1Why was I appointed Retiree Representative?
The Pension Fund’s Trustees decided to file an application with the United States Treasury Department under a law called the Multiemployer Pension Reform Act of 2014 (MPRA). MPRA is also known as the Kline-Miller Act. MPRA requires the Pension Fund’s Trustees to appoint a Retiree Representative because the Pension Fund has more than 10,000 participants. The only requirement to serving as Retiree Representative is being a participant in pay status in the Pension Fund.
The Retiree Representative receives no compensation. The Retiree Representative’s reasonable expenses are reimbursed by the Pension Fund.
2Are Pension Fund benefits going to be cut?
Probably. If the Pension Fund’s MPRA application is approved then benefits will be reduced for most current retirees.
Until the Pension Fund’s MPRA application is available no one will know exactly how the pension reductions will work. The law does impose a few limits on how the Trustees cut pension benefits. Retirees over the age of 80 or receiving a disability pension from the Pension Fund cannot have their pensions reduced. The reductions for retirees between ages 75 and 79 are limited.
I will receive the same pension cuts as any other retiree; my status as Retiree Representative does not entitle me to special treatment.
3Why are the Pension Fund Trustees filing a MPRA application?
The Pension Fund is severely underfunded and is projected to become insolvent in 2028. This means that in about a decade the Pension Fund could run out of money unless action is taken. The point of the MPRA application is to obtain benefit reductions that will enable the Pension Fund to avoid insolvency. It also important to understand that the MPRA application does not guarantee that the Pension Fund will avoid insolvency; investment returns and other variables ultimately have a great deal to do with whether the Pension Fund avoids insolvency.
4How can the Pension Fund run out of money? It has $700 million.
The Pension Fund’s problem, like many other plans, is that it owes much more in pension benefits than it receives in employer contributions. The Pension Fund, for example, currently pays out about $6 million more per month in benefits than it receives in employer contributions. So while it might seem impossible that such a large plan could run out of money, the funding deficiency will over time drive the Pension Fund insolvent.
5Doesn’t the federal government protect our pensions?
In the event the Pension Fund becomes insolvent, all Pension Fund benefits would be in jeopardy except for the benefits insured by the Pension Benefit Guaranty Corporation (PBGC). There are two important problems regarding the PBGC insured benefit.
First, the benefit insured by the PBGC for multiemployer plans like the Pension Fund is relatively small compared to the Pension Fund’s benefits. The PBGC guarantees 100% of a benefit up to $11 per month per year of service. This roughly equates to a pension benefit of $3,960 per year for an individual with 30 years of service. The PBGC then guarantees 75% of the next $33 per month per year of service up to a maximum annual benefit of $12,870. So if the Pension Fund becomes insolvent and the PBGC provides the insured benefit, everyone entitled to a benefit is likely going to see a drastic reduction.
The second problem with the PBGC insured benefit, however, is the solvency of the PBGC itself. In 2016, the PBGC delivered a report to the United States Congress indicating that the multiemployer insurance program would likely become insolvent in 2025. If the PBGC becomes insolvent then it will be unable to pay all of its obligations.
6What is the Retiree Representative’s job?
MPRA states that the Retiree Representative “shall advocate for the interests of the retired and deferred vested participants and beneficiaries of the Pension Fund”.
[A deferred vested participant is an individual entitled to a benefit from the Pension Fund but is not currently receiving benefit payments. Deferred vested participants are also no longer actively employed.]
I will communicate with you about the Pension Fund’s MPRA application; answer your questions as best as I am able; and, advocate in your interests that any benefit cuts must be fairly distributed in accordance with the law.
I am just like you – I don’t understand the intricacies of multiemployer pension funding or MPRA. MPRA is a relatively new law and it is complex. To assist me in performing my job as the Retiree Representative, I have engaged CBIZ Retirement Plan Services
to provide actuarial services and Meyer, Unkovic & Scott LLP
to serve as my legal counsel. I have also hired 4CTechnologies
to build this website and to help me reach as many retirees and deferred vested Pension Fund participants as possible. MPRA authorizes me to hire these professionals, but their fees are paid by the Pension Fund.
