For the past several months, we have been reporting on the application filed by the Central States Southeast and Southwest Areas Pension Fund  (“Central States”) to the Department of Treasury to reduce “core” benefits to participants.    This extraordinary remedy is permitted by the  Kline-Miller Multiemployer Pension Reform Act of 2014 (“Kline-Miller Act”).

Public hearings conducted by Special Master Feinberg have revealed that the proposed cuts can be between 39.9% and 60.7%.

Special Master Feinberg must decide by May 7th whether to approve the reductions to the Fund which has approximately 400,000 participants.

There has been opposition expressed by retirees as well as retiree groups. A group of fifty United Senators has also written to the Secretary of the Treasury indicating their concern with the proposed reductions.

As the multi-employer pension fund world awaits a decision, a fifth multi-employer pension fund, the Iron Workers Local Union 16 Pension Fund located in Baltimore, Maryland filed its application to the Treasury Department to reduce core benefits.

These actions highlight the risk that employers contributing to multi-employer funds are now facing.  It is not beyond the realm of possibility that the burden of providing the promised benefits will fall even more heavily upon employers.

We suggest that employers become proactive in considering strategies to exit these plans in future negotiations.

Clearly the situation will not get better.

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Photo of Paul A. Friedman Paul A. Friedman

Paul A. Friedman is a principal in the White Plains, New York, office of Jackson Lewis, P.C. His legal practice is focused on ERISA litigation, labor and Multiemployer Pension Plan Amendments Act (MPPAA) arbitrations and is well grounded in his earlier experience as…

Paul A. Friedman is a principal in the White Plains, New York, office of Jackson Lewis, P.C. His legal practice is focused on ERISA litigation, labor and Multiemployer Pension Plan Amendments Act (MPPAA) arbitrations and is well grounded in his earlier experience as outside counsel to numerous union pension funds. During years of litigating cutting-edge ERISA issues before the U.S. Department of Labor, U.S. district courts, bankruptcy courts and courts of appeal on behalf of employers, plan sponsors and ERISA plan fiduciaries, Paul sometimes finds his own prior landmark decisions cited to him.

For Paul, MPPAA has all the excitement of a trial – it is an intricate and counter-intuitive statute. He has first chair experience in more than 40 jury trials and has handled hundreds of arbitrations and bench trials on all aspects of ERISA. ERISA knows no organizational bounds and so Paul has defended cases for clients representing many industry sectors, including life sciences, financial services, energy, hospitality, and construction.

Paul has served as litigation counsel for numerous multi-employer and single-employer employee benefit plans in ERISA matters, where he:

  • Devotes his practice mainly to the defense of employers, plan sponsors, fiduciaries, and financial institutions against claims brought under ERISA by benefit funds, plan beneficiaries, and the U.S. Department of Labor. He handles issues related to breach of fiduciary duties, excessive plan expenses, benefit entitlement issues retiree health benefits, and functional fiduciary liability
  • Successfully represents companies as plan sponsors against claims of participants and qualified beneficiaries for violations of COBRA
  • Defends employers that have been assessed withdrawal liability under MPPAA or have experienced increased liability due to the passage of the Pension Protection Act of 2006
  • Performs employee benefits due diligence for buyers or sellers in mergers and acquisitions transactions, filling a knowledge gap between labor and financial counsel, ensuring that buyers and sellers price-in or mitigate against ERISA violations and potentially millions of dollars in liabilities
  • Conducts comprehensive strategic reviews of clients’ current operations to avoid or mitigate against exposure to ERISA enforcement and risk of civil and criminal charges brought against company executives, principals, and trustees

In the last decade, he has developed a business model for use by businesses across a broad spectrum of ERISA issues from the beginning of the ownership of these companies to their sale. He also provides benefits guidance to Mergers and Acquisitions counsel in complex transactions.

Outside of work, Paul is an ardent Civil War and World War I buff. He expressly enjoys traveling to Europe and touring World War I battlefields.