Central States, Southeast and Southwest Areas Pension Plan

Item #18 

Does the application include information on past and current measures taken to avoid insolvency. 

See section 5.01. 

Information on past and current measures taken to avoid insolvency is attached as document 

number 18. 

18.0
SECTION 5. PLAN SPONSOR DETERMINATION RELATING TO REASONABLE 

MEASURES TAKEN TO AVOID INSOLVENCY

With respect to the plan sponsor’s determination required under section 3.03 of this 

revenue procedure that the plan is projected to become insolvent unless benefits are 

suspended, the application must include the following information: 

.01 Measures taken to avoid insolvency. A detailed description of measures taken in 

order to avoid insolvency over the past 10 plan years immediately preceding the 

plan year in which the application is submitted.

As described in detail below, the Trustees have taken all reasonable measures to avoid 

insolvency of the Plan. Because Congress has provided that the Trustees must take all reasonable 

measures to avoid insolvency, the Trustees determined that they must take those measures that 

are feasible under the Plan’s particular circumstances and likely to further the statutory goal of 

avoiding insolvency, but that they need not take measures that, while theoretically available, 

would in practice not promote the goal of avoiding insolvency. 

The primary measures available to the Trustees to allow the Plan to avoid insolvency are 

contribution rate increases and benefit reductions.1 Over the past years and decades, the Trustees 

have worked with the bargaining parties to develop sustainable combinations of contributions 

and benefit levels. In doing so, however, both the Trustees and the bargaining parties are 

constrained by what the active, voting members of the union can reasonably be expected to 

accept and by what the employers can afford to pay. 

In particular, the Trustees’ ability to increase the annual contribution rate is limited by the 

rate that employers can afford to pay and not be compelled to withdraw from the Plan. Although 

withdrawal liability is generally intended to put the plan in the same position it would have been 

had the employer continued to contribute and to fund its share of the plan’s unfunded benefit 

liabilities, in practice withdrawal liability often fails to achieve that goal, for reasons discussed in 

detail below. Therefore, the Trustees did not consider a measure to be reasonable if it would 

impose contribution increases so great that they would precipitate employer withdrawals, thereby 

further undermining the actuarial soundness of the Plan. 

1

 In theory, reducing administrative expenses and increasing investment returns could also 

improve the funded status of the Plan. However, as one of the largest multiemployer pension 

plans in the United States, the Plan enjoys substantial economies of scale, and the Plan’s 

administrative expenses already are very low. Annually, expenses are only about 1.35 percent of 

annual benefit payments. Even if all expenses of administering the Plan could be and were 

eliminated, the savings would be vastly insufficient to allow the Plan to avoid the projected 

insolvency. With respect to investments, the Plan’s assets, pursuant to a consent decree between 

the Plan and the Department of Labor, are managed by several major financial institutions that 

are screened by the Department of Labor and approved by a federal judge. Those financial 

institutions maintain exclusive management and control over the Plan’s investment function. 

18.1

Although the ratio of actives to retirees had steadily decreased since deregulation, actives 

continued to outnumber retirees until the late 1990s. Then in 1999, the trucking industry entered

a particularly difficult period. Id. A price collapse in the used truck market, along with 

skyrocketing fuel prices and an ongoing driver shortage, led to widespread bankruptcies among 

trucking companies. Id. On top of those difficulties, in 2000, the “tech bubble” burst, sending the 

stock market and the U.S. economy generally into steep decline. Id. 

The economy entered a recession in March of 2001, and the industry experienced another 

rash of bankruptcies in this period. Id. An overabundance of used trucks, the worsening 

economy, and high diesel prices combined to push profit margins downward. Id. In 2002, 

Consolidated Freightways, once the nation’s largest long-haul trucking company and, at that 

time, among the largest Contributing Employers to the Plan, filed for bankruptcy, at the cost of 

more than 15,000 trucking jobs. Id. Meanwhile, the ongoing recession caused the Plan to 

experience investment returns far below its long term return assumption in 2000, 2001, and 

2002, which erased the majority of the considerable gains the Plan had experienced during the 

tech boom. Id. 

As the economy struggled to recover in 2003, the average price of a gallon of diesel fuel 

hit a record high. Id. Between 2001 and 2003, 11,500 trucking companies went out of business. 

Id. Another major Contributing Employer, Fleming Foods, withdrew from the Plan, and, 

together with Consolidated Freightways, failed to pay $290 million of a total of more than $403 

million in withdrawal liability. By the end of 2003, only 3,172 of the 11,687 Contributing 

Employers that the Plan relied upon in 1980 remained, and the Plan was projected to experience 

annual funding deficiencies as early as 2004. 

