Requests for benefits reductions have picked up this spring, as Treasury Department filings show four pension funds recently applied for benefits cuts under the Kline-Miller Multiemployer Pension Reform Act of 2014. They are the Sheet Metal Workers Local Pension Fund, the Plasterers Local #82 Pension Plan, the Pressroom Unions Pension Trust Fund, and the Plasterers & Cement Masons Local 94 and Pension Fund. That brings the total to five plans seeking benefits cuts so far in 2018. A total of 10 applications were filed in 2017, nine in 2016, and two in 2015.
Sheet Metal Workers Local Pension Fund (OH)
The Sheet Metal Workers Local Union #33 of Parma, Ohio, represents more than 4,500 skilled craftsmen throughout Ohio and West Virginia. The fund’s application proposes a reduction in monthly benefits in that the revised monthly amount is based on a level accrual rate of $48, multiplied by years of service earned through April 30, 2019.
Participants whose current level accrual rate under the plan is less than the $48 post-suspension level accrual rate would not have their benefits reduced. A participant’s current level accrual rate is determined by dividing their present earned benefit amount by their years of service. It also said that no special groups of participants will be treated differently except those required by law. There would be no reduction for participants or beneficiaries with benefits based on disability, or participants or beneficiaries who are at least 80 years old on May 31, 2019. Meanwhile, participants or beneficiaries who are at least 75 on May 31, 2019, will have a lesser benefit reduction.
The plan’s actuary certified its funding status as critical for 2009 because the funded percentage was 47.2%, and there were projected funding deficiencies starting at the end of the 2009-2010 plan year. The fund blamed the financial crisis of 2008 as the cause for the underfunding.
The fund said that contribution increases resulted in significant wage deferments by its active participants, and made it difficult for signatory contractors to remain competitive in the sheet metal construction market.
“At present, any would-be contributing employer is faced with participation in a plan that is projected to become insolvent, that imposes an almost punitive contribution rate, and for which new participants will accrue a 0% future benefit,” said the fund in its application.
Plasterers Local #82 Pension Plan
The Plasterers Local #82 Pension Plan of Portland, Oregon, which is projected to become insolvent during the 2034 plan year, has proposed reductions of 22% for participants who worked at least 400 hours in 2015 or 2016, and a 31% for participants who did not work at least 400 hours during the same period.
No suspensions can be made for participants and beneficiaries older than 80 as of the end of the month of the effective date of the suspension, which would be Feb. 28, 2019. The suspension is reduced for participants and beneficiaries above the age of 75, but younger than 80 as of the end of the month of the effective date of the suspension. The factor is calculated by determining how many months the participant or beneficiary has until age 80 (as of the end of the month of the effective date of the suspension) and dividing that amount by 60.
The plan was most recently 100% funded in 2008, however, investment losses from the stock market crash of 2008 caused the funding ratio to plunge to 68% the following year. Despite reductions to benefit accruals, and increases to contribution rates, the funding ratio continued to decline, falling to 47% as of 2017.
Pressroom Unions Pension Trust Fund
The New York City-based Pressroom Unions Pension Trust Fund is seeking the approval of a proposed benefit suspension equal to 39% of all plan benefits accrued through Sept. 30, 2017. The effective date would be Jan. 1, 2019, with no proposed expiration date. It said that the proposed suspension does not provide for different treatment of participants and beneficiaries, except when legally required; however, the accrual rate for active participants will not be reduced after Sept. 30, 2017.
The pension plan was certified to be in critical and declining status for the plan year beginning Oct. 1 2016, and is projected to become insolvent during the plan year beginning Oct. 1, 2031. As of Oct. 1, 2017, the plan had $164.4 million in liabilities, and $129.3 million in assets for a funded level of 78.7%.
Plasterers & Cement Masons Local 94 & Pension Fund
The Harrisburg, Pennsylvania-based Plasterers & Cement Masons Local 94 and Pension Fund is proposing that benefits of all plan participants will be reduced to 110% of the Pension Benefit Guaranty Corp. (PBGC) guarantee, which is the maximum benefits reduction allowed by law. As a monthly benefit amount, the PBGC guarantees a payment equal to 100% of the first $11 of the plan’s monthly benefit rate, plus 75% of the next $33 of the monthly benefit rate multiplied by the participant’s years of credited service.
The board of trustees said the fund is projected to become insolvent in the plan year beginning May 1, 2026, unless benefits are suspended. It also said the fund has seen a 44% decrease in the market value of assets from 2007 to 2017, and a 58% decrease in contribution hours when comparing the plan year beginning in 2007 to the average hours during the plan years 2008 through 2016.