For the past several months, we have been reporting on the application filed by the Central States Southeast and Southwest Areas Pension Fund (“Central States”) to the Department of Treasury to reduce “core” benefits to participants. This extraordinary remedy is permitted by the Kline-Miller Multiemployer Pension Reform Act of 2014 (“Kline-Miller Act”).
Public hearings conducted by Special Master Feinberg have revealed that the proposed cuts can be between 39.9% and 60.7%.
Special Master Feinberg must decide by May 7th whether to approve the reductions to the Fund which has approximately 400,000 participants.
There has been opposition expressed by retirees as well as retiree groups. A group of fifty United Senators has also written to the Secretary of the Treasury indicating their concern with the proposed reductions.
As the multi-employer pension fund world awaits a decision, a fifth multi-employer pension fund, the Iron Workers Local Union 16 Pension Fund located in Baltimore, Maryland filed its application to the Treasury Department to reduce core benefits.
These actions highlight the risk that employers contributing to multi-employer funds are now facing. It is not beyond the realm of possibility that the burden of providing the promised benefits will fall even more heavily upon employers.
We suggest that employers become proactive in considering strategies to exit these plans in future negotiations.
Clearly the situation will not get better.