Two more multiemployer pension funds have won approval to reduce benefits to avoid insolvency, after their initial applications were rejected by the Treasury Department, which oversees the benefit reduction process established by the Multiemployer Pension Reform Act of 2014.
Western States Office and Professional Employees Pension Fund, Portland, Ore., submitted its third application on Dec. 28 to reduce benefits 30% for active participants, terminated vested participants and retirees under the age of 80, to avoid insolvency that was projected to happen by 2036.
Pension fund assets as of Jan. 1 were $336 million and liabilities were $525 million, for a funded status of 64%.
Iron Workers Local 16 Pension Fund, Towson, Md., reapplied May 15 to reduce benefits starting Oct. 1. Without the reductions — an average of 20% in benefit cuts — it is projected to be insolvent by 2032. As of Jan. 1, 2017, the pension fund has assets of $78 million and liabilities of $121.5 million, for a funding level of 64.2%.
Officials at both plans were notified in Aug. 3 letters from Sam J. Alberts, the special master handling MPRA applications, that final authorization will happen after plan participants vote on the proposed plan, known as suspension. Unless a majority of all eligible voters elect to reject the proposed benefit reductions, they will go into effect. The Treasury Department does not provide reasons for why applications are approved.
Treasury officials are reviewing 10 other applications for benefit suspensions, including one submitted July 31 by Laborers Local 265 Pension Plan in Cincinnati, which is projected to be insolvent before 2029. Of the 1,328 plan participants and beneficiaries, 963 would be impacted by benefit suspensions that would go into effect May 1, 2019, if the application is approved, with 226 having benefit cuts of 40% or more. The actuarial certification of its critical and declining status projected 2018 assets of $49.1 million and liabilities of $97.9 million, for a funded status of 50%.
Treasury officials have now approved seven applications and denied five. Ten applications have been withdrawn, but some of those have reapplied.