Multiemployer Pension Reform Act of 2014
Long-awaited legislation focused on multiemployer pension plans was signed into law by President Obama on December 16, 2014. The Multiemployer Pension Reform Act of 2014 brings significant changes to the current law that governs multiemployer pension plans offering Plan sponsors both new opportunities and added challenges.
Key changes included in the Act include the following:
Permanent extension of several Pension Protection Act (PPA) provisions that were set to expire at the end of 2014
New funding status labeled “critical and declining status.” Plans that are projected to be insolvent within the next 15 years are eligible for the new funding status
Plans in “critical and declining status” may take action to suspend benefits for both actives and retired participants. Any suspension of benefits would require approval by the Department of Treasury and when possible, participant ratification.
Increase in PBGC premiums from the $12 per participant to to $26 per participant beginning in 2015, with a provision allowing for future increases
Greater authority provided to PBGC to facilitate plan mergers, and in some instances to provide financial assistance to facilitate such mergers
Permission granted to the Pension Benefit Guaranty Corporation (PBGC) to approve a partition without a bankruptcy requirement
Most of the Pension Reform Act’s provisions become effective for plan years beginning January 1, 2015 and thereafter. The implications of these rules can be significant for pension plans. Trustees are encouraged to talk with plan professionals about the impact of this new legislation on their plans.