The Treasury Department has rejected an ailing multiemployer pension plan’s application to trim members’ benefits, a move that drew criticism from construction contractors and praise from organized labor and its congressional allies, according to an ENR report. It also sparked calls from both sides to seek legislative remedies.
ENR said that the May 6 decision by Kenneth R. Feinberg, the Treasury-appointed special master overseeing such multiemployer pension applications, deals with an application from the Central States, Southeast and Southwest Areas. The ruling is Treasury’s first under a 2014 pension law that allowed multiemployer plans to petition Treasury to reduce benefits.
Multiemployer plans are common in construction’s unionized sector. The Central States Fund, established in 1955 for teamsters’ union truckers, now includes some members from the construction industry.
The fund said in a Feb. 18 letter to U.S. Sens. Gary Peters and Debbie Stabenow—both Michigan Democrats—that its annual benefits payments exceed contributions by more than $2 billion, according to ENR. The fund also said that it is projected to become insolvent in about 10 years and added that it needs $11 billion to avoid insolvency and meet long-term obligations
Feinberg said in a letter to the fund that its application failed to meet the requirements set forth in the 2014 Multiemployer Pension Reform Act. For example, he said that the reductions would not ensure the plan’s solvency and that the proposed reductions benefits would not be distributed equitably among members.
Marco Giamberardino, the National Electrical Contractors Association’s executive director for government affairs, said, “The difficult decision the Central States trustees made would have ensured long-term solvency of the...pension fund, but Treasury’s decision creates even greater uncertainty over the viability of their plan going forward.”