Western States Office and Professional Employees Pension Fund, Portland, Ore., received final approval from the Treasury Department to cut benefits as of Oct. 1 for participants and retirees as part of a rescue plan.
It was the pension fund's third attempt; two previous applications were withdrawn.
Of the 7,331 eligible participants and beneficiaries, 2,326 voted to reject the benefit cut and 920 voted to approve it. But 3,986 members did not return a ballot and since a majority of eligible voters did not reject it, the benefit reduction goes into effect. Fund officials must make an annual determination that the benefit reductions need to stay in effect to avoid insolvency.
The fund had $336 million in assets and $525 million in liabilities as of Jan. 1, for a funded status of 64%. Without the benefit reductions, known as suspensions, the plan was projected to be insolvent by 2036.
Retirees older than 80 or under disability will see no change in benefits. Active participants, terminated vested participants and retirees under the age of 80 will see 30% reductions.
In materials to participants, trustees said retirees now outnumber active workers 11 to 1, and the number of employers dropped to 168 currently from 280 in 2008. Investment returns stabilized in recent years but were not enough to make up for losing 32% in 2008, plus the decline in contributions, the trustees said.