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 Treasury Releases Proposed and Temporary Multiemployer Pension Reform Act Regulations


6/17/2015
 
Kenneth Feinberg Appointed Special Master to Oversee Treasury Implementation of Kline-Miller Law
 
WASHINGTON – The U.S. Department of the Treasury today released proposed and temporary regulations to implement the Kline-Miller Multiemployer Pension Reform Act of 2014, as required by Congress. In Kline-Miller, Congress established a new process for multiemployer pension plans to propose a temporary or permanent reduction of pension benefits if the plan is projected to run out of money.
 
As part of Treasury’s commitment to ensuring an open and fair process, Treasury Secretary Jacob J. Lew today appointed Kenneth Feinberg as a Special Master to help provide a dedicated, impartial and informed review of applications proposing to reduce pension benefits. Feinberg will oversee Treasury’s implementation of Kline-Miller, including the review of applications to determine whether they meet the requirements set by Congress. He will also ensure that affected stakeholders have a single point of contact dedicated to this process.
 
“Multiemployer plans are a source of financial security for millions of American workers and their families,” said Treasury Secretary Jacob J. Lew. “The Treasury Department is committed to performing its congressionally-mandated responsibility to review applications to reduce benefits as provided under Kline-Miller in a manner that is transparent and fair. Ken has a proven track record of approaching these matters in an even-handed and thoughtful way, and he will oversee an open and balanced process for reviewing these applications.”
 
Feinberg is an attorney and one of the nation’s leading experts in mediation and alternative dispute resolution. His prior federal appointments have included serving as Special Master for TARP Executive Compensation following the financial crisis, Administrator of the Gulf Coast Claims Facility following the Deepwater Horizon oil spill, and Special Master of the Federal September 11th Victim Compensation Fund. He also administered victim compensation and memorial funds following the Boston Marathon bombings and the Virginia Tech shootings.
 
In accordance with Kline-Miller, a multiemployer pension plan sponsor that believes benefit reductions are needed must submit an application to the U. S. Department of the Treasury showing that reductions are necessary to keep the plan from running out of money. The temporary and proposed regulations and related guidance released today outline the process for multiemployer pension plans to apply for a reduction of pension benefits. Participants in these plans will be notified of any application to reduce benefits and will have the opportunity to comment on the application.
 
Kline-Miller requires that the application be reviewed by the Treasury Department, in consultation with the Pension Benefit Guaranty Corporation (PBGC) and the Department of Labor, to determine whether it meets the requirements set by Congress.  If it does, the application will be approved, and plan participants and beneficiaries will then have the right to vote on the proposed benefit reductions before they can take effect.
 
Most of the more than 10 million participants in multiemployer pension plans will not see their benefits reduced. According to PBGC, about 10 percent of participants are in plans that are projected to run out of money at some point in the future.  Many of these plans are taking other actions to postpone plan insolvency or improve their financial condition.
 
Under Kline-Miller, multiemployer pension plans can consider reducing benefits only after they have taken all reasonable measures to address their financial problems. Even within plans that seek to reduce benefits, some plan participants cannot have their benefits reduced, including retirees 80 years of age and older (partial protection beginning at age 75), and participants receiving disability benefits.
 
In order to ensure that public input is fully considered regarding the application review process, Treasury does not expect to approve applications until the proposed and temporary regulations are finalized. Any plan that applies prior to finalization of the proposed and temporary regulations may have to submit a new application or revise proposed suspensions to take account of any differences between the proposed and temporary regulations and the final regulations.
 
The proposed regulations are available online here and the temporary regulations are available online here.  The related revenue procedure, detailing the application requirements, is available online here. The public comment period ends August 18, 2015. Additional information is available at www.treasury.gov/mpra.
 
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