In response, the Trustees took a number of significant measures on both the benefits side 

and the contribution side of the equation to improve the Plan’s actuarial soundness going 

forward. Effective January 1, 2004, the Trustees amended the Plan to provide that the 

contribution-based benefit accrued by a participant would be reduced going forward from 2 

percent of the contributions his employer made on his behalf to 1 percent of those contributions. 

In addition, the Trustees froze early retirement and “and-out” pensions at an amount based on 

years of service earned at that point, while still allowing participants to grow into eligibility for a 

portion of those benefits by earning additional years of service. Finally, the Trustees froze the 

various “Classes” of Contributory Service Pensions, meaning that the Plan would no longer 

allow any bargaining unit to bargain up to a higher Benefit Class. 

On the contribution side, the Trustees worked with the bargaining parties to the major 

national contracts (National Master Freight Agreement (“NMFA”) and National Master Auto 

Transporter’s Agreement (“NMATA”), and National Master UPS Agreements) to reallocate

employee benefit plan contribution rate increases from health plan contributions to the Plan from 

2004 through 2007, resulting in additional revenue of approximately $500 million per year to the 

Plan during that period. 

Despite these measures, the Plan’s actuary estimated that the Plan faced a $1.3 billion 

funding deficiency for plan year 2004, along with significant funding deficiencies in subsequent 

years. The Trustees concluded that imposition of this liability, along with associated excise taxes, 

18.3
on the Plan’s Contributing Employers would have caused additional catastrophic business 

failures among those employers, accelerating the deterioration of the Plan’s own financial 

condition. As a result, in January 2004, the Plan filed a request with the Internal Revenue Service 

for a 10-year extension of the period for amortizing liabilities. 

In 2004, the economy was finally on the path to recovery, and carriers experienced 

increased demand, particularly late in the year. See Trucking Industry Overview. Due to the 

recent years of contraction in the industry, however, many carriers lacked sufficient drivers to 

meet this increased demand. Id. As a result, they were forced to increase driver compensation. Id. 

Meanwhile, in summer and fall of 2004, diesel prices, pushed higher as a result of the Iraq War, 

repeatedly reached record highs. Id. 

Entering the 10-year period immediately prior to the year of this application, the 

population of active participants had declined so that there were 156,744 active participants, 

208,666 retirees, and 86,213 inactive participants. Compared to the roughly 11,657 employers 

that contributed to the Plan in 1980, only 2,783 contributed in 2005, a decline of nearly 80 

percent. 

On July 13, 2005, the IRS granted the Plan’s request for an amortization extension, 

subject to the Plan satisfying certain funding targets going forward. To meet those funding 

targets and set the Plan on a stable path, the Trustees recognized, it would be necessary to couple 

the benefit reductions made in the previous year with contribution increases going forward. 

Thus, in November 2005, the Trustees determined to accept renewals of collective bargaining 

agreements expiring in 2006 only if they included compound contribution rate increases of 7 

percent per year for the duration of the renewal agreement. 

Meanwhile, the price of diesel fuel had more than doubled since 2002, and the trucking 

industry experienced a significant shortage of drivers in the wake of new post-9/11 government 

security regulations that made obtaining and maintaining certain licenses and certifications more 

difficult. Id. 

Similarly in 2006, diesel prices hit new record highs, and regulatory issues continued to 

burden the trucking industry. Id. The economy was strong, however, and the Trustees determined 

that it was reasonable to require additional contribution increases of the Plan’s Contributing 

Employers. In November 2006, the Trustees determined to accept renewal agreements for those 

CBAs expiring in 2007 only if they provided for compounded 8 percent annual contribution rate 

increases. 

In 2007, United Parcel Service (“UPS”) withdrew from the Plan. Although UPS paid its 

withdrawal liability in full, the withdrawal resulted in a loss of 44,400 active participants in the 

Plan. This in turn resulted in a loss of more than $500 million in contribution revenue (which 

constituted about one third of total contribution revenue at that time).2

 The loss of a substantial 

2

Taking into account scheduled contribution rate increases, the current loss of annual revenue 

due to UPS’s withdrawal is nearly $800 million, not considering that UPS has likely experienced 

growth in bargaining unit members since withdrawal. This current amount of lost contribution 

18.4
portion of the active population made the Plan more vulnerable to future investment losses. 

(Unfortunately, this withdrawal could not have come at a worse time for the Plan, as dramatic 

investment losses occurred in the very next year.) Nonetheless, the aggressive measures the 

Trustees had taken in recent years to increase income and reduce liabilities had set the Plan on a 

path toward full funding. As of January 1, 2008, the Plan’s actuaries projected that the Plan 

would be fully funded by 2029, assuming normal investment returns. 

Unfortunately, 2008 was a far from normal year in terms of investment returns, and the 

Plan, like practically all investors, experienced significant losses in the wake of the stock market 

collapse. The Plan suffered investment losses of $7.6 billion that year. This forced the Plan to 

expend $1.8 billion—the amount by which benefits exceeded contributions that year—out of 

principal. 

