The US Treasury Department has approved the United Furniture Workers Pension Fund’s application for a benefits reduction, making it only the second pension fund to be approved for benefits cuts under the Klein-Miller Multiemployer Pension Relief Act of 2014 (MPRA).
The plan’s trustees’ proposal includes reducing benefits to 110% of the Pension Benefit Guaranty Corporation (PBGC) guarantee, excluding disabled retirees, or those who will be older than 80 as of Sept. 30, 2017. The percentage reductions range from 0% to 62%, and of the fund’s 9,896 participants, 7,078 would see no reduction. For the other 2,818, the average reduction would be 12.7%.
“There is no question that a rapid increase in US furniture imports has been the primary competitive factor facing the contributing employers, and by extension, the pension fund,” said the fund in its application.
In February, the Treasury Department approved an application for benefits by the Ironworkers Local 17 Union of Cleveland, making it the first pension to be approved for benefits reductions under the MPRA.
Under the MPRA, severely troubled pension plans can apply to suspend vested benefits provided that certain criteria are met.
“My husband and I both worked under the UFW Union for several years and we ourselves paid into our pension fund with no help from our employer,” wrote an unnamed pension participant in the comments section of the application. “This union tried once before to quit on us while on strike, and after some deliberating and a lot of upset employees, they decided to forgo that decision. Now, they want to reduce our measly pension amounts. I just do not feel that this is in the best interest for us. It seems like it was mismanaged on the part of the United Furniture Workers Pension Fund A.”
However, other participants supported the plan to reduce benefits.
“While it is upsetting for anyone to get their benefits reduced, this is the best thing that can happen to the pension fund,” said one participant. “If this does not pass and the Fund becomes insolvent, the people on Disability Pension and anyone 80+ years old will not be protected. Out of 9,000+ participants, over 7,000 are not getting any reductions. If this does not pass, the number of people that will get reductions will increase tremendously.”
In order for the approval of benefits reductions to take effect, it must be voted on by participants and beneficiaries of the pension plan. The MPRA requires that the Treasury, in consultation with the Department of Labor and the PBGC administer the vote.