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Pension cuts not on multiemployer plan participants' radar — yet


Few multiemployer pension plan participants are very concerned about a 2014 federal law that opens the door for financially troubled plans to cut benefits in order to stay afloat, according to a new survey.

Just over 9% of the trustees and administrative staff of 216 multiemployer plans responding to an International Foundation of Employee Benefit Plans survey reported that plan participants were very concerned about the 2014 law.

On the other hand, 28.7% of respondents said plan participants seem to be unaware of the law — known as the Multiemployer Pension Reform Act — while 19.4% said participants were not concerned, with the plans receiving few calls or questions about the new law, and 28..7% of respondents were only “mildly concerned” about the law, with the plans receiving a few respondent questions or calls about the law.

While participant awareness of the law is low. at least for now, that could change as plans tap a provision that allows those in bad financial condition to cut participants' promised benefits to survive.

Few of the nation's roughly 1,400 multiemployer plans, which have more than 10 million participants, are expected to take that route. But those that do could be among the nation's biggest and best-known plans.

For example, in a newly launched website, the Teamsters Central States, Southeast & Southwest Areas Pension Plan last month said “significant and painful retirement benefit reductions must be considered” in order “to prevent a real risk of a total loss benefits.”

On its website, the Teamsters plan, whose trustees include employers and union members, laid out its dire financial condition: For every $3.46 that the plan pays out in benefits, only $1 is collected, generating a $2 billion annual shortfall.

At year-end 2014, the plan, which has more than 400,000 participants, had $35 billion in liabilities and just $17.8 billion in assets.

At the moment, survey respondents seem more concerned about a 2014 law provision that doubled to $26 the per-participant premium the plans pay to the Pension Benefit Guaranty Corp., the federal agency that guarantees a portion of participants' benefits.

Indeed, more than a third of respondents said the premium hike will be either “very impactful” or “extremely impactful.”

The survey was conducted in May by the Brookfield, Wisconsin-based IFEBP. Just under half of the respondents represented or worked for plans with between 500 and 4,999 participants.

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