The United Food and Commercial Workers International Union (“UFCW”) National Pension Fund (which, according to its website has over 500 contributing employers and over 100,000 active participants) has adopted a new rule effective as of the plan year ending on June 30, 2014 which increases the risk that a participating employer will unknowingly create a partial withdrawal liability obligation for itself.

An employer participating in any multiemployer pension plan needs to be aware of when a reduction in force may trigger a partial withdrawal (which obligates the employer to make withdrawal liability payments on top of the contributions already being made). In short, ERISA § 4205(a) sets forth three scenarios for a partial withdrawal, including the 70% Decline Rule (the other two scenarios, which are not discussed further here, involve the “partial cessation of the employer’s contribution obligation” in the context of either a facility take-out or a bargaining unit take-out). Under the 70% Decline Rule, a partial withdrawal can occur when the employer’s contribution base units decline by at least 70% and remain at or below that level over a three-year testing period.

However, under the seldom utilized ERISA § 4205(c), a multiemployer pension plan that covers mostly employees in the retail food industry may be amended to provide that a partial withdrawal is triggered by only a 35% decline in contribution base units instead of a 70% decline. This is the provision that the UFCW National Pension Fund has taken advantage of, and which may ensnare some of its unsuspecting participating employers.