MPRA Filing Frequently Asked Questions

These FAQs are simply facts and information provided to educate. These are NOT the thoughts or opinions of the Retiree Representative, Bill Lickert.

This is where I will address the common questions and concerns that you might have in relation to the MPRA Filing.

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The Trustees of the Western Pennsylvania Teamsters and Employers Pension Fund filed a MPRA application to reduce pension benefits on September 24, 2018. The Department of Treasury reviewed the application with the Trustees and the Fund’s attorney and actuary to determine if the benefit reduction design proposed in the application meets the requirements of MPRA.

On May 7, 2019, the Board of Trustees of the Western Pennsylvania Teamsters & Employers Pension Fund was notified that its proposal to reduce pension benefits under MPRA meets the requirements for approval. Click here To view approval letter.

1What happens now that a MPRA application has been approved by the Department of Treasury?

The Department of Treasury has determined that the benefit reduction design meets the requirements of MPRA and they have approved the application. Now the benefit reduction design will be voted on by the Fund’s participants. The reduction will go into effect on August 1, 2019 unless a majority of the participants vote to reject the benefit reduction

2How does voting work?

Within the next month, the Department of Treasury will mail ballots to participants. Only participants will be eligible to vote. Alternate payees are not eligible to vote. The ballots will provide information regarding how each voting participant’s benefits will be impacted by the reduction. They will also include a statement from the Fund’s Trustees in support of the benefit reductions and a statement, based on public comments, in opposition to the benefit reductions. Voting “Yes” means that you approve of the benefit reduction plan. Voting “No” means that you reject the benefit reduction plan. Participants will need to fill out and return the ballots by the date indicated on the ballot. Any ballots that are not returned will be counted as votes in favor of the reduction. If you don’t send in a ballot, you are voting to approve the benefit reduction plan.

The deadline for voting will be specifically indicated on the ballot. We expect the voting deadline to be three weeks from the date the ballots are mailed to you. Again, the ballot will indicate the voting deadline.

3What happens if the benefit reduction is voted down by the Funds participants?

Under a special rule in MPRA that may apply to the Fund, even if a majority of eligible participants and beneficiaries vote to reject the proposed benefit reduction plan, the proposed benefit reduction (or a modified version of it) may still take effect. The special rule applies for a pension plan if the estimated cost to PBGC of providing guaranteed benefits (if that plan runs out of money) is over $1 billion (indexed for inflation). It has not yet been determined whether this special rule applies to the Fund.

4If the benefit reduction is approved and implemented, what will happen to my pension?

If you are receiving a pension from the Fund on January 1, 2018, you will receive a 30% reduction in your pension for all benefits you earned as of December 31, 2017 (unless you are subject to one of the MPRA special protections; i.e., over age 80, prorated relief for pensioners age 75 to 79, or receiving a disability pension from the Fund – the MPRA special protections are more fully explained under the “General Frequently Asked Questions” of my site).

As an example, if you are age 68 and are receiving a $3,000 monthly pension, your pension will be reduced to $2,100.

If you are actively employed as of January 1, 2018, you might qualify for an exception to the 30% across the board benefit reduction.

5What is the exception to the 30% across the board benefit reduction?
If you are actively employed on January 1, 2018 and your employer is making Fund contributions on your behalf at the Top Tier contribution level or higher, you might not receive a full 30% reduction to your pension when you retire. If, upon retirement, you are eligible for the age 55 and 30 year $3,500 monthly Special Benefit and a 30% benefit reduction to your normal retirement benefit would be less than $3,500, then your pension will only be reduced to $3,500 a month. In other words, active participants on January 1, 2018 with employer contributions at the Top Tier cannot have their pension reduced below $3,500 per month if their age and service makes them eligible for the Special Benefit.
6Why did the Trustees feel it was necessary to protect the age 55 and 30 year special benefit?

The Trustees believe that protecting this benefit is necessary to prevent active participants from leaving the Fund. The Trustees determined that applying the 30% reduction to this benefit would create a scenario where active participants would leave the Fund which could put the Fund in an even more critical position than it is in currently. The Trustees felt protecting this benefit was necessary to ensure the Fund retains an active population which would allow the Fund to remain healthy enough to avoid insolvency.

7How did the Trustees determine that the 30% reduction was appropriate?

The Trustees reviewed the MPRA applications which have received approval to provide guidance for a successful benefit reduction design. As a result of this review, the Trustees determined that a benefit reduction which would have the Fund bottom out at 20% funding and $200 million in assets would likely receive approval. With this goal in mind the Fund’s actuary reviewed many different reduction scenarios looking for the right scenario which would meet the Trustee’s goal while also meeting the requirements of MPRA. As a result the Trustees determined that the 30% reduction with protection for the 55/30 Special Benefit was most likely to lead to an application being approved, and it was.

8When will I start receiving a reduced monthly pension?

The benefit reduction will be effective August 1, 2019. Until that date you will still receive your current monthly pension amount.

9Was a MPRA application filed by the Trustees?

