scorpion 2 said:
Love it thanks.
Provides increased authority to facilitate plan mergers and financial assistance to do so.
Provides plan sponsors of plans with tools to suspend benefits for active and retired participants. Thats a good one there.
Multiemployer plans have a lot of flexibility to screw your pants off.
thanks again for your post
Posting just the outrageous headline is something that Fox news likes to do without posting all of the relevant information available. Let's expand the headline you chose shall we.
Benefit Suspensions
Under the Pension Reform Act, plans that are deeply troubled and projected to be in the newly created “critical and declining status” may apply to the Treasury to voluntarily suspend pension benefits for participants in pay status and accrued benefits for participants not in pay status. The term “suspension of benefits” is defined in the Pension Reform Act to mean “the temporary or permanent reduction of any current or future payment obligation of the plan to any participant or beneficiary under the plan, whether or not in pay status at the time of the suspension of benefits.”
Retiree Representative. During the suspension approval process, the Pension Reform Act provides for a retiree representative for plans with 10,000 or more participants, which must be selected no later than 60 days from the plan’s submission of an application to the Treasury to suspend benefits. The plan sponsors are charged with selecting a retiree representative to be an advocate for the interests of the retirees and inactive participants in the application for benefit suspension process.
Suspension Conditions and Limitations. A plan in “critical and declining status” may suspend benefits only if the plan’s actuary certifies that, considering the proposed suspension, the plan is projected to avoid insolvency. The plan sponsor must determine that even though it has taken all reasonable measures to forestall insolvency, the plan is still projected to become insolvent unless the proposed benefits are suspended.
A plan in “critical and declining status” may only suspend benefits subject to the following limitations:
A participant’s or beneficiary’s monthly benefit cannot be reduced below 110% of the PBGC guarantee.
Participants and beneficiaries ages 75 and older at the date of suspension have limitations on the suspension.
Participants and beneficiaries ages 80 and older at the date of suspension are exempt from benefit suspensions.
Disability pensions are exempt from benefit suspensions.
Benefit suspensions shall be reasonably implemented to avoid plan insolvency.
The Pension Reform Act includes a list of factors that a plan sponsor must consider to ensure that the benefit suspensions are equitable, including age, number of years to retirement, and the participants’ benefit histories.
Additionally, the Pension Reform Act provides for a special benefit suspension allocation rule. First, any reductions in the plan’s benefits must be allocated, to the maximum extent possible, to benefits attributable to a participant’s service for an employer that withdrew from a plan without paying its full withdrawal liability or the full amount agreed to with the plan. Second, all other benefits not attributable to service with the withdrawn employer may be suspended. Third, benefits under the plan attributable to a participant’s service with an employer that withdrew prior to the date of the Pension Reform Act’s enactment and that has paid its full amount of withdrawal liability would be suspended only after all other benefits have been suspended to the maximum extent allowable.
Treasury Approval. To suspend benefits, the plan sponsors of a critical and declining status plan must apply to the Treasury and demonstrate that the plan meets the new statutory requirements. Concurrently with a plan’s submission of an application to suspend benefits, the plan sponsor must provide notice to participants, beneficiaries, contributing employers, and the respective union representatives. Within 30 days of the Treasury receiving the plan’s application, it must publish a notice in the
Federal Register soliciting comments. The Treasury must approve or deny the application within 225 days, or the application is automatically deemed approved. If the Treasury rejects the application, the plan may challenge the denial through judicial review procedures.
Voting and Ratification. If the Treasury approves a plan’s application to suspend benefits, the suspension is subject to a vote of all participants and beneficiaries within 30 days of the approval. The proposal for benefit suspension is rejected only if a majority of all participants and beneficiaries (not simply a majority of those who vote) reject it. The plan sponsor may submit a new application if the suspension is rejected under the vote. Suspensions of benefits will not take effect until after the vote.
Systemically Important Plans. If the participants and beneficiaries vote to reject the proposed benefit suspensions, the Treasury, within 14 days after the vote, and in consultation with the DOL and PBGC, must determine whether the plan is “systemically important,” which is defined as resulting in $1 billion or more in projected PBGC liabilities if the plan’s suspensions are not implemented. If a plan is determined to be systemically important and suspensions were not approved by the participants, the Treasury, in consultation with the DOL and PBGC, has the discretion to either accept the proposal terms or modify the benefit suspensions in some other manner projected to avoid plan insolvency.
Withdrawal Liability. Benefit suspensions are ignored for withdrawal liability calculation purposes, unless the employer’s withdrawal occurs more than 10 years after the benefit suspension’s effective date.
Oversight and Judicial Review. The Pension Reform Act includes other technical amendments regarding implementation and oversight of the benefit suspension process, including judicial review. The Treasury is directed to publish guidance to implement the benefit suspension amendments within 180 days after the Pension Reform Act’s enactment.
