Teamsters Building Material Drivers Local 436 Pension Fund, Valley View, Ohio, applied to the Treasury Department to reduce benefits in order to avoid insolvency.
The benefit reductions, known as suspensions, are allowed under the Multiemployer Pension Reform Act of 2014, pending Treasury approval in consultation with the Pension Benefit Guaranty Corp. which would oversee a proposed plan partition, effective May 1, 2021.
The application was submitted June 30 and Treasury officials have until Feb. 10 to decide. The pension fund proposes to cut benefits for all except disabled and older participants to 110% of the PBGC guarantee, the maximum amount allowed under MPRA.
In a notice to plan participants, trustees said that the proposed suspension will remain in effect indefinitely and that the reductions, combined with a partition, "are projected to keep the plan from running out of money."
Pension fund trustees said in the application that the fund, with $24.8 million in assets as of Jan. 1, 2020, will become insolvent in 2023 without the reductions, partly due to the bankruptcy of two major contributing employers as well as reduced work hours, fewer active participants and negative cash flow. The latest Form 5500 shows that as of Dec. 31, 2018, the plan had 171 active participants out of 1,647 total participants and was 26.1% funded.
It is the only MPRA application currently pending. To date, Treasury officials have denied seven applications and approved 18, including preliminary approval granted in August for the Bricklayers and Allied Craftworkers Local 7 Pension Plan, Austintown, Ohio, pending a participant vote. That application, which also proposes a partition, showed $9.53 million in assets as of April 30, 2019, when it was 24% funded, and projected insolvency by May 2023.