For Immediate Release
July 23, 2015
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Multiemployer Plans Closely Watching MPRA—3% of Funds Are Interested in Reducing Benefits
Brookfield, Wisconsin—Six months after the passing of the Multiemployer Pension Reform Act of 2014 (MPRA), an International Foundation of Employee Benefit Plans survey finds multiemployer plans are closely monitoring and discussing the law, but few are taking any drastic measures.
MPRA was passed to assist multiemployer plans from becoming insolvent. The law allows deeply troubled plans to temporarily or permanently suspend current and future benefits, increases premiums payable to the Pension Benefit Guaranty Corp. (PBGC), and allows the PBGC to facilitate multiemployer plan mergers and to order and finance plan partitions.
The survey found that more than nine in ten funds have been closely monitoring MPRA developments and all but 4% have begun discussions on the potential impact.
Funds were split in their response on the overall impact of MPRA—34% anticipate MPRA as a whole will have little to no impact while 23% say it will be very or extremely impactful. The majority of the funds, 81%, anticipate the PBGC premium increase (from $12 per-participant in 2014 to $26 in 2015) will be somewhat, very or extremely impactful.
Of the multiemployer pension plans responding to the survey, currently 63% are in the green safe zone, 16% are in the endangered yellow zone and 1% is in the seriously endangered orange zone. Additionally, 14% are in the traditional critical status red zone, while 6% are in the new critical and declining status.
MPRA states that plans in critical and declining status can temporarily or permanently reduce current and future benefits if such action will ensure the plan's continued solvency. Called remediation or suspension, 3% of the funds surveyed are interested in applying for this action.
When asked about other measures made possible by MPRA, few plans anticipate taking action. MPRA allows troubled plans to merge with better-funded ones, something just 5% of respondents said they were interested in. Two percent of funds are interested in early critical status elections, an action that allows them to adopt flexible tools to address funding challenges.
"Half of funds report that they have received questions from their participants expressing concern about the law," said Julie Stich, CEBS, director of research at the International Foundation. "Going forward plan sponsors will be closely watching the developments surrounding MPRA and continually evaluating their plan to ensure the best interests of their plan participants."
Conducted in May 2015, Impact of the Multiemployer Pension Reform Act: 2015 Survey Results had 216 responses from funds representing a wide range of industries and size. For the full report findings visit www.ifebp.org/MPRA2015.
The International Foundation of Employee Benefit Plans is the premier educational organization dedicated to providing the diverse employee benefits community with objective, solution-oriented education, research and information to ensure the health and financial security of plan beneficiaries worldwide. The Foundation has more than 33,000 multiemployer, corporate and public sector members representing over 25 million lives. For additional information, visit www.ifebp.org.