On December 16, 2014, President Obama signed the Consolidated and Further Continuing Appropriations Act, 2015 (Public Law 113-235). When the law is available online, it will be accessible from the Public and Private Laws page on the Government Publishing Office website.
On December 13, 2014, the Senate passed the "Multiemployer Pension Reform Act of 2014" (MEPRA) as part of the Consolidated and Further Continuing Appropriations Act, 2015, the omnibus government funding bill.1 The House of Representatives had previously approved the bill on December 11, 2014. President Obama is expected to sign it into law.
MEPRA reflects many of the recommendations included in Solutions not Bailouts, the Report issued by the Retirement Security Review Commission of the National Coordinating Committee for Multiemployer Plans (Commission Report).2 The one receiving the most attention is the provision that gives trustees of deeply troubled plans the ability to help their plans avoid insolvency by reducing some benefits (including benefits in pay status), subject to various safeguards and requirements.3
This Bulletin briefly describes the key provisions of MEPRA, which generally become effective for plan years beginning on or after January 1, 2015.
The Pension Benefit Guaranty Corporation (PBGC) multiemployer premium rate will double to $26 per participant in 2015. Thereafter, it will be indexed to national wage growth.
Plans in critical status (commonly referred to as plans in the "red zone") that also are in "declining status" may reduce some benefits, including benefits in pay status, subject to various requirements and limitations. This is referred to as "suspension" of benefits. As the funded status of a plan improves, suspended benefits could be reinstated. Key elements of suspension, which becomes effective on the date the bill is signed by the President, include:
The PBGC is given specific authority to help "facilitate" mergers upon request. The existing partition rules have been eliminated and replaced with an entirely new structure. For plans in critical and declining status where benefit suspension alone will not prevent insolvency, the PBGC may approve a partition to enable benefit suspension to work for the remaining part of the original plan. The PBGC must certify that its ability to meet its financial assistance obligations to other plans is not impaired by providing merger financial assistance to a plan or approving a partition of a plan.
Among the other changes included in MEPRA are the following:
The implementation of any new legislation raises many interpretive and operational issues and, in MEPRA, this is compounded by the immediacy of the effective dates. Segal consultants can work with fund counsel to help trustees understand the new legislation and the issues and options that it might present. If you have any questions about the content of the Bulletin, please contact your Segal consultant or the nearest Segal office.
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As with all issues involving the interpretation or application of new laws, trustees should rely on the advice of fund counsel in interpreting and applying the Multiemployer Pension Reform Act of 2014.
1 The MEPRA legislative language is on the following page of the House Education and the Workforce Committee’s website. The text of MEPRA is designated as Division O of the larger omnibus funding bill.
2 The Commission Report is available on the following page of the NCCMP website.
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