The Internal Revenue Service posted temporary voting regulations for multiemployer pension plans in “critical and declining” status, driving the reality of pension claw backs home for union employees in the worst-funded plans.

Last year, to the surprise of most industry watchers, Congress passed the Multiemployer Pension Reform Act, which extended provisions of the Pension Protection Act of 2006, and created a new funding status—critical and declining—to account for plans expected to be insolvent in 15 years, or plans expected to be insolvent in 20 years that are less than 80 percent funded.

The law, pushed through as part of last year’s omnibus spending bill at the last minute of the Congressional session, gives plans in that status the right to reduce promised benefits to retirees, a previously prohibited measure.

But they need the Treasury Department’s approval to do so.

If Treasury approves the benefit reductions, trustees of a plan must put the proposed reductions to a vote before affected union members. The vote must take place within 30 days of Treasury approving the reductions.

If a majority of voters reject the proposed reductions, trustees can’t enact them. But the law does give Treasury the power to override the vote under certain conditions.

The new voting guidelines detail the process for that voting, which were left out in earlier guidance issued last June.

The temporary voting regulations, which stakeholders now have 60 days to comment on, say that Treasury can designate a third party service provider to administer and tally the vote.

Plan sponsors will not be allowed to distribute ballots under the temporary rules. Voters will receive the ballots, which will have a voter designation identifying code issued by Treasury, from Treasury or the assigned service provider.

Sponsors will be required to furnish a comprehensive list of affected employees and their mailing addresses, as well as any available information on participants sponsors have not been able to contact in the past.

The ballots will include individualized estimates of the benefit reductions for each specific voter, information sponsors are required to provide Treasury.

Sponsors will pay all costs associated with distribution of ballots, including postage, according to the temporary rules, which are scheduled to go into affect June 2017, and expire June 2018.

Sponsors will also be required to send electronic notification to participants that the ballot will be arriving in the mail, a measure included to assure that participants accustomed to receiving information electronically will know the ballots are coming in the mail.

Participants will have at least 21 days to cast their vote from the time they receive their ballots.

Votes will be cast one of two ways: electronically, or on line, or via a telephone vote. Votes received in any other form, such as in paper, will not be counted, according to the temporary rules.

Treasury will certify the votes seven days after the close of voting.

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Treasury issues voting rules for multiemployer plan benefit reductions

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