New York State Teamsters Conference
Pension & Retirement Fund
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The Multiemployer Pension Reform Act of 2014 (MPRA) allows trustees of severely underfunded multiemployer pension funds—like our Fund—to reduce benefits for both Active Participants and Retirees, in order to prevent the Fund from running out of money and be able to pay pension benefits in the future. By August 31, 2016, the Fund plans to submit its benefit suspension application (called the Pension Preservation Plan or “PPP”) to the U.S. Department of the Treasury.
MPRA amends portions of ERISA and the Internal Revenue Code, and includes for the first time, rules for reducing previously protected, accrued benefits, including retiree benefits.
Under MPRA, the Fund generally must meet the following criteria: (1) a pension plan must be certified to be in Critical and Declining Status by the actuary; and (2) the proposed suspensions must be enough to avoid insolvency. The Fund’s actuary has certified that the Fund is in Critical and Declining status for 2016, and has projected that the Fund will run out of money if benefit reductions are not implemented. Specifically, the actuary advises the Fund will be insolvent by 2027 if action is not taken.
The Trustees must submit an application to reduce benefits to the U.S. Department of the Treasury. The Fund submitted its application on August 31, 2016. Treasury must approve or reject that application within 225 days after the application is filed. If Treasury approves the application, the Fund’s participants will have an opportunity to vote on whether to approve or reject the PPP. If the participants vote to accept the PPP, it will go into effect on July 1, 2017. If the participants vote to reject the PPP, it will not go into effect. Note there are special rules for “systemically important plans,” which are discussed further below.