On February 9, the US Department of the Treasury (Treasury) released additional proposed regulations implementing the benefit suspension provisions of the Multiemployer Pension Reform Act of 2014 (MPRA).
The proposed regulations address MPRA’s rule for multiemployer plans in “critical and declining” status that includes benefits attributable to a participant’s service with any employer that has (1) withdrawn from the plan in a complete withdrawal, (2) paid its full withdrawal liability, and (3) assumed liability, pursuant to a collective bargaining agreement, for providing benefits to participants and beneficiaries that is equal to any benefits for such participants and beneficiaries reduced as a result of the financial status of the plan.
Importantly, these proposed regulations do not affect the larger community of multiemployer pension plans or employers that contribute to them. They are exclusively important to the Central States, Southeast and Southwest Areas Pension Fund (CSPF) and its largest contributing employer, United Parcel Service Inc. (UPS).
The proposed regulations trace their genesis to a 2007 labor agreement between UPS and the Teamsters, in which it was agreed that UPS could withdraw from the CSPF for a lump sum payment of $6.1 billion. As part of that agreement, UPS established a new jointly trusteed single-employer pension plan for UPS’s employees who were previously covered under the CSPF. UPS also guaranteed that it would provide benefits to participants and beneficiaries that were equal to any benefits reduced as a result of the financial status of the CSPF (referred to as the “make-whole agreement” in the proposed regulations).