7How can the Trustees just cut my pension benefits?
On their own, they can’t. Under MPRA they must first file an application with the United States Treasury Department explaining how they propose to cut benefits and how those benefit cuts will enable the Pension Fund to avoid insolvency. The Treasury Department will then review the letter to determine whether the Trustees determinations are in accordance with law. As the Retiree Representative, I will share my thoughts with the Treasury Department during this process. This will be my opportunity to speak for you.
If the Treasury Department approves the Trustees’ application, then the Pension Fund’s participants and beneficiaries will vote to accept or reject the benefit reductions. If a majority of plan participants vote to reject the benefit reductions they will not take effect unless the Treasury Department determines that the Pension Fund is a “systemically important plan”. A systemically important plan is a plan that the PBGC projects the present value of projected financial assistance payments to exceed $1 billion if the benefit reductions are not implemented. If the Treasury Department determines that the Pension Fund is a systemically important plan it may authorize certain benefit reductions regardless of the participant vote.
As your Retiree Representative, I will be involved in each step of the process and will post updates on this website regarding significant developments.
8Are there age-based limitations on MPRA pension cuts?
Yes. Retirees who are age 80 or over cannot have their pensions cut. Retirees age 75-79 also have a prorated age-based pension cut limitation. This limit is based on a percentage obtained by dividing how many months there are between the month the pension cuts become effective and the month you turn age 80, divided by 60. For example, if – and only for the sake of illustration – the pension cuts took effect April 1, 2018 and you are 77 years and 0 months old as of that date, your pension cut would be reduced by 60% (36/60) on account of your age.
9What happened to the Retiree Burial Benefit a/k/a the Retiree Death Benefit?
The Pension Fund provides a burial benefit. If you died after April 1, 1979 but before October 1, 1998, the amount of the benefit was $1,000. If you died on or after October 1, 1998, the amount of the benefit is the greater of $1,000 or one monthly benefit payment.
The Pension Fund’s Trustees prospectively eliminated the burial benefit in the 2010 Rehabilitation Plan. Accordingly, if you retired prior to February 1, 2011, your beneficiary will receive a burial benefit when you die. If you retired after February 1, 2011, no burial benefit will be paid after your death.
10Are there disability-based limitations on MPRA pension cuts?
Yes. If you are receiving a disability pension from the Fund your pension is protected from any benefit cut. Be advised, however, that the Fund’s rules provide that if you are receiving a disability pension, the disability pension becomes a normal or early retirement pension as of the earliest of your normal or early retirement age (generally between age 55-65). Once a disability pension becomes a normal or early retirement pension it is no longer protected from a pension cut, although it cannot be cut below the amount of the original disability pension.
11Are orphans of withdrawing employers entitled to special protection if the employer paid its withdrawal liability to the Fund in full?
They are not entitled to special protection under MPRA. Under MPRA, the pension cuts must be equitably distributed. The Trustees could distinguish between orphans based on whether their employers paid their withdrawal liability to some extent and argue that, in totality, the cuts are equitably distributed. MPRA, however, does not address the matter and the United States Department of Treasury would have to approve the application. I cannot say more about this until we are provided the details of the Trustees’ MPRA application.
12I am in payment status and over age 80 on the effective date of the MPRA cuts. Subsequently, I die. Is the survivor benefit payable to my spouse cut?
No. Under MPRA, the pension cuts occur once, on the effective date specified in the MPRA application. In this scenario the survivor benefit payable to your spouse would not be cut regardless of her age.
13What can you do?
You can stay informed and up to date by visiting this website often. I would also encourage you to recommend this website to anyone you know that has earned or is receiving a Pension Fund benefit.
You can also visit my “Lickert Listens” page and sign up
for updates by providing us with your e-mail address.
I will update the frequently asked questions section of my website from time to time as developments occur.
14What if you have questions?
You should e-mail your questions to firstname.lastname@example.org
or call 724-382-4956 and leave a message.