The Southwest Ohio Regional Council of Carpenters Pension Plan, Austintown, applied to the Treasury Department for approval to reduce benefits in order to remain solvent.
A statement from the board of trustees said the proposed recovery plan will “put the pension plan back in a position where its future financial stability is as close to guaranteed as we can make it” and allow it to continue paying benefits for the foreseeable future. “These changes are the last best option,” the statement said.
Trustees of the plan, which had $216.9 million in assets and $471.3 million in liabilities as of Jan. 1 for a funding ratio of 46%, submitted a plan under the Kline-Miller Multiemployer Pension Reform Act of 2014 that calls for reducing, or suspending, benefits by an average of 17% for 90% of plan participants, including retirees.
People who retired before age 62 would see deeper cuts between 17% and 66%, according to application documents. An example on the pension fund's website calculates that a retiree currently receiving $961 per month would get $755 under the suspension plan, compared to $645 if the plan becomes insolvent and winds up at the Pension Benefit Guaranty Corp., which has lower guaranteed limits for multiemployer plans.
The suspension plan is based on an assumed annual rate of return of 6.34%, which plan actuaries based on the plan's 10-year annualized returns.
Without the benefit reductions, the plan is projected to be insolvent by 2032. The plan, which reported 5,578 participants as of Jan. 1, had equal numbers of active and retired participants in 2000, but by 2016 retirees outnumbered active members two to one.
Treasury officials have until Nov. 10 to make a decision.
