​On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law.  The key provisions for multiemployer pension plans are outlined here and summarized in more detail in the link below.  In addition, Horizon Actuarial co-sponsored a webinar with Groom Law Group, NCCMP, and Segal Consulting to discuss the relief measures on Tuesday, March 23rd at 12:00PM EDT. Click here to view a recording of the webinar.

• Special Financial Assistance Program.  ARPA creates and appropriates funding for a financial assistance program for distressed multiemployer plans.  The program is expected to provide approximately $86 billion in relief to plans that meet the eligibility criteria.  These plans include plans in critical and declining status, plans in critical status that meet certain other conditions, plans that previously suspended benefits, and a small group of plans that recently became insolvent.  In general, the assistance is designed to ensure these plans can continue to meet their full benefit obligations for at least the next 30 years.

 

• Funding Relief.  ARPA also provides temporary funding relief for healthier plans similar to the relief that was provided in the wake of the Great Recession.  This relief includes a zone status delay, funding improvement period and rehabilitation period extensions for plans in endangered/critical status, as well as expanded asset smoothing and funding standard account amortization extensions for certain COVID-19 related experience losses.

 

• PBGC Premium Increases.  ARPA also includes a modest increase in the per-participant PBGC premiums starting in 2031.  The current per-participant premium of $31 for 2021 will increase each year with inflation until 2031 at which time it will increase to $52 per participant.

 

• Notable Exclusions.  Previous proposals included discount rate limitations, changes to funding rules other than those noted above, changes in the amount of benefits guaranteed by the PBGC, and provisions for composite plans.  None of these provisions were included in ARPA.

 
A more detailed summary can be viewed at the link below.

This is the ninth edition of the survey for which we have published a report.  Prior editions can be found below:

The United Association of Journeymen and Apprentices of the Plumbing, Pipefitting and Sprinkler Fitting Industry of the United States and Canada (United Association), Mechanical Contractors Association of America, Inc. (MCAA), and Horizon Actuarial Services, LLC have partnered to conduct an analysis of the multiemployer pension reform proposal released by Senators Charles E. Grassley (R-IA) and Lamar Alexander (R-TN) on November 20, 2019.

This analysis focuses on two key changes in the proposal – increases in PBGC premiums and limitations on discount rates, and their implications for UA multiemployer plans. Each of the proposed changes would significantly increase contribution requirements.  The report also opines on the proposed changes to the calculation of employer withdrawal liability.
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The report can be viewed below.

Please contact your Horizon Actuarial consultant if you have questions about the report or how the proposal might impact your plan.

On November 20, 2019, Senators Charles E. Grassley (R-IA) and Lamar Alexander (R-TN) released a proposal to address the immediate financial challenges faced by a subset of multiemployer pension plans and also to secure the multiemployer pension system over the long term — the “Multiemployer Pension Recapitalization and Reform Plan.”  The proposal generally follows the outline of the reform principles considered by the Joint Select Committee in November, 2018. 

​While the proposal does provide significant relief for some of the most troubled multiemployer plans via enhanced liability partitions to the PBGC and increases in PBGC guaranteed benefits, it also imposes strict funding standards that would be harmful for participants and employers in the majority of plans that are likely to remain healthy under current law.
 
Our high-level summary of the proposal is linked below.

​Please contact your Horizon Actuarial consultant for more details including an analysis of how the proposal could affect your plan.

 

The United Association of Journeymen and Apprentices of the Plumbing, Pipefitting and Sprinkler Fitting Industry of the United States and Canada (United Association), Mechanical Contractors Association of America, Inc. (MCAA), and Horizon Actuarial Services, LLC have partnered to conduct a study of multiemployer pension plan benefit and contribution levels from the 1970s to today.

The purpose of the study is to educate policy makers about the significant actions that plans have taken to increase contributions, decrease benefits, or both, and to highlight the fact that current active participants are bearing the burden of these changes.

Maintaining active participation is crucial to the survival of multiemployer plans, and policy reforms that place additional, undue, burden on current active participants may further erode the system and diminish benefit security for current inactive vested participants, retirees, and beneficiaries.

The study uses a random sample of seven United Association Pension Plans to show that contribution rates have increased significantly over time while the value of the benefits provided has decreased over time.  These changes have disproportionately affected current active participants, and policy makers should be mindful of these inequities when considering potential multiemployer pension reform legislation.
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The report can be viewed below.