By: Julie Stich, CEBS

On December 13, 2014, Congress passed the Multiemployer Pension Reform Act of 2014 (MPRA) as part of the federal spending “cromnibus” bill, the Consolidated and Further Continuing Appropriations Act, 2015.

The multiemployer defined benefit pension reform provisions were introduced by Rep. George Miller (D-Calif.) and Rep. John Kline (R-Minn.). Here is what the passing of the law means for multiemployer plans



By far, the provision of MPRA garnering the most attention involves allowing deeply troubled plans nearing insolvency to reduce benefits, a process lawmakers call “remediation.”

The law states that plans in “critical and declining status” can temporarily or permanently suspend current and future benefits. This suspension can include benefits already accrued for vested participants and benefits already being paid to retirees and beneficiaries. Critical and declining status is defined as critical plans that are projected to become insolvent during the current plan year or the next 14 plan years (or 19 plan years if the plan has a ratio of inactive to active participants that exceeds 2 to 1 or if the funded percentage of the plan is less than 80%). There are clearly specified conditions for when suspensions may be made. Two such conditions include the inevitability of insolvency and that all other reasonable measures have been taken to avoid insolvency.  

​[Related: Trustees and Administrators Institutes]

The law also sets limits. For example, the monthly benefit of any participant or beneficiary may not fall below 110% of the PBGC’s guaranteed monthly benefit. Participants and beneficiaries aged 75 and older are afforded special protections, as are those with benefits based on disability. Benefit suspensions are to be distributed equitably among participants and beneficiaries.

​[Related: The Multiemployer Retirement Plan Landscape:
A Ten-Year Look (2003-2012)

When a plan applies to the Department of Treasury for the ability to suspend benefits, the plan must also notify participants, beneficiaries, contributing employers and employee organizations. A model notice is to be developed by Treasury, the Department of Labor (DOL) and the PBGC for this purpose. Treasury, in consultation with the DOL and the PBGC, will approve or deny the suspensions. If approved, participants and beneficiaries will be given the right to vote on the suspensions. If the vote is against the suspensions, Treasury, again in consultation with the DOL and the PBGC, can determine that the plan is “systemically important.” If so, Treasury can override the vote and approve the suspensions or call for modified suspensions. Systemically important means the PBGC has determined that its projected financial assistance payments will exceed $1 billion (to be indexed) if suspensions are not put into place. The final decision can be appealed to a court for review.

Other provisions of the law include:

  • Pension Protection Act (PPA) sunset: The law repeals the PPA’s funding rule sunset date of December 31, 2014.
  • Increased PBGC premiums for the multiemployer program: For plan years beginning after December 31, 2014, the premium is increased to $26 per participant, up from $12 in 2014. For subsequent plan years, the amount will be indexed.
  • Elective critical status: Plans that are not yet in critical status but are projected by actuaries to be in critical status within the next five plan years may elect to be in critical plan status for the current plan year. Since critical status provides trustees with the greatest flexibility for addressing funding challenges, this elective critical status would allow trustees to adopt these flexible tools (via a rehabilitation plan), including expense reductions, reductions in future benefit accruals, reductions in adjustable benefits and increases in employer contributions.
  • Mergers: The PBGC is given the clear authority to promote and facilitate the merger of two or more multiemployer pension plans if the action is in the interests of participants and beneficiaries of at least one of the plans and not detrimental to any of the participants and beneficiaries involved. Facilitation can involve training, mediation, technical assistance and communications. The PBGC is allowed to provide financial assistance to merged plans under certain circumstances.
  • Plan partitions: In a plan partition, the PBGC can remove troubled liabilities from a plan. Under MPRA, the PBGC is given the authority to order and finance a plan partition if a plan is in critical and declining status and has taken all reasonable measures to avoid insolvency and the PBGC expects that a partition will keep the plan solvent. The PBGC can provide financial assistance to the partitioned plan; this expense is to be paid exclusively from the PBGC’s fund for basic benefits guaranteed for multiemployer plans.
  • Changes to withdrawal liability payments: The law spells out certain items that may or will be disregarded when determining a plan’s unfunded vested benefits for purposes of determining an employer’s withdrawal liability—specifically, benefit reductions, PPA surcharges and increased contributions resulting from rehabilitation and funding improvement plans.
  • PBGC guarantees for preretirement survivor annuities: Until now, participants in single-employer pension plans had the assurance that, should their pension become insolvent, the PBGC would honor their spouse’s eligibility for a preretirement survivor annuity if the participant were to die before starting to draw pension benefits at retirement. Multiemployer plan participants were not given this same PBGC guarantee; the new law extends this protection.
  • Multiemployer defined benefit pension plan disclosure rules: Upon written request (and within limits), administrators must furnish to any plan participant, beneficiary, employee representative or contributing employer copies of plan documents, summary plan descriptions, trust agreements, participation agreements (to employers only), annual reports, funding notices, actuarial reports, financial reports and statements, and funding improvement and rehabilitation plans.

Several of the law’s provisions are based on recommendations from the Retirement Security Review Commission of the National Coordinating Committee for Multiemployer Plans (NCCMP). In 2013 the Commission released its proposals in a report entitled Solutions Not Bailouts, based on 18 months of discussions among more than 40 labor and employer organizations, plans and large employers that are involved with multiemployer defined benefit pension plans.

President Obama is expected to sign the bill. The federal government will eventually spell out the details of MPRA in regulations. The Foundation is following the law and will continue to alert members to any developments. Find updates on MPRA and other pension news in our pension funding resource page.

Julie Stich, CEBS

Director, Research

Favorite Foundation service/product: A tie between our research reports and the personalized research service!

Benefits related topics she’ll happily discuss: Issues involving women in retirement, ACA, innovative benefits, trends, communicating the value of benefits, work/life benefits and “fuzzy” benefits.

Favorite Foundation conference/event moment: Listening to Eric Greitens’ keynote at the 2012 US AC. Also, really likes being in a booth at whichever conference, and chatting with members.

Personal Insight: A history buff, Julie enjoys traveling to major U.S. landmarks. She is also a life-long Trekker, and will correct you if you mistakenly call her a “Trekkie.”


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