The US Treasury has approved benefits reductions for the Southwest Ohio Regional Council of Carpenters Fund, which is the third approval in February alone, and 13th overall, since the Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA) was enacted into law.
The number of approvals has risen sharply under Treasury Secretary Steve Mnuchin. Since he was sworn in just over two years ago, the Treasury Department has approved benefits reductions for 12 pension funds, while only denying one application.
This is in sharp contrast to the rate of approval under Mnuchin’s predecessor Jack Lew, when only one application for benefits reduction was accepted, while four others were denied.
However, the decision to approve a reduction in benefits is not the sole decision of Mnuchin. According to the MRPA, the secretary of the Treasury Department is required to consult with the Pension Benefit Guaranty Corporation (PBGC) and the Secretary of Labor before approving or denying applications by plan sponsors to reduce benefits.
The approval for Southwest Ohio Regional Council of Carpenters Fund came in its second attempt to have its benefits cut after withdrawing its original application in October 2017. The plan, which is less than 50% funded and was certified to be in critical condition in Jan.1, 2015, was projected to become insolvent by 2034 without a reduction in benefits.
The fund’s rehabilitation plan applies to all participants, beneficiaries and alternate payees without regard to different categories or groups of individuals. It also does not distinguish between individuals based on years of service, benefit credit or accrual rate, employer, or the amount of benefits received. The effective date of the reduction of benefits is expected to be March 31.
The plan includes a one-time recalculation based on the premise that all accrued benefits and monthly benefits in pay status would be subject to the same early retirement reduction factors. All accrued benefits and monthly benefits in pay status would be subject to an additional flat 8% reduction.
In its first application, the pension had proposed eliminating all subsidies for all participants and beneficiaries for any monthly payments on or after Jan. 1, 2018, and then applying a uniform 17% reduction.