This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
The Central States Pension Fund's application for suspension of benefits is available on the Treasury Department's website, the agency said.
The application by Central States, Southeast and Southwest Areas, Pension Fund features a number of documents, including the description of the proposed suspension, which would begin on July 1, 2016. The amount of a participant's suspension would be based on three factors—the “tier” the person's benefits are associated with; the amount of contributions made to the plan on the participant's behalf; and whether the person will be an active participant, terminated participant or retiree as of July 1, 2016—the application said.
“Participants with at least 20 years of Contributory Service Credit (and their beneficiaries in pay status) as of July 1, 2016, will receive lesser suspensions than other participants. Also, the suspensions are affected by both the age of the participant upon retirement and whether the participant elected a joint and survivor form of benefit upon retirement,” the application says.
On Oct. 22, Treasury issued a notice announcing that the fund's application had been submitted and published on Treasury's website. The notice also asked for comments, which are due 45 days after its publication in the Federal Register, which is scheduled for Oct. 23.
Central States submitted its application to Treasury on Sept. 25 and notified participants of its plan on Oct. 1.
The Central States rescue plan, as well as provisions in a 2014 law allowing the benefit suspensions, have drawn impassioned criticism that such cuts are unfair and deeply harmful to retirees who depend on the pension benefits
The Rescue Plan
According to the description of suspension—one of the 40 items on the application's checklist—the Multiemployer Pension Reform Act, also known as the Kline-Miller Act, established a three-tier system for benefit suspensions and set out different requirements for the benefits attributable to each tier.
Federal law requires that those benefits in Tier 1 be reduced “to the maximum extent possible,” the application said. Tier 1 comprises benefits attributable to employers that pulled out of the Central States fund on or before July 1, 2016, but didn't pay their full withdrawal liability under law or in accordance with the terms of the plan, the application said.
“Therefore the determination of the suspension amounts for benefits attributable to Tier 1 contributions does not include any formula developed by the Board of Trustees, but instead is generally equal to 110% of the benefit amount guaranteed by” the Pension Benefit Guaranty Corporation, the application said.
Benefits under Tier 2 and Tier 3 have more complex calculations. For those with at least 20 years of contributory service credits as of July 1, 2016, the reduction in benefits for Tier 2 won't be greater than 50 percent and reductions for those in Tier 3 won't be greater than 40 percent, the application said.
Excerpted from a story that ran in Pension & Benefits Daily (10/23/2015).
Stay on top of the latest industry trends and news coverage with a free trial to the Benefits Practice Resource Center.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)