The Trustees of the Western Pennsylvania Teamsters and Employers Pension Fund filed a MPRA application with the United States Department of Treasury, who confirmed receipt of the filing on September 26, 2018.

10What happens now that a MPRA application has been filed by the Trustees?

The Department of Treasury will now review the application with the Trustees and the Fund’s attorney and actuary to determine if the benefit reduction design proposed in the application meets the requirements of MPRA. If the Department of Treasury determines that the benefit reduction design meets the requirements of MPRA, they will approve the application.

You should expect to receive in the mail a notice from the Fund regarding the MPRA application filing. Along with that notice will be an individualized impact statement that will identify the exact reduction to your pension if the application is approved and goes into effect.

11What if I have a question about the notice or the personal impact statement?

Contact the Fund’s Board of Trustees at:

900 Parish Street, Suite 101
Pittsburgh, PA 15220

Phone: (412) 362-4200
Toll Free: (800) 362-4201

I cannot answer any questions regarding the notice or your personal impact statement.

12When will Treasury make a decision on the Trustees’ MPRA application?

The Secretary of Treasury must approve or deny the MPRA application within 225 days. This means we should know whether the application is approved or denied by May 9, 2019.

13What happens if Treasury approves the Trustees’ MPRA application?

Once approved by the Department of Treasury, the benefit reduction design will be voted on by the Fund’s participants and their beneficiaries. The reduction will go into effect on August 1, 2019 unless a majority of the participants and beneficiaries vote to reject the benefit reduction.

14If the benefit reduction is approved and implemented, what will happen to my pension?

The Trustees approved a 30% across the board benefit reduction with one exception. This reduction will only apply to benefits earned through December 31, 2017. If you are not a member of a class protected by MPRA (those over 80, limited protection for those receiving a disability pension, and prorated protection for those between 75 and 79), your pension will be reduced by 30%. As an example, if you are 68 and receive a $3,000 monthly pension, your pension will be reduced to $2,100.

15How did the Trustees determine that the 30% reduction was appropriate?

The Trustees reviewed the MPRA applications which have received approval to provide guidance for a successful benefit reduction design. As a result of this review, the Trustees determined that a benefit reduction which would have the Fund bottom out at 20% funding and $200 million in assets would likely receive approval. With this goal in mind the Fund’s actuary reviewed many different reduction scenarios looking for the right scenario which would meet the Trustee’s goal while also meeting the requirements of MPRA. As a result the Trustees determined that the 30% reduction was most likely to lead to an application being approved.

16What is the exception to the 30% across the board cut?

The 30% benefit reduction will not apply to those participants who qualify for the special $3,500/month 30-and-out benefit level at age 55. Participants who qualify for this benefit will still have their monthly benefit reduced. However, the monthly benefit will not be reduced below the amount provided by this benefit.

17Who will benefit from the protection of the special $3,500/month 30-and-out benefit level at age 55?

All participants actively employed as of January 1, 2018 who are covered at the “Top Tier” contribution rate. According to the Trustees’ MPRA application, the “Top Tier” group is primarily populated by 1,117 participants employed by United Parcel Service (UPS).

18 Why did the Trustees feel it was necessary to protect the special $3,500/month 30-and-out benefit level at age 55?

The Trustees believe that protecting this benefit is necessary to prevent active participants from leaving the Fund. The Trustees determined that applying the 30% reduction to this benefit would create a scenario where active participants would leave the Fund which could put the Fund in an even more critical position than it is in currently. According to the MPRA application, UPS contributes approximately $31 million per year to the Fund. The Trustees felt protecting this benefit was necessary to ensure the Fund retains an active population which would allow the Fund to remain healthy enough to avoid insolvency.

19What is the Retiree Representative’s opinion of the application?

The Trustees’ MPRA application is voluminous and I am in the process of reviewing it. At this point, I have come to no conclusion about whether the application meets the statutory requirement of representing an equitable distribution of pension cuts. Once I come to a conclusion I intend to share my opinion with the Treasury Department, but that will not be until after November 30, 2018.

20What if I have a question about the MPRA application or this process?

Contact the Fund’s Board of Trustees at:

900 Parish Street, Suite 101
Pittsburgh, PA 15220

Phone: (412) 362-4200
Toll Free: (800) 362-4201

I cannot answer any questions regarding the MPRA application.

21When will I start receiving a reduced monthly pension?

The benefit reduction will be effective August 1, 2019. Until that date you will still receive your current monthly pension amount.

I have a favor that I’d like to ask from you…

Please do not spread information regarding the Pension Fund’s MPRA application that you do not personally know to be true.  It helps no one and may actually cause others to become upset.  If you hear a rumor about this process that worries you, e-mail me at bill@wpatrr.com or call me at 724.382.4956 and ask me about it before you pass it along.  Please.  Thank you.

 

If you have questions about your Pension:

Please contact the Western Pennsylvania Teamsters & Employers Pension Fund:
900 Parish Street, Suite 101 Pittsburgh, PA 15220
Call: 412.362.4200   |    Call Toll-free: 800.362.4201