Iron Workers Local 17 Pension Fund, Cleveland, is seeking permission to cut benefits for participants, including retirees, as part of a proposed rescue plan awaiting approval from the Treasury Department.
The pension fund had $91.9 million in assets and $223.2 million in liabilities as of April 30, 2014, according to its most recent Form 5500 filing. Of its 2,064 participants, 640 are active.
The plan is in “critical and declining” status and projected to become insolvent in 2032, according to a notice of critical status filed with the Department of Labor in August. In 2008, trustees developed a rehabilitation plan that reduced some adjustable benefits and called for a one-time contribution increase, according to the notice.
The application submitted to the Treasury Department on Dec. 23 would reduce benefits as of Dec. 1, 2016, if approved. The reductions would remain in effect “indefinitely,” according to a notice of application sent to participants, and will allow the plan to remain solvent with enough assets to pay the reduced level of benefits “indefinitely.”
The Treasury Department has 30 days to post the application on its website.
The Multiemployer Pension Reform Act of 2014 allows trustees of deeply underfunded pension funds that would be insolvent within 15 years to reduce benefits, even for current retirees, after they have tried all other means. This requires approval by the Treasury Department, which has 225 days to respond. Those cuts can be no lower than 110% of the Pension Benefit Guaranty Corp.'s guarantee. Disabled or older retirees have further protections.
The Iron Worker pension fund is the second multiemployer pension plan to apply for benefit reductions under MPRA. The $17.8 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., applied Sept. 25 for a rescue plan that would be implemented July 1, 2016. The comment period on that application ends Feb. 1.