Archive for the ‘Multiemployer Pensions’ Category

Who Will Pay Benefits of Bankrupt Multiemployer Plans?

Multiemployer (union) plans, for a variety of reasons*, will all go bankrupt.  So what happens to promised benefits?  The Road Carriers Local 707 Pension Fund (RC707) ** could  tell us.

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If the Department of the Treasury will not approve benefit suspensions under the Multitemployer Pension Reform Act  (MPRA) for participants in the Central States Pension Fund (CSPF) then how will  other multiemployer plans lined up for approvals fare?

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Central States Preservation Plan

According to an online report:

A pension fund serving Teamsters members said Thursday it will not issue a new plan to rescue the fund, following the Treasury Department’s rejection of proposed reductions. Thomas Nyhan, executive director of the Central States Pension Fund, said it remains in “critical and declining status” and called for legislation to protect participants’ retirement benefits. Earlier this month, Nyhan predicted insolvency for the fund without legislation, absent another plan.

A condition of that plan for Thomas C. Nyhan may be to keep the highest amount of payouts in place – and not only for retirees.

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Granted We Have Problems

Government at all levels is dysfunctional and James L. Buckley in ‘Saving Congress from Itself‘ may have hit upon a critical first step toward regeneration.

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Special Master of Mankind

All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.

– Adam Smith, The Wealth of Nations

Ironic that when it was decided with MPRA to have retirees in multiemployer (union) pension plans take the hit for an unsustainable system the executioner was dubbed ‘Special Master.’

In a letter to Congress explaining why the Central States application was rejected Treasury Secretary Jacob J. Lew provided clues as to where this is headed:

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CSPF Resuce Plan – for those who run CSPF

The 5500 filing for 2014 for the Central States Pension Fund (CSPF) is 428 pages with 160 of those pages (12-171) being the Schedule C, a form where you report expenses being paid out of the trust which mostly go to Service Providers but for CSPF there are also several Trustees and Employees listed.

Were the Pension Benefit Guaranty Corporation (PBGC) to take over CSPF and cut benefits to the maximum allowed not only would participants take a substantial hit but these ‘Trustees’ and ‘Employees’ would be off the trust payroll entirely.

So it is that when the Treasury denied the CSPF rescue plan with its massive benefit reductions (encouraging larger reductions) the people who run the fund, on their website, fought back:

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Central States 5500 Data

How much trouble is the Central States Pension Fund (CSPF) in? You can get a pretty good idea from their 5500 filing for 2014 (the latest available) if you know where to look.

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