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Members of a Syracuse, N.Y.-based pension for unionized workers approved the plan’s proposal to cut benefits.
In a vote tally announced Sept. 13 by the Treasury Department, the New York State Teamsters Conference Pension and Retirement Fund became only the third multiemployer plan to fully complete the approval process to cut benefits under the Multiemployer Pension Reform Act of 2014. That law, also known as the Kline-Miller Act, was designed to help plans avoid insolvency. Multiemployer plans are collectively bargained and involve at least two contributing employers.
The final vote result was 24,848 in favor and 9,788 against. Although the actual voting was 9,788 against the proposal and 4,081 in favor, 20,767 plan members didn’t vote. Under the MPRA, members who don’t vote are considered to have voted yes.
Employers contributing to the fund include United Parcel Service, Coca-Cola Co., and ABF Freight. At the end of 2016, the plan was 37 percent funded with $1.246 billion in assets and $3.31 billion in liabilities, according to documents filed with the Labor Department.
As a result of the voting, effective Oct. 1, retirees who aren’t protected under the MPRA will have their benefits cut. Those at least age 80 or disabled are protected under the MPRA and won’t have their benefits cut. Active participants will see an 18 percent reduction in accrued monthly benefits, while retirees will have a 29 percent cut, according to the pension fund’s application.
Had the cuts not been approved and the plan permitted to go insolvent, as projected by 2027, many participants would receive even lower benefits or possibly no benefits at all.
“The fund was fortunate to be in good enough financial shape to put together a workable MPRA proposal that ensures the plan’s ongoing solvency without having to put participants in a far worse situation,” John F. Ring, the plan’s attorney, told Bloomberg BNA Sept. 13. The cuts will obviously be difficult for many retirees but are far less than what many retirees in other plans will need to take because those plans didn’t act quickly enough to maintain solvency, said Ring, a partner at Morgan, Lewis & Bockius in Washington.
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