative solution that protects the pension benefits of the more than 400,000 Central States participants and beneficiaries, who should not have to bear the emotional trauma of waiting until the Fund is at the doorstep of insolvency before Congress acts. The moment for action and for doing the right thing is now.”
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