The Ax Falls – Central States Begins Process to Reduce Pension Benefits
In a letter to all participants (both Teamsters currently drawing a pension and Teamsters eligible to draw a pension in the future), the Central States Pension Fund formally put participants on notice that Central States is contemplating “significant and painful” reductions in retirement benefits for both active workers and retirees.
These reductions are being implemented under the Multiemployer Pension Reform Act of 2014 (“MPRA”), which changed the law to enable endangered pension funds to cut benefits in order to survive. Central States has long been the poster child for trouble multiemployer pension plans, and it should come as no surprise that it is one of the first major funds out of the gate to use the toolkit provided in the Multiemployer Pension Reform of 2014 to start down the benefit reduction road.
Central States will not be able to finish their jumping through the legal hoops to implement benefit reductions until approximately the summer of 2016. While this may seem relatively soon, employers should keep in mind that under the terms of the MPRA, employers will not be able to take advantage of any reduced withdrawal liability as a result of these benefit reductions for 10 years, meaning that there should be no rush to withdraw, although this development may signal some light at the end of the tunnel.
A copy of Central States’ letter can be found here.