Western Pennsylvania Teamsters and Employers Pension Fund, Pittsburgh, applied for permission to reduce benefits to remain solvent, according to the Treasury Department website listing applications under the Kline-Miller Multiemployer Pension Reform Act of 2014.
As of Jan. 1, 2017, the pension fund had $718.4 million in assets and $2.2 billion in liabilities, according to its most recent Form 5500; it is projected to be insolvent by 2029. The pension fund is seeking to reduce benefits by 30% across the board, except for older retirees protected by the MPRA.
If the application is approved, plan participants will have to vote on the proposal. In a sample ballot submitted with the application that would be sent to plan participants, plan trustees said the board "has done everything in its power to avoid these benefit reductions," including reducing future accruals and benefits, and "substantially" increasing contributions. Those, plus several recent years of good investment returns, "have not been enough to reverse the trend toward insolvency," the trustees said in the proposed ballot.
According to the MPRA application, United Parcel Service Inc. employees make up 29% of the fund's active population and represent 58% of total employer contributions to the plan.
Along with investment losses after 2000 and 2008 that forced plan officials to draw down assets, retirees now outnumber active workers by 3 to 1, and several employers have withdrawn because of the plan's critical and declining status, in some cases with their employees' approval.
Financial troubles experienced by the plan's second largest employer YRC Worldwide in 2009 stopped or reduced that company's contributions for several years, and another large contributor, Giant Eagle Inc., withdrew from the plan in 2016, in part because of repeated contribution increases, the trustees said.
Treasury officials have 225 days to act on the application, which was submitted Sept. 28 and recently posted on Treasury's website.
To date, the Treasury Department has denied five MPRA applications for benefit suspensions, and approved seven. There are eight applications under review, according to the Treasury website.