A U.S. Court of Federal Claims judge ruled that the U.S. government did not violate the law when it approved a benefit reduction plan for United Parcel Service retirees under the Kline-Miller Multiemployer Pension Reform Act of 2014.
In his April 28 decision, Judge Richard A. Hertling said that the law, which allowed union pension funds to apply for reduced benefits due to poor funding levels that could lead to insolvency, was not a case of "physical takings" as alleged in a lawsuit filed by a group of three United Parcel Service retirees in October 2018.
Those retirees participating in the New York State Teamsters Conference Pension and Retirement Fund, Syracuse, sued the federal government after the Treasury Department approved the union pension fund's MPRA application and less than 50% of participants voted against the action. The suit asked the government to reimburse a potential class of 22,000 retirees the 29% in benefit cuts approved under the MPRA.
That reimbursement had occurred under the American Rescue Plan Act of 2021, but the suit continued.
In his conclusion, Mr. Hertling said, "The physical-takings test does not apply to the plaintiffs' claims. Supreme Court precedents reject the application of the physical-takings test to ERISA amendments applicable to multiemployer pension plans when the government seizes nothing for its own use."
As of Jan. 1, 2021, the Teamsters pension fund had $1.64 billion in assets and $2.98 billion in liabilities, for a funding ratio of 55%, according to its most recent Form 5500 filing.