Ranking third in P&I's top stories of 2016 is the vexing issue of multiemployer pension plan reform, highlighted by the rejected proposal of the $17.8 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., to reduce benefits in the face of impending insolvency.
The Teamsters effort — the most high-profile attempt to use the Kline-Miller Multiemployer Pension Reform Act of 2014 to cut benefits in the face of a funding crisis — was rejected by the U.S. Treasury Department on May 6.
The pension fund had applied in September 2015 for permission to reduce benefits to avoid insolvency that it projected would happen by 2026. At the time of its application, it was 53% funded, with $35 billion in liabilities.
The $92 million Iron Workers Local 17 Pension Fund, Cleveland, on Dec. 16 became the first multiemployer plan to receive approval under MPRA to reduce its benefits.
Additionally, the Pension Benefit Guaranty Corp.'s multiemployer insurance program is headed toward insolvency. That program's deficit rose to $58.8 billion as of Sept. 30, up from $52.3 billion the year before.
John Kline, R-Minn., chairman of the House Education and the Workforce Committee, said in a November statement that reforming the multiemployer program will require more bipartisan solutions from Congress. “There is no escaping the fact that tough decisions must be made to shore up the fiscal health of the PBGC, modernize the multiemployer pension system and provide workers more retirement options,” he said in the statement.