Teamsters Central States, Southeast and Southwest Areas Pension Fund, Rosemont, Ill., is in “critical status” with a funding level in “the so-called red zone,” less than four months after receiving a $6.1 billion payment from United Parcel Service Inc., Atlanta, that raised assets to $26.8 billion.
Central States informed the Treasury Department that the plan “has funding or liquidity problems, or both,” Thomas C. Nyhan, the fund’s executive director, said in a notice to participants. The Internal Revenue Service, which is under Treasury, administers plan funding rules.
Under a “rehabilitation plan,” the fund plans to eliminate early retirement benefits, disability benefits and other so-called adjustable benefits for participants who work for employers in the multiemployer fund that have not agreed to a recent 8% annual increase in contributions, Mr. Nyhan said in the notice. The law allows for such changes of a pension plan in critical status, he added. The notice was required under the Pension Protection Act of 2006.
“For the vast majority of participants, your benefits will not be affected,” Mr. Nyhan said in the notice.
The PBGC received the notice, but the critical status doesn’t raise an issue as long as the fund continues to pay benefits, said spokesman Gary Pastorius.
The notice doesn’t give the assets or liabilities of the Central States plan. In a statement last October, Mr. Nyhan said with the UPS payment the plan’s funding ratio as of Jan. 1 “should exceed 70% and may reach 75% if we meet our actuarial assumptions.”
Mr. Nyhan; Mark Angerame, the fund’s CFO; and IRS media relations couldn’t be reached for comment.