International Association of Machinists of Motor City Pension Fund, Troy, Mich., has received conditional approval to reduce benefits as part of a restructuring plan submitted to the Treasury Department under the Multiemployer Pension Reform Act of 2014.
A Monday notification letter sent to the fund's board of trustees by Sam Alberts, the Treasury Department's special master for MPRA, said that final approval depends on the outcome of a vote by plan participants "with respect to the proposed reduction." The pension fund's actuary projected that without the approval, the plan would be insolvent in 2026. Treasury approval is conditioned on the proposed reductions being likely to keep the plan solvent.
In the latest Form 5500 report filed with the application, the pension fund lists assets of $51.4 million and liabilities of $103.4 million, for a funded percentage of 50%, as of June 30, 2016. Among the 1,313 participants at the beginning of the plan year, only 221 were active.
The pension fund's application, filed March 29, called for reducing benefits to 110% of the multiemployer benefit guarantee of the Pension Benefit Guaranty Corp., the maximum cut allowed under the MPRA. Substantially lower than the single-employer guarantee, the current PBGC multiemployer guarantee maximum, in place since 2001, is $15,015 per year for a worker with 35 years of service, and $8,580 for 20 years of service.
Older or disabled participants would not see any cuts.
A call to the pension fund was not returned.