The Pension Protection Act of 2006 (“PPA”) took effect in 2008, providing the Trustees 

with additional tools to help address the Plan’s financial difficulties. In March 2008, the Plan’s

actuary certified the Plan to be in critical status under PPA. In developing their rehabilitation 

plan as required by PPA, the Trustees concluded that, having recently imposed the significant 

benefit reductions and contribution increases discussed above, mandating the additional benefit 

cuts and/or contribution increases that would be necessary to emerge from critical status by the 

end of the 10-year rehabilitation period would not be reasonable because it would substantially 

accelerate the rate at which employers would withdraw from the Plan. 

In reaching this conclusion, the Trustees considered the views of the International 

Brotherhood of Teamsters (“IBT”), the collective bargaining representative of active employees.

The IBT submitted a letter to the Trustees on this topic, stating that, if the Plan adopted “a 

contribution schedule at this time or in the reasonably foreseeable future which would require 

additional benefit cuts, the result would be a serious erosion of support for the Fund among the 

rank-and-file Fund participants and their bargaining representatives.” February 19, 2008 Letter 

from C. Thomas Keegel to Thomas C. Nyhan. The IBT further explained that “it would be 

virtually impossible to obtain membership support for a proposal which combines increased 

benefit contributions (and lower or no wage increases) with pension benefit cuts. If confronted 

with an employer’s insistence on such a proposal, . . . members would likely become receptive to 

suggestions from their employers that they should simply bargain out of the Fund completely.” 

Id. 

The Trustees also recognized that active employees already had borne a 50 percent 

reduction in their benefit accrual rate as a result of the benefit changes adopted effective January 

2004. At the same time, their ability to earn additional fully-subsidized early retirement benefits 

was frozen. Coupled with the greater contribution rate increases agreed to during the same time 

period, the Trustees concluded that bargaining parties may be at or near the limit of their ability 

and willingness to agree to further benefit reductions for active participants. 

Because additional contribution rate increases would be likely to cause employers to 

withdraw, the Trustees considered whether withdrawal liability would fully compensate the Plan

revenue would be nearly 150% of current actual contribution revenue. 

18.5
for any loss of employers resulting from application of the benefit reductions and contribution 

increases necessary to emerge from critical status by the end of the rehabilitation period. As 

noted above, employers often do not pay the entire amount of their withdrawal liability. Indeed, 

Congress recognized as much when it created a separate tier under MPRA for benefits 

attributable to an employer that has withdrawn from the plan and failed to pay the full amount of 

its withdrawal liability. Despite the Trustees’ vigorous collection efforts, the Plan’s projected 

collection rate for future withdrawn employers was 25 percent of the assessed withdrawal

liability.

As noted above, withdrawal liability often fails to compensate a plan for unfunded vested 

benefits (“UVBs”) for a number of reasons. First, even if all employers complied with all 

statutory requirements of ERISA and made all of their withdrawal liability payments, the 

duration of the payments is capped at 20 years, even if the payments do not pay the employer’s 

full share of the UVBs. ERISA § 4219(c)(1)(B). Other rules further limit collection of an 

employer’s full share of UVBs. See, e.g., ERISA § 4209 (reducing employer’s UVBs by de 

minimis amount), § 4225 (limiting UVBs allocable to employer based on employer liquidation or 

insolvency). 

Second, the addition of withdrawal liability to an employer’s debt load could cause the 

employer to file for bankruptcy. The Internal Revenue Service (“IRS”) acknowledged this risk in 

connection with the Plan’s amortization extension. See July 13, 2005 Letter to Thomas C. Nyhan 

from James E. Holland, Jr. (“Extension Letter”). The Extension Letter explains that, according to 

information submitted with the application for an extension, “if the extension is not granted, the 

potential increases in employer contributions necessary to avoid funding deficiencies . . . would 

severely harm the majority of the contributing employers to the plan. The authorized 

representative of the Fund represents that, in many cases, the additional expenses would wipe out 

the net income of the employers and potentially force them into bankruptcy. The additional 

expense and cash outflows would likely cause many employers to violate debt covenants or 

hamper their access to credit markets further straining their financial conditions.” Id. at 4. In 

bankruptcy, the Plan has historically collected roughly 23.5 cents per dollar of assessed 

withdrawal liability, and several bankruptcies of large employers in recent years are likely to

cause this figure to decline to less than 5 cents on the dollar. 

