Members of an Iron Workers union local’s pension plan have voted to cut their pension benefits, the first such action under a 2014 federal law allowing financially ailing multiemployer plans to seek federal approval for benefit reductions.
Trustees of the Iron Workers’ Local 17 pension plan, based in Cleveland, said on Jan. 27 that votes cast in the election were two-to-one in favor of the reductions, which are projected to begin with the Feb. 1 pension checks. Multiemployer plans are common in unionized construction.
The Treasury Dept., which oversees applications under the 2014 Kline-Miller Multiemployer Pension Reform Act, certified the results of the election. In December, Treasury approved the Local 17 plan's application to trim benefits, subject to a vote of the plan's participants.
The Pension Rights Center, a Washington, D.C.-based advocacy group, said that the reductions would fall heaviest on a group of retirees who took early retirement, including those who retired before age 62. Those plan members would see reductions of as much as 60% from current levels, said Karen Ferguson, the center’s director.
Ferguson said in a statement, “These cuts are particularly unfair and cruel to 336 of the fund’s retirees who labored for decades constructing Cleveland’s skyscrapers.” The center also said that more than half of the pension plan's 1,938 participants did not vote.
Treasury is now reviewing two other multiemployer pension plans’ applications for trimming benefits. (See list.) One is a construction-industry plan, for members of Bricklayers Local 5 in Newburgh, N.Y.
Treasury on Nov. 3 denied the benefit-reduction application from the Iron Workers Local 16 pension fund, in Towson, Md.
The Bricklayers Local 7 plan, Austintown, Ohio, on Jan. 6 withdrew its application for benefit cuts.
The Local 17 plan’s trustees said in a statement that they “appreciate that a majority of the participants understood that the suspension plan, while reducing their pensions now, is a better alternative than letting the pension fund become insolvent.” They projected that the insolvency would take place in 2024.