WASHINGTON, DC, April 15: In response to the US Department of Treasury (Treasury), Internal Revenue Service, and Pension Benefit Guaranty Corporation’s (PBGC) requests for information from the public to assist with future rulemaking under the Multiemployer Pension Reform Act of 2014 (MPRA), Morgan Lewis has submitted comments to the Agencies urging the development of streamlined and common-sense approaches that provide trustees of troubled pension plans with the maximum authority to utilize the legislation’s new tools. Morgan Lewis serves as employer-appointed co-counsel to the boards of trustees of numerous multiemployer defined benefit plans in various industries, and separately, advises many employers that participate in multiemployer plans.
Signed into law in December 2014, MPRA makes sweeping changes to the rules governing multiemployer pension plans and the tools available to troubled plans to take corrective action to avoid insolvency. Treasury, in consultation with the PBGC and the US Department of Labor, is charged with primary oversight of most of the provisions of MPRA. Prior to issuing any regulations under MPRA, the PBGC requested comments on matters that may be addressed in future PBGC guidance on implementing the new partition and merger provisions under MPRA. Separately, Treasury requested comments on issues that may be addressed in future Treasury guidance on implementing the new Critical and Declining zone status and suspension of benefit provisions applicable to troubled plans under MPRA.
Many multiemployer pension plans are in perilous financial condition and in need of immediate action if they are to be saved. Morgan Lewis urged Treasury and PBGC to expeditiously develop and release regulations that provide trustees with the maximum authority and discretion to utilize the partition, merger, and suspension of benefit tools available to troubled plans under MPRA. If many of these plans do not take quick action, the firm explained in its comments, there could be many large plans that will be unable to avoid insolvency. Plan insolvency will require the PBGC to provide financial assistance to plans by providing benefits at reduced levels. At the same time, given the frailty of the PBGC’s finances, the largest troubled plans, especially if they are first in line for assistance, will likely empty the Agency’s multiemployer guarantee fund. Additionally, further delay in the process only means plans will require deeper suspensions or extreme partitions to avoid insolvency.