The US Department of the Treasury has approved benefits reductions for the Mid-Jersey Trucking Industry and Local 701 Pension Fund, and the Toledo Roofers Local No. 134 Pension Fund.
They are the 11th and 12th pension plans to receive approval for a reduction in benefits from the Treasury Department since the Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA) was enacted into law.
Meanwhile, the New York-based Local 807 Labor-Management Pension Fund has withdrawn its application for benefits cuts, but said it reserves the right to resubmit a revised application with additional information in the future.
For the Mid-Jersey Trucking and Toledo Roofers pension plans, the Treasury Department said it has determined that both are eligible to reduce benefits under the MPRA, and that their applications satisfied the requirements of the Internal Revenue Code as added by the MPRA.
The Mid-Jersey Trucking fund was certified by its actuary to be in critical and declining status beginning June 1, 2017, and was projected to become insolvent at the beginning of the 2029 plan year without a reduction in benefits.
According to the rehabilitation plan the pension submitted in its application, the following adjustable benefits will be eliminated for all participants with an annuity starting date of May 15, 2018, or later, and who did not earn at least 120 hours of service during each of the three years with the month immediately preceding the participant’s annuity starting date:
- Disability benefit not yet in pay status.
- 60-month certain guarantee.
- Subsidized joint and survivor annuity for married participants.
- Commencement of new retirement benefits prior to age 55.
- Pre-retirement death, accidental death and dismemberment benefits except as required by law for surviving spouses.
- The subsidized portion of the early retirement benefit and service pension for all years of service.
- Post-retirement death benefits for participants and beneficiaries.
- Lump-sum payment option for the benefits earned prior to April 1, 2012.
The Toledo Roofers plan projected that without a cut in benefits, it would likely become insolvent at the beginning of 2030.
Its benefit suspension plan eliminates any early retirement subsidy on the benefits of participants, or their beneficiaries, who retired before the plan’s normal retirement age of 65. If the benefit is greater than 175% of the amount guaranteed by the Pension Benefit Guaranty Corp. (PBGC) after the application of this step, the benefit will be reduced to 175% of the amount guaranteed by the PBGC. No reduction will apply to benefits based on disability under the pension plan’s terms.
An individual’s age affects the amount of the reduction that may apply to the monthly benefit. For example, no reduction applies to the benefits of an individual who is 80 or older as of the end of the month of the benefit reduction’s effective date. And the closer the individual is to age 80, the smaller the benefits reduction.