About half of the nearly 2,000 participants in the Iron Workers Local 17 pension fund will see future retirement benefits cut, beginning with the checks issued to some retired workers this week.

The news comes after the Treasury Department approved proposed benefit suspensions allowed under the Multiemployer Pension Reform Act of 2014.

Under the benefit suspensions, 52 percent, or 1,029 of the plan’s 1,995 participants, will not have retirement benefits cut.

More than 30 percent of participants will see benefits cut by at least 20 percent: 30 participants will see extreme cuts between 50 and 60 percent; 115 participants will see cuts between 40 and 50 percent; 191 will see cuts between 30 and 40 percent; and 265 will see cuts between 20 and 30 percent.

Another 168 participants will see benefits cut by 10 percent or less. The suspension will reduce the average monthly benefit for all participants by 20 percent, from $1,401 to $1,120.

In approving the benefit suspensions under MPRA, the Treasury Department said the plan now has a greater than 50 percent chance of maintaining solvency for the next 30 years.

A vote pitting workers v. retirees

The Multiemployer Pension Reform Act, a controversial law unexpectedly passed as a last minute rider to the 2015 budget and signed into law by President Obama, allows collectively bargained plans that are insured by the Pension Benefit Guaranty Corp. and facing imminent insolvency to apply for benefit reductions, under certain conditions.

In 2015, the Iron Workers Local 17 plan was designated as being in “critical and declining” status, a new designation created by MPRA to account for plans expected to be insolvent in 20 years or sooner. The Local 17 pension fund was projected to be insolvent by 2024, when the fund would be unable to pay any retirement benefits.

Prior to the cuts, the Cleveland-headquartered union’s pension held $85 million in assets and $263 million in liabilities, amounting to a 32 percent funding level. Current retirees account for 80 percent of the liabilities.

Trustees of the pension fund filed an initial application for benefit suspensions in December of 2015, which was withdrawn and ultimately resubmitted in July of 2016.

Under MPRR, retirees age 80 and over and retirees on disability cannot have retirement benefits cut.

Retirees age 75 to 79 suffer less aggressive benefit suspensions under the law. Some of the retirees in the Iron Workers’ plan who will see the most aggressive cuts have been paid aggregate benefits greater than their contributions to the plan over their career, and about 30 retirees receiving between $4,000 and $5,000 in monthly benefits will see the steepest reductions, according to reporting in Chief Investment Officer magazine.

MPRA also requires union members to vote on benefit suspensions approved by the Treasury Department.

Of the 1,938 members of the Iron Workers Local 17 pension, 936 cast a vote: 616 votes were in favor of the benefit suspensions; 320 were against the suspensions. All told, 16.51 percent of eligible members voted against the suspensions.

Specific data on the participants that voted for or against the suspensions is not available, as voter anonymity is required under MPRA. But some have speculated that the vote pitted the interests of working participants against retirees already receiving benefits.

According to papers filed by the plan’s trustees with the Treasury Department, there were 1,078 participants receiving retirement benefits as of May 2016: 304 were younger than 75 and were subject to the most aggressive cuts. Another 83 were between age 75 and 79 and exposed to lower cuts.

There were 138 were over age 80 and 351 participants on disability—their benefits could not be cut under MPRA.

About 53 percent of the pension’s retirees were subject to limited or no benefit suspensions under MPRA.

First of many?

According to the Pension Rights Center -- a non-profit that advocates for retirees’ rights and urged the Treasury Department to reject the application to suspend ironworkers' benefits -- there are about 70 other collectively bargained plans that are in critical and declining status, and eligible to apply for benefits cuts.

Four other applications for benefit suspensions are currently under review by the Treasury Department. Another four applications have been denied, and two pensions have withdrawn applications.

In a comment letter to Treasury prior to its approval of the suspensions, the Pension Rights Center noted that the Iron Workers’ Local 17 existing collective bargaining contracts do not require new contractors to pay into the pension fund.

“If new money doesn’t come into the Fund and its projections are wrong, participants who voted for the cuts are sure to face future cuts of their own,” according to a statement issued by the Pension Rights Center.

Trustees of the Local 17 fund cast members’ vote to approve the suspensions as the better of two bad options.

“The Trustees 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,” according to a statement on the Iron Workers’ Local 17 website.

The reductions will reduce the fund’s “overall liability and improve its financial solvency over the long term,” the trustees said in a statement.

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Iron workers&rsquo; union votes to suspend pension benefits under MPRA

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Iron workers’ union votes to suspend pension benefits under MPRA