Automotive Industries Pension Plan, Alameda, Calif., is seeking permission to cut benefits for participants, including retirees, as part of a proposed rescue plan awaiting approval from the Treasury Department.
Pension fund assets as of Jan. 1 were $1.19 billion and liabilities were $1.96 billion, for a funded status of 60.7%. The proposed benefit reductions would start July 1, 2017, if approved.
The fund is projected to be insolvent by 2030 without the suspensions. Over the last 10 years, the number of active participants has declined and there are now 5.5 non-active participants for each active participant, according to the application.
Under a rehabilitation plan in place since 2009, trustees have made the maximum benefit reductions allowed by law before 2014, including removal of all early retirement subsidies, joint and survivor subsidies, disability pensions and other options. The Multiemployer Pension Reform Act of 2014 allows further benefit reductions, called suspensions, if they are likely to keep a pension fund solvent. The application to reduce benefits, submitted Sept. 27, projects a 50.3% chance of that.
Once an application is submitted, the Treasury Department has 30 days to post the application on its website and 225 days to respond.