The Treasury Dept. has allowed a construction union local’s pension fund to reduce benefits for the plan’s members. Treasury on Dec. 16 notified trustees of the Iron Workers Local 17 pension fund that it had approved their application to cut benefits.
The decision is Treasury’s first approval of proposed multi-employer pension-plan benefit cuts under a 2014 statute. Multi-employer plans are common in unionized construction.
According to Treasury, the next step is a vote by participants and beneficiaries of the Cleveland-based local’s pension plan on whether to accept the reductions. Ballots were to be mailed to plan members by Dec. 31.
According to the Pension Rights Center, a Washington, D.C-based advocacy group, the ironworker local’s pension plan has 2,067 members and is projected to be insolvent within 20 years.
Pension center Director Karen Ferguson said in a Dec. 20 statement, “These cuts will devastate retirees who count on their pensions to make ends meet in retirement.”
She added, “Needless to say, retirees we’ve spoken to are consumed with worry about how they will pay their medical bills, mortgages, car payments and meet their everyday needs.”
Since May, Treasury has denied three other applications, including one from the pension fund of Iron Workers Local 16, which is based in Baltimore. (Click here for a list of all applicants and Treasury's decisions.)
The 2014 Kline-Miller Multiemployer Pension Reform Act gave Treasury the authority to approve financially troubled multi-employer plans’ requests to reduce benefits.
Notification of Treasury’s decision came in a letter from Kenneth Feinberg, a Washington, D.C., attorney, who is the department’s special master for implementing the Kline-Miller Act.
The department also is reviewing an application from bricklayers’ union Local 5’s pension plan. The local is based in Newburgh, N.Y.
Story corrected on Jan. 30 to say that the bricklayers' union Local 5 whose pension plan was under Treasury Dept. review is based in Newburgh, N.Y., not the union's Local 5 that is based in Oklahoma City.