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On September 14, 2018, the Pension Benefit Guaranty Corporation (PBGC) published final regulations intended to facilitate plan mergers and transfers between multiemployer pension plans under ERISA Section 4231. These regulations become effective October 15, 2018.
Employers that do not have large employee populations have for many years struggled to provide competitive health coverage to their employees. In an effort to offer the economies of scale and risk spreading that exist when large numbers of employees are covered in a single group health plan, there have been many attempts to structure health insurance arrangements (typically referred to as multiple employer welfare arrangements, or MEWAs) in which unrelated employers can participate. Unfortunately, many MEWAs have been undercapitalized, unable to provide the cost savings they promoted, and/or noncompliant with state and federal law.
As has been widely reported, including in our recent post, Congress Establishes Select Committee to Address Underfunded Multiemployer Pension Plans, a significant number of multiemployer pension plans, which provide pension benefits to more than 10 million Americans, are severely underfunded and many are facing impending insolvency. To learn more about the history of multiemployer plans, how this crisis is unfolding, the efforts that have been made to ameliorate the funding issues, and potential solutions, we recommend the U.S. Chamber of Commerce’s (Chamber’s) report, The Multiemployer Pension Plan Crisis: The History, Legislation, and What’s Next. Morgan Lewis collaborated with the Chamber in preparing this report, which the Chamber has submitted to the congressional select committee.
The Internal Revenue Service (IRS) recently announced that it is requesting comments on the possible expansion of its favorable determination letter program for individually designed plans. Specifically, the IRS is interested in public input on circumstances it should consider in its decision to accept applications for favorable determination involving amended plans, or types of plan amendments, during calendar year 2019. Currently, the IRS only accepts applications for rulings on initial plan qualification or qualification on termination.
In recent years, we have seen an unsettling trend with courts disregarding the terms of parties’ corporate asset purchase agreements and holding purchasers liable for their target’s multiemployer pension contribution and withdrawal liability under the theory of successor liability.
The potential financial impact of severely underfunded multiemployer pension plans continues to be the focus of contributing employers, boards of trustees, and the participants and beneficiaries of such plans.
On July 20, the Nashville-based United Furniture Workers Pension Fund A (the Fund) became the second multiemployer pension plan to receive the US Department of the Treasury’s approval to suspend benefits under the Multiemployer Pension Reform Act of 2014 (MPRA).
On January 20, participants in the Iron Workers Local 17 Pension Fund became the first group of participants to vote and to approve benefit reductions under the Multiemployer Pension Reform Act of 2014 (MPRA).

On December 16, the Iron Workers Local 17 Pension Fund (the Iron Workers Fund) became the first multiemployer pension plan to receive approval from the US Department of the Treasury (the Treasury Department) to cut benefits for participants as part of a proposed rescue plan under the Multiemployer Pension Reform Act of 2014 (MPRA). MPRA permits trustees of a significantly underfunded pension plan to apply to the Secretary of the Treasury Department to reduce participants’ benefits if (1) the plan is headed for insolvency within 15 years from the time the rescue plan would be implemented and (2) the trustees have exhausted all other means to avoid insolvency.