Iron Workers Local 17 Pension Fund, Cleveland, will implement a benefit reduction plan Feb. 1, following approval by plan participants by a ratio of 2-to-1, the pension fund announced Friday.
It was the first multiemployer pension plan to win approval of benefit cuts, known as suspensions, from the Treasury Department, which granted it Dec. 16 — providing that a majority of participants approved it as well.
The Local 17 pension fund had $86.9 million in assets and $221.8 million in liabilities as of April 30, 2015, for a funding ratio of 39%, according to its most recent Form 5500 filing. Of its 2,024 participants, only 640 were active. Without the suspensions, the pension fund was projected to be insolvent by May 2025.
With suspensions in place until May 2055, the pension fund would still have $47.3 million in May 2025 and $16 million at the end of the period, when its funded status is projected to be 16.7%, according to its application under the Kline-Miller Multiemployer Pension Reform Act of 2014.
The suspension plan projected a 54.2% chance of staying solvent.
Karen Ferguson, director of the Pension Rights Center, said in a statement that some current retirees will be most affected, with their pensions benefits cut 30% to 60%. The vote outcome “is not surprising since two-thirds of the plan's participants stand to lose little or nothing as a result of the cuts,” and more than half of the eligible participants did not vote, Ms. Ferguson said.
A statement on the pension fund website said, “The trustees appreciate that a majority of the participants understood that the suspension plan, while reducing their pensions now, is a better alternative than letting the pension fund become insolvent.”