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Four more financially beleaguered multiemployer pension plans are testing the rescue application waters, seeking Treasury Department permission to cut benefits.
The four plans include the Portland, Ore.-based Western States Office & Professional Employees Pension Fund, which filed on Feb. 22, and the New York-based Local 805 International Brotherhood of Teamsters Pension & Retirement Plan, which filed March 22. They were joined on March 29 by the Troy, Mich.-based International Association of Machinists Motor City Pension Fund and on March 30 by the Anchorage, Alaska-based Alaska Ironworkers Pension Plan.
The recent flurry of applications may indicate a renewed sense of optimism among plan trustees and officials that Treasury’s process under the Multiemployer Pension Reform Act of 2014 for benefit cuts is a realistic path to avoiding plan insolvency. The MPRA is also known as the Kline-Miller Act.
The filings show “increased trustee and adviser confidence” that plan trustees now “know what standards will be applied and that approval is possible,” Dominic DeMatties, a partner with Alston & Bird, told Bloomberg BNA in an April 13 email. That’s in the wake of the first approval of a request to cut benefits and as plans have digested final regulations issued a year ago, said DeMatties, who previously served as an attorney-adviser in Treasury’s Office of the Benefits Tax Counsel.
In December, the Iron Workers Local 17 Pension Fund became the first plan to get Treasury’s approval to proceed with the process of putting to a vote of plan participants a proposal to cut benefits. In January, participants approved the cuts.
“This is certainly a positive development but it’s unclear whether it represents a real change at Treasury or not,” Michael Scott, executive director of the National Coordinating Committee for Multiemployer Plans, told Bloomberg BNA in an April 14 email.
Scott was referring to the NCCMP, a coalition of employers and unions that lobbied for passage of the MPRA, questioning the usefulness of Treasury’s application process. That skepticism stemmed from the fact that, before approving the Iron Workers application, Treasury rejected the first four petitions on which it ruled. One of those rejections was of the largest and most systemically important plan—the 400,000-member Central States, Southeast and Southwest Areas Pension Fund.
The NCCMP has been exploring whether Treasury should reopen the MPRA regulations to address items that may be in conflict with either the statute or the congressional intent behind it.
A new legislative solution to address the “far reaching consequences” of Treasury’s rejection of Central States’ petition is needed, Scott said.
In addition to the four plans that filed petitions near the end of 2017’s first quarter, the Nashville, Tenn.-based United Furniture Workers Pension Fund A on March 15 submitted an application after having withdrawn an earlier one.
According to data from the Pension Rights Center, the Furniture Workers fund had the most participants among the recent filers, with 9,896. The fund projects it will be insolvent by 2022.
The Western States fund is the only other fund among the recent filers with more than 2,500 participants. The PRC says the plan listed 7,661 participants and is projected to be insolvent by 2037.
Both the Alaska Ironworkers plan and the Motor City fund expect to be insolvent by 2032, while the Local 805 Teamsters plan projects insolvency by 2023, according to the PRC.
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