AAA on MPRA to DOT, PBGC, and DOL

On March 14, 2019 representatives form the American Academy of Actuaries (AAA) Multiemployer Plans Committee met for the third time with representatives from the Department of the Treasury (DOT), Pension Benefit Guaranty Corporation (PBGC), and Department of Labor (DOL) to discuss the MPRA application process and also “covered the topics of withdrawal liability, mergers and transfers, and possible multiemployer pension reform legislation.”

Excerpts from the notes of that meeting follow:

A default approach to equitable distribution is to apply the same percentage reduction to all participants, subject to the limitations under MPRA. If a plan sponsor diverges from this simple approach, it must be prepared to provide supporting evidence that the proposed suspension is equitably distributed across all participant groups. (page 3)

The Committee members responded that they did not expect many more plans currently in critical and declining status to submit applications to suspend benefits or partition liabilities, for the following reasons:

  • Many plans that are currently in critical and declining status cannot avoid projected insolvency, even with maximum benefit suspensions. These plans are too close to their projected insolvency date, have benefit levels that are not much more than PBGC guarantee levels, or both. For those plans that might apply concurrently for a partition of liabilities, uncertainty about PBGC’s available resources becomes an important factor.
  • Plan sponsors often perform an analysis of which participants would be “helped or hurt” by a suspension of benefits. This analysis considers the plan’s projected insolvency date, and whether PBGC’s multiemployer program will remain solvent and be able to pay guaranteed benefits. In many cases, the plan sponsor concludes it would be in the overall best interest of the participants not to apply for a suspension of benefits.
  • Although Treasury has provided more details about the application process in recent years, preparing an application remains a time-consuming and expensive process, and approval is far from a certainty. In a case where the plan sponsor has determined that a suspension of benefits may be slightly beneficial to the participant population overall, that slight benefit may not justify the significant expense and uncertainty associated with the application process.
  • Even though the Joint Select Committee on Solvency of Multiemployer Pension Plans dissolved at the end of 2018, many plan sponsors are holding out hope for a legislative solution to the solvency crisis. While some plan sponsors may decide to proceed with preparing an application to suspend benefits under current law, others may determine that the expense is not worth it until the legislative picture becomes clearer, especially as some proposals would repeal relevant provisions under MPRA. (pages 6-7)

4. Possible Multiemployer Reform Legislation Present at the meeting were PBGC employees who served as technical detailees to the Joint Select Committee on Solvency of Multiemployer Pension Plans. The outline of possible reforms that was prepared by Joint Select Committee staff and released to certain groups (and ultimately the public) in November 2018 was discussed. It was pointed out that even though the Joint Select Committee has been dissolved, the process succeeded in educating key legislative staffers on issues facing multiemployer pension plans. That said, it should not be assumed that the concepts in the Joint Select Committee outline will appear in future legislative proposals that are developed under “regular order” under the four Committees of jurisdiction. (page 12)

3 responses to this post.

  1. Posted by Tough Love on September 7, 2019 at 10:18 pm

    Another of NJ’s “best and brightest”………… at least he paid appropriately by losing his pension:

    https://nj1015.com/another-nj-trooper-harassed-women-for-dates-pension-fight-reveals/

    Reply

    • Authorities said that on April 7, 2008, Link followed a woman’s vehicle for 10 miles and used his car’s mobile data computer to snoop into the woman’s personal information without conducting a proper motor vehicle stop.

      Federal crime, both civilly and criminally. $2500 pop per each/single violation.

      Reply

  2. Posted by Rex the Wonder Dog! on September 7, 2019 at 11:09 pm

    Authorities said that on April 7, 2008, Link followed a woman’s vehicle for 10 miles and used his car’s mobile data computer to snoop into the woman’s personal information without conducting a proper motor vehicle stop.

    Federal crime, both civilly and criminally. $2500 pop per each/single violation.

    Reply

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