Late December 2022, President Biden announced what is being called historic relief to protect the pensions of 350,000 Central States Pension Fund workers and retirees. At an amount of $36 billion, it is the largest award of federal financial support intended to support worker and retiree pension security. The funds came from the American Rescue Plan’s Special Financial Assistance Program, which provides security for over 200 distressed multiemployer pension plans and the associated estimated two to three million workers’ pension benefits to ensure the plans remain solvent in order to pay workers’ full benefits through 2051.
Teamster Workers and Retirees Pensions Protected
The Central States Pension Fund is primarily comprised of Teamster workers and retirees serving in roles ranging from truck drivers and construction workers to food processors and warehouse workers. Without this recent award these workers and retirees would have experienced an estimated 60% reduction in the pension benefits they had already earned. Now, with this historic relief, workers and retirees from the states of Florida (19,000), Illinois (25,000), Indiana (20,000), Minnesota (19,000), Missouri (28,000), Tennessee (14,000) and Texas (22,000) are assured of receiving their full benefits through 2051. Many of these individuals rely heavily on their pensions to support them during their retirement years.
The Multiemployer Pension Reform Act
Before the American Rescue Plan was signed by President Biden on March 11, 2021, the Multiemployer Pension Reform Act enabled 18 multiemployer plans to cut worker and retiree pension benefits, if necessary to remain solvent. Now, through the American Rescue Plan’s Special Financial Assistance Programs, workers whose benefits were reduced are eligible to have their benefits restored. This program is regarded as the most significant policy for helping multiemployer pensions remain solvent since the Employee Retirement Income Security Act (ERISA) was enacted.
Best Practices Multiemployer Pension Plan Administration
Even with this legislative protection, it is important that trustees and administrators of multiemployer pension plans adhere to best practices in the plan’s administration. To ensure this, many plans opt to hand over this function to a third-party administrator (TPA) experienced in pension administration. When selecting a TPA to manage a pension plan’s administration, seek out one, like Amalgamated Employee Benefits Administrators, that can provide end-to-end services encompassing:
- Maintenance of accurate records relating to participant benefits, eligibility, and payment history;
- Maintenance of full financial records;
- Processing of pension applications in compliance with fund benefit rules;
- Assistance in government filing preparation;
- Management of all billing, collection and reconciliation of monthly employer contributions or withdrawal liability payments, data maintenance, delinquency, and standard reporting;
- Management of member inquiries relating to eligibility, application status, contributions, pension payments and annual pension statements;
- General plan administration, coordination, and communication with other plan professionals;
- Appeals management including documentation, presentation, recommendations, receipt of final determination and communication of resolution; and
- Maintenance of plan records including plan documents and amendments, SPDs/SMMs/benefit overviews, trustee meeting minutes, trust agreements, rate/fee adjustments.