Provisions of the omnibus budget and spending bill that was signed into law in December 2014 also included changes for multiemployer pension plans, and made permanent many of the funding relief measures contained in the Pension Protection Act (PPA). sweeping changes that apply to some private sector multiemployer pension plans. The changes contained in the “Multiemployer Pension Reform Act of 2014” (MPRA) were mixed, including only some of the reforms that BAC and IPF had pressed Congress for. However, the law does provide additional certainty and some useful new tools for Trustees to address pension plan funding issues. The law requires a significant increase in Pension Benefit Guaranty Corporation (PBGC) premiums for multiemployer plans, but adds new protections for pre-retirement surviving spouses who previously had no guarantee at all if a plan became insolvent; allows plans to take certain early steps to improve funding rather than waiting until funding levels reach “critical” status; provides that increased hourly contributions earmarked to address underfunding will not increase an employer’s withdrawal liability; and gives new authority to the PBGC to “facilitate” plan mergers. Perhaps the most significant, and certainly the most controversial aspect of the MPRA is that it allows the small percentage of multiemployer pension plans – those that are very seriously underfunded and unable to avoid insolvency with all of the existing tools -- to reduce benefit payments to retirees as well as accrued benefits for participants – but never below the PBGC guarantee levels. IPF is not facing those serious underfunding issues, and instead is on schedule under its December 2010 Funding Improvement Plan, so those allowed benefit cuts will not apply to IPF or IPF pensioners or participants. There are a very few plans, however, that will fall within the new plan status known as “critical and declining status” and that would become insolvent in the next 15 to 20 years without further cuts. For those plans and their participants, the MPRA may provide difficult but necessary relief.
