The Western Pennsylvania Teamsters & Employers Pension Fund has received approval by The US Treasury Department for a benefit reduction application.
The application would allow the plan’s trustees to reduced benefits that have accrued through Dec 31, 2017, by 30%. This will affect all participants in accordance with the individual limitation requirements imposed by The Multiemployer Pension Reform Act of 2014 (MPRA).
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The MPRA stipulates that there can be no reduction in benefits for those who are 80 years old or older by Aug 31. Nevertheless, it is permissible to enact reductions on individuals between the ages of 75 and 80 on Aug 31.
In addition, those individuals who are currently receiving disability benefits will not have any reductions applied to the portion of their disability to is part of their disability benefit provisions under the plan. Those who have worked underneath the plan through Dec. 31, 2017, will not have their benefits suspended.
According to the MPRA, the reduction of benefits must follow a procedure involving the Treasury Department in conjunction with the Department of Labor and the Pension Benefit Guaranty Corp. (PBGC) that requires an administered vote. If the majority of eligible voters do not reject the proposed cuts then the reductions will take effect starting Aug 1.
The pension’s board of trustees believe that a reduction in benefits is the only way to avoid the plan becoming completely insolvent by 2029.
“If the proposed reduction is implemented, you will receive a larger benefit than you would if the plan becomes insolvent,” the board explained to its members, “has done everything in its power to avoid these benefit reductions, including reducing active participants’ benefits and future accruals in 2006, 2008, and 2011.”
In the event that the majority of eligible voters reject the proposed benefits reduction, the MPRA requires the Treasury Department in conjunction with the PBGC to evaluate whether it is possible to allow the plan to go insolvent which will impose a liability of more than $1 billion on the PBGC.