Sheet Metal Workers Local Pension Fund, Troy, Mich., received permission from the Treasury Department to reduce benefits to remain solvent.
The pension fund's second application under the Kline-Miller Multiemployer Pension Reform Act of 2014 was provisionally approved in a Nov. 9 letter from MPRA Director Danielle Norris. Pension fund officials must now submit the plan to a vote by participants, but it will go into effect May 1, 2020, unless a majority of them reject it.
The board of trustees, which is based in Ohio, initially applied in March 2018 but withdrew the application. The board was later told by a Treasury official that the pension fund was a candidate to reapply.
According to its latest 5500 filing for plan year ended April 30, 2018, the pension fund had $42.1 million in assets and was 43.4% funded. The plan is projected to be insolvent during its 2033 plan year without the changes. The benefit reduction plan calls for a 35% benefit cut for all terminated vested participants and non-active participants who retired before Aug. 1, 2009. Non-active participants retiring on or after Aug. 1, 2009, will have a 30% cut. Active participants hired before May 2006 will have a 25% cut, while those hired after, and older or disabled participants will not have benefits reduced.
Since MPRA was enacted, Treasury has denied five applications and given final approval to 14 benefit reduction plans. Another three applications are being reviewed.
