The second time has proven the charm for the trustees of the Sheet Metal Workers Pension Fund of Troy, MI: their reapplication to reduce benefits under the Multiemployer Pension Reform Act of 2014 has been approved by the US Treasury Department.
The Treasury has now agreed on benefits reductions for 15 pension plans, while denying just five applications. Three proposed benefit reduction plans are currently under review.
The fund’s actuaries said that as of May 1 the pension was only 40.6% funded, and that it is projected to become insolvent in the plan year beginning May 1, 2033.
According to the fund’s benefit reduction plan, non-active participants who retired before Aug. 1, 2009, and all terminated vested participants, will have their benefits cut by 35%. Non-active participants who retired on or after Aug. 1, 2009 will have their benefits lowered by 30%. For active participants the reduction is 25% for employees who were hired before May 1, 2006. There will be no reduction for those hired on or after May 1, 2006.
The pension defines active participants as those who have worked at least 435 hours during the plan year ended Apr. 30, 2017 or Apr. 30, 2018, and who have not retired as of Apr. 30, 2018. Non-active participants include terminated vested participants, retired participants, disabled participants, beneficiaries of participants, and alternate payees.
The pension’s original application, had proposed a reduction in monthly benefits on which the revised monthly amount was based on a level accrual rate of $48, multiplied by the years of service earned through Apr. 30, 2019. Participants whose level accrual rate was already less than the $48 level accrual rate would not have had their benefits reduced. The fund withdrew that proposal in October 2018.
Before the Sheet Metal Workers Pension Fund’s reduction plan can take effect, it must first be put before a vote of the participants and beneficiaries of the fund. The vote will be administered by the Treasury Department, in consultation with the Department of Labor and the Pension Benefit Guaranty Corporation (PBGC).
The plan said the suspension would take effect as of May 1, 2020 and would continue indefinitely.