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June 16 — The PBGC has rejected a multiemployer pension fund's application for a plan partition, putting in doubt whether the fund will get the Treasury Department's approval of a proposal to cut benefits.
The Pension Benefit Guaranty Corporation on June 16 rejected the Road Carriers-Local 707 Pension Fund's partition application in a letter explaining that the fund couldn't show that it would remain solvent following a partition.
In a partition, the PBGC will approve the transfer of some liabilities from a fund in danger of becoming insolvent to a new fund and provides financial assistance. This allows financially healthy employers to maintain the original plan.
The fund, based in Hempstead, N.Y., had asked the PBGC to allow it to partition the plan. The fund had also asked that the Treasury Department approve its application to suspend benefits. The department requires funds applying for such benefit suspensions to show that the suspensions will help avoid insolvency.
The fund's application to Treasury may be in jeopardy now that the PBGC has denied the application for a partition.
To contact the reporter on this story: David B. Brandolph in Washington at firstname.lastname@example.org
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The PBGC's letter to the fund is at http://src.bna.com/fZ6.
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