This is another in our series addressing the continuing deterioration of multi-employer defined benefit pension plans.

Regardless of the identity of the next tenant of the White House, a major item on the new administration’s domestic agenda must be curbing the continuing deterioration of multi-employer defined benefit pension plans. Hopefully any new legislation will approach the problems differently than did the Kline-Miller Multiemployer Pension Reform Act of 2014 (the “MPRA”).

In the waning moments of the 2014 lame duck Congress, an Omnibus Bill was passed containing the MPRA. This legislation was intended to provide a “quick fix” to the problems confronting multi-employer pension plans by permitting them, for the first time since the passage of ERISA, to reduce core benefits.  Those funds were obligated to file applications to the Department of the Treasury seeking the relief sought and providing reasons.

In the two years since the passage of the MPRA, nothing has happened except expenditures of a great deal of money by multi-employer funds to obtain the relief from the Treasury and a hue and cry from Senator who now regret having voted in favor of legislation that has caused such human suffering. They then penned a common letter to the Treasury Department demanding that the lengthy and costly application by the Central States and Southeast Pension Fund be denied.  Central States’ application was subsequently denied.

Although other pension funds have also attempted to obtain the relief permitted under the MPRA, none of those applications have been granted. The application filed by the Iron Workers Local 17 Pension Fund which sought cuts of monthly pension benefits for some retirees of up to 50% was withdrawn with the fund submitting a revised application.  Applications were recently filed by the New York State Teamsters Conference Pension and Retirement Fund and the Bricklayers and Allied Craftworkers Local 5 New York Retirement Fund.

Based upon the finding by the Treasury Department that the assumptions used by Central States in the actuarial projections contained a bias because the projected 7.5% annual investment rate of return was “significantly optimistic,” it is unclear how these new applications will be addressed by the Treasury Department.

Concurrently, Congress has come up with a new iteration to bail out the multi-employer funds in the form of a “composite plan.” The composite plan has been described as being a newly created defined contribution plan which Congress envisions as being the successor to existing multi-employer plans.  Perhaps in an effort to eliminate opposition by the PBGC, these composite plans would not participate in the PBGC’s defined benefit plan insurance.

A positive note is that at least one member of Congress is sounding the alarm about a stealth passage of a pension revamp. Congressman Joseph Courtney of Connecticut has warned about passage of some pension “reform” in the post-election lame duck session and has specifically referred to the manner in the MPRA was passed in 2014 as part of an omnibus bill.

We continue to monitor the situation.

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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.