Fourth multiemployer plan applies to reduce benefits
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Road Carriers Local 707 Pension Fund, Hempstead, New York, has applied to the Treasury Department to reduce benefits for participants, including retirees.
It becomes the fourth multiemployer plan to make use of the Multiemployer Pension Reform Act of 2014, which allows trustees of deeply underfunded pension funds to reduce benefits, even for current retirees, after they have tried all other means. The funds, which in most cases would be insolvent within 15 years from when the application is approved, cannot make cuts lower than 110% of the Pension Benefit Guaranty Corp.'s guarantee. Disabled or older retirees have further protections.
Local 707's application was filed March 15 and posted in the Federal Register Thursday. The Treasury Department posted the application on its website and has 225 days to respond to the application. Public comments are due April 29.
In its MPRA application, the Teamsters local proposes to suspend benefits as of July 1, 2016, because the plan is projected to be insolvent by February 2017.
The pension fund also applied to the PBGC to partition the plan and create a new plan for terminated vested and retired participants. Trustees were told March 3 that the partition application is under review.
A call to fund manager Kevin McCaffery was not returned.
In the MPRA application, fund trustees said the estimated market value of assets as of Dec. 31 was $27.8 million, and projected to be $24.5 million as of Jan. 31. The fund's most recent Form 5500 filing listed $75.4 million in actuarial value of assets and $670.9 million of liabilities as of Jan. 31, 2015, for a funded level of 11.2%.
Hazel Bradford writes for Pensions & Investments, a sister publication of Business Insurance.
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