The Bricklayers and Allied Craftworkers Local 7 Pension Plan in Austintown, Ohio, has submitted its third Treasury Department application to reduce benefits under the Multiemployer Pension Reform Act of 2014, along with a request for a partition from the Pension Benefit Guaranty Corp.
The plan is in critical and declining status, with $9.53 million in assets as of April 30, 2019. when it was 24% funded and projected to become insolvent by May 2023. At the time of its initial application in 2016, the plan had $14.6 million in assets and was 46.7% funded. There are now 108 terminated vested participants, 87 retirees receiving payments, 19 beneficiaries and no active participants.
In a letter to plan participants, the board of trustees said that both the proposed partition and reduction of benefits are necessary for the plan to avoid insolvency. The application proposes reducing benefits to 110% of the PBGC guaranteed level, which for a participant with 30 years of service averages about $13,000 a year.
The letter notes that a second application was withdrawn May 22 after discussions with Treasury officials and the new one was submitted on May 29, "to take into account the recent COVID-19 crisis, which impacted both investment returns and the potential work outlook."
Partitioning sets up a second plan to pay some benefits that the PBGC guarantees and is granted only if the changes will make a pension fund solvent for at least 30 years. Before MPRA, the PBGC had some authority to facilitate partitions but it was rarely used. Now, struggling plans must cut benefits first, by enough to keep the plan solvent.