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FAQ for Butch Lewis Pension Relief Law

The Butch Lewis Emergency Pension Plan Relief Act of 2021 was signed into law on March 11, 2021 as part of the larger American Rescue Plan Act of 2021.  This law allows severely underfunded multiemployer plans to apply for aid from PBGC so that retirees benefits are not cut.  You can read our summary of the legislation here.

We have received many questions about this law and below we have answered some of the most frequent questions

WHO IS ELIGIBLE:

QUESTION:  My fund is in “critical and declining” status but no MPRA cuts are in place or proposed. What does it mean? Will my fund still be eligible for a grant?  

ANSWER:  If the plan meets the criteria of critical and declining status or is less than 40% funded and has 3 or more inactive workers for each active worker, it can apply to the PBGC for relief regardless of whether it applied for MPRA benefit suspensions.

QUESTION: My Fund is not in “critical and declining status.” What happens if it gets there next year, or in future years? 

ANSWER:  The plan has to be in critical and declining status or less than 40% funded (see answer above), and it has to have that status by 2022 in order to apply for relief.  Eligible plans must then submit their applications by 2025.  Plans that do not meet eligibility requirements by 2022 will not be eligible for relief.

QUESTION: My fund didn’t qualify for MPRA cuts because our plan was too underfunded, but our benefits were slashed due to the plan’s insolvency.   Is my plan eligible for aid and will I get retro reimbursement for the months of reduced pensions?

ANSWER: Yes,if the plan became insolvent after MPRA was passed but before the Butch Lewis Act was enacted, the plan can get relief unless it was terminated.  If the plan applies to PBGC, the retirees would get retroactive payments for past lost benefits, either as a lump sum or in monthly installments over 5 years, depending on what the trustees decide.

 

WHAT BENEFITS ARE COVERED BY THIS AID?

 

QUESTION: My fund got authorization to make MPRA cuts after 2014. My monthly checks were reduced. Will I get retroactive reimbursement on my promised pension for the months it was reduced?

ANSWER:  Yes, if the plan trustees apply to the Pension Benefit Guaranty Corporation, the retirees would get retroactive payments for past lost benefits either as a lump sum or in installments over 5 years, depending on what the trustees decide.

QUESTION:  I work for YRC, Holland, New Penn. The company has been making 25% contributions since 2009. I’m getting ¼ credit per year. Will the Butch Lewis Act cover those company shortfalls for contributions?

ANSWER: No, this is a collective bargaining issue.

QUESTION: Once a multi plan begins receiving this aid, what types of distributions are allowed?  Can lump sums, early retirement, or disability benefits still be paid out? 

ANSWER: The plan can take steps to reduce some of these benefits but the government cannot force it to reduce early retirement or disability benefits.  Plans that are eligible for relief, however, are not permitted to pay lump sum benefits in excess of $5,000. 

QUESTION: Once a multi plan begins receiving this aid, are there limits on the amount of the monthly benefits?

ANSWER: There are no limits on benefits--no one will suffer a reduction in the benefit they are already receiving unless the plan later becomes insolvent, i.e., runs out of money sufficient to pay the benefits that are due that year.  People can in some circumstances still lose certain subsidized benefits, such as early retirement benefit that are worth more than the age-65 benefit. The plan can reduce the rate of future benefit accruals--but that has always been allowed, even before MPRA.

QUESTION: I receive a multiemployer pension that was cut due to MPRA, and I waived the survivor benefit option when I retired. Let’s suppose my multiemployer plan elected to pay my retroactive benefit in monthly installments. If I die prior to the monthly retroactive installments being fully paid out, does the plan have any obligation to pay the remainder of the retroactive amount to my estate or my current spouse?

ANSWER: We believe that the statute requires the plan to pay these unpaid benefits to the participant’s estate, although it is possible in some situations that the payments would be made directly to a surviving spouse.   

QUESTION: In the past, my multiemployer plan’s benefits were frozen (or accruals were reduced going forward) due to being in critical status as a result of the Pension Protection Act.  Will this new law restore my reduced benefits?

ANSWER: If your plan is eligible and applies for aid under the Butch Lewis Act, the aid is intended to restore benefits that were cut as a result of an insolvency since 2014, or to restore benefit cuts imposed under the Multiemployer Pension Reform Act of 2014.  In our view it is unlikely a plan would unfreeze benefits with this aid.  In addition, there are strict limits on the circumstances in which a plan in critical status can increase benefits under any circumstances. 

 

WHAT'S NEXT?

QUESTION:  I’m a young Teamster. I see the Butch Lewis Act is good through 2051. What happens then to me and my pension when I’m ready to retire? Is there a long-term fix in this, and what is it? 
 
ANSWER:  We don’t yet have enough information to know whether Butch Lewis relief will make the plan sufficiently solvent that it will be able to pay benefits beyond 2051, although we think this is the likely result.  We need to see how the PBGC answers this question, which it should do by July 9th.  In any event, if the plan fails despite receiving a grant, plan benefits will be reduced to PBGC guarantee levels.  And we hope that the law will be improved going forward to improve PBGC guarantee levels and to take other steps to ensure that plans are able to pay all promised benefits.
  
QUESTION: What’s the application process like for funds to receive the money? How will I know if my fund applied, and what do I do if they didn’t?   What’s the timeline for this happening?

ANSWER:  For questions about the process and timelines, this is all going to get hashed out in guidance by the agencies, which must be published within 120 days from the date the law went into effect, March 11, 2021, so preliminary  guidance is due by July 9th.   The focus going forward will be urging plans to apply for relief and to seek further improvements in the laws governing multiemployer plans.

QUESTION: At what point is a plan compelled to apply to be eligible for Treasury aid. E.g. So if the multi plan is projected to go insolvent in 5 years are they required to apply now, or to wait the 5 years? Or is the plan not required under the law to apply at all.

ANSWER: This is complex--plans have to meet the conditions by 2022 and the plans must file applications for assistance by 2025. The statute tells PBGC to give priority in application processing to certain troubled plans, including those in which participants lost benefits because of MPRA cuts or because the plan became insolvent. A plan, however, is not required to apply for relief.


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