The Multiemployer Pension Reform Act of 2014 (MPRA) established a new process for multiemployer pension plans to propose a temporary or permanent reduction of pension benefits if the plan is projected to run out of money. Trustees of a multiemployer pension plan that is in critical and declining status, meaning it is projected to run out of money in less than 15 years, have the option to seek a reduction of benefit payments under the plan, if the Treasury Department determines that certain requirements are met. For the small subset of multiemployer plans facing insolvency, applying for benefit suspensions under MPRA was the last and only hope for keeping the plan operating indefinitely for the benefit of its participants. While MPRA benefit cuts can be painful to participants, benefits would still be higher than if the plan was taken over by the Pension Benefit Guaranty Corporation (PBGC), and even more uncertainty if the PBGC itself went insolvent. The American Rescue Plan Act of 2021 (ARPA) established a special financial assistance program to enable eligible multiemployer plans to pay benefits without reduction for many years into the future. Importantly for plans that reduced benefits under MPRA, this law provides funds to reinstate previously suspended benefits. ARPA also addresses the solvency of PBGC’s Multiemployer Insurance Program, which was projected to become insolvent in 2026.
News and Updates | MPRA Background
Applications for Benefit Suspension, Department of Treasury, ongoing
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