It is being reported that the participants in a multiemployer pension plan system that received “permission” from the Treasury Department under the Multiemployer Pension Reform Act of 2014 (MPRA) are suing the government challenging them on the legality of authorizing a private pension system to reduce benefits. This is believed to be the first such suit, and the plaintiffs are seeking class-action status to include all of the multiemployer participants in plans that have received such permission to date.
The plan participants, in this case, are part of the New York State Teamsters Conference Pension and Retirement Fund. Unbelievably, the cuts to the participants, which took effect last October, amount to a 29% per participant reduction. According to PlanSponsor’s Rebecca Moore, “the complaint notes that the Employee Retirement Income Security Act (ERISA) expressly prohibits a plan from reducing vested pension benefits: Until and unless a pension fund is broke, a retiree’s monthly payment may not be reduced.”
If the plaintiffs are successful, multiemployer pension systems that are designated “critical and declining” because of weak funded status, will need to seek an alternative to just slashing benefits. This is where potential legislation, such as the Butch Lewis Act, becomes even more critical. These plans can be rescued and secured through a low-interest loan program, preserving the promised benefits and extending the life of these systems for decades to come.
Plan participants in these failing pension systems have done nothing wrong. They contributed to a fund based on a promise that was made. It is disgraceful that the government has passed legislation to significantly reduce the benefit to which these workers are entitled. It is time to support the Butch Lewis Act legislation in order to restore and preserve these benefits. I can’t imagine being in my mid-70s only to have my pension dramatically slashed with little prospect of being able to make up the loss through part-time employment.