Applying for a suspension under the Multiemployer Pension Reform Act (MPRA) is a lengthy and complicated process. This article describes the steps one pension fund went through to apply for benefit suspensions.
Michael Reilly, ASA, published this article in the May 2019 issue of Benefits Magazine.
The U.S. Treasury Department has denied the application to suspend benefits under the Multiemployer Pension Reform Act of 2014 that was submitted by the Automotive Industries Pension Fund in September 2016. Treasury noted in its denial letter that assumptions regarding mortality, Joint and Survivor election percentage by married participants, and the probability of benefit commencement by terminated vested participants over the age of 70 were considered not reasonable.
The Automotive Industries Pension Fund is projected to become insolvent in 2030 without the suspensions. As of January 1, 2016, the Plan had an unfunded benefit liability of over $700 million, was 60.7% funded, and covered over 25,000 participants.
As of the date of this posting, Treasury has received applications for benefit suspensions from a total of 15 multiemployer pension plans since MPRA took effect. Five have been denied, one has been approved, three have been withdrawn, and six are pending.