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Lawmakers urge Treasury to reject Central States plan to cut benefits

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The Treasury Department should reject a request by a huge financially distressed multiemployer pension plan — the Central States, Southeast and Southwest Areas Pension Plan — to cut benefits, a group of 18 members, all Democrats, of the House of Representatives — says.

In a letter sent Monday to Kenneth Feinberg, a veteran attorney and arbitrator, who the Treasury Department in June named to review applications of financially troubled multiemployer plans to cut benefits, the lawmakers said cutting benefits should not be the only option considered.

“We do not believe placing an inordinate burden on middle-class workers and retirees is the only option for Central States,” the lawmakers wrote.

“Simply put, America's workers are entitled to pensions they've earned over a lifetime of hard work,” the lawmakers said, adding that a “significant number” of retirees will face pension benefit reductions of between 50% to 70% if the plan's application is approved.

“We urge the Treasury Department to deny this application and move, forward with a more equitable solution,” the letter said, which did not say what that solution would be.

A catalyst for Congress last year passing legislation allowing such cuts in drastically underfunded and financially weak multiemployer pension plans was an earlier dire Government Accountability Office projection. The GAO said that unless benefits cuts were permitted, an insurance program offered by the Pension Benefit Guaranty Corp. — the federal agency that guarantees a portion of participants' promised but unfunded benefits — would go broke in 10 to 15 years.

The Central States plan, which has more than 400,000 participants and, at the end of last year, had $35 billion in benefit liabilities and $17.8 billion in assets, earlier said benefits cuts would be necessary to prevent insolvency.

The Treasury Department has until early May of 2016 to make a decision on whether to permit the proposed benefit cuts, which would hit 272,600 of the plan's 407,000 participants.

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