WASHINGTON – In a decision affecting more than 2,000 workers, retirees, spouses and widows, the Treasury Department announced on Friday that it had approved Iron Workers Local 17 Pension Fund’s application to cut retiree pensions under the Multiemployer Pension Reform Act (MPRA). This decision marks the first time the Treasury Department has allowed retiree pension benefit reductions to move forward; four other applications have been rejected.
“These cuts will devastate retirees who count on their pensions to make ends meet in retirement. We’re extremely disappointed that the Treasury Department approved these cuts, and we’re not sure why they did it,” said Karen Ferguson, the Center’s Director. “We’re puzzled as to why the agency did not provide specific reasons for approving the application. Needless to say, retirees we’ve spoken to are consumed with worry about how they will pay their medical bills, mortgages, car payments and meet their everyday needs.” said Ferguson.
“The Treasury Department’s decision means that my pension will be cut by 51 percent. My wife and I are scared and depressed,” said Walter Overstreet, a retiree who for 32 years worked as an iron worker helping construct buildings that compose Cleveland’s skyline.
The Pension Rights Center submitted comments on the application to the Treasury Department pointing out that the cuts were not distributed equitably and would not ensure that the plan would meet the law’s requirement that the plan remain solvent for 30 years. The Treasury Department appears to have rejected these arguments.
“The Pension Rights Center has long taken the position that MPRA is an unfair law and the cut-back provisions must be repealed,” asserts Ferguson. The Treasury Department was given authority to approve or reject cuts under MPRA, an ill-conceived law that was passed in an end-year deal in 2014, to shore up the funding of severely underfunded multiemployer plans. The Treasury Department can only approve applications that the agency deems to have met the criteria put forth under MPRA.
Plans approved to move forward with MPRA pension cuts are required to allow all plan participants to vote on whether cuts can move forward. This vote will take place in January.
The Center will continue its work to encourage Congress to repeal MPRA by finding a better solution to address the problem of underfunded multiemployer pension plans. “Iron Workers Local 17 is the first plan whose benefit reductions have been approved. We are concerned that the floodgates will open now that the Treasury Department has given the green light to Local 17,” says Ferguson. Retirees in four other pension plans are waiting Treasury Department’s decision on whether their pensions will be cut and dozens more plans are eligible to apply to make similar cuts
The Pension Rights Center is committed to working with stakeholders on all sides of the issue to develop new comprehensive legislation to address underfunded plans without draconian cuts to the pensions of retirees.
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