Indeed, the risk of bankruptcy by Contributing Employers was high at this time even 

absent the imposition of further contribution increases. The Trustees recognized that 2008 had 

been a particularly difficult year for trucking companies due to factors such as the high cost of 

diesel fuel, a major expense of trucking companies. See Hearing Before the Subcomm. on 

Highways and Transit of the H. Comm. on Transportation and Infrastructure (July 9, 2008) 

(statement of Michael J. Smid, President and Chief Executive Officer, YRC North American 

Transportation) (hereinafter “Congressional Subcomm. Hearing”). Bankruptcies in the trucking 

industry had been on the rise in 2008, with June numbers showing a 143 percent increase over

the previous year. Samantha Bomkamp, Analysts Say Trucking Capacity Cutbacks and 

Bankruptcies to Speed Up and Help Balance Industry, Associated Press, June 9, 2008. Nearly 

1000 trucking companies with at least five trucks failed in the first quarter of 2008 alone. See 

Congressional Subcomm. Hearing. 

18.6
Finally, each employer withdrawal shrinks a plan’s contribution base. A smaller number

of employers will likely be less able to absorb any contribution rate increases that become 

necessary in the future. Similarly important, as the number of Contributing Employers shrinks, 

the plan becomes more heavily dependent on investments, which makes the plan’s source of 

income less diverse and riskier. As the number of active participants shrinks, each active 

participant must bear a greater share of the plan’s liabilities. Employer withdrawals also lead to a 

shrinking asset base as benefit payments far exceed contribution income, so that as the market 

recovers there is less opportunity for the plan to realize gains. 

Applying the draconian measures that would have been required for the Plan to emerge 

from critical status in ten years, the draft 2008 ten-year default schedule and alternative ten-year

schedules projected that the number of active participants at emergence from critical status

would decrease from approximately 100,000 to roughly 38,000, at best, and possibly as low as 

12,000. The Trustees concluded that as the number of active participants and Contributing 

Employers to the Plan shrinks, remaining employers would likely become concerned about 

being the “last man” in the Plan. This, in turn, could cause additional employers to withdraw and 

lead to a downward spiral of withdrawals, ending in a mass withdrawal and termination of the 

Plan. 

For these reasons, the Trustees concluded that the contribution increases and/or benefit 

reductions necessary to allow the Plan to emerge from critical status by the end of the

rehabilitation period would cause employers to withdraw from the Plan and increase the risk of a

catastrophic downward spiral toward eventual mass withdrawal. On this basis, the Trustees 

instead developed primary and default schedules of contribution increases and reductions to 

adjustable benefits designed to allow the Plan to emerge from critical status by the year 2028.

The Primary Schedule maintained the current pension benefit levels for all bargaining units that 

adopted it, and generally required that all Contributing Employers and bargaining units agree to 

five years of compounded eight percent annual contribution rate increases, three years of six

percent compounded increases, and then continuous four percent compounded annual increases. 

The Default Schedule required continuous compounded annual rate increases of four percent but 

eliminated all adjustable benefits under PPA (essentially any benefits other than those already in

pay status prior to 2008, disability benefits in pay status at any time, and the accrued benefits 

(i.e., Contribution Based Pensions) payable at age 65). In addition, bargaining units that 

voluntarily withdraw from the Plan, or are complicit in a withdrawal (called a “Rehabilitation

Plan Withdrawal”), incur the elimination of all adjustable benefits).

In 2009, as a result of the stock market declines and global economic crisis, the Plan was

not only certified to be in critical status under PPA, but was for the first time projected to 

become insolvent. The Plan’s actuaries projected that the Plan would become insolvent in 2022. 

Recognizing the impact that the financial crisis would have on multiemployer plans, Congress 

had, in 2008, passed the Worker Retiree and Employer Recovery Act, which permitted plans to 

elect an exemption from updating their rehabilitation plans. Upon concluding that the Plan’s 

Contributing Employers could not withstand additional contribution increases in the midst of 

the financial crisis, the Trustees elected to take advantage of that exemption. They continued the 

measures already in place to improve the Plan’s funded status, including those in the existing 

18.7
rehabilitation plan, and they sought a waiver of certain conditions of the 2005 amortization 

extension.3 

For the 2010 plan year, the Plan’s actuary again certified the Plan to be in critical status.

Concluding that the contribution increases necessary to emerge from critical status would not 

constitute reasonable measures to improve the Plan’s funded status but rather would accelerate 

possible insolvency by driving Contributing Employers out of business, the Trustees adopted 

schedules of benefit reductions and contribution increases designed to allow the Plan to forestall 

possible insolvency by the year 2023. In addition, the 2010 rehabilitation plan increased the 

minimum retirement age under the Plan to 57, effective after July 1, 2011. 

Also as part of the 2010 rehabilitation plan update process, the Plan engaged Stout Risius 

Ross (“SRR”), a financial consulting firm, to study the capacity of the Plan’s Contributing 

Employers to continue to absorb contribution rate increases. In November 2010, SRR reported to 

the Trustees that a number of the Plan’s larger, publicly-traded Contributing Employers—whose 

pension contribution rates were already (or would soon be) at $342 per week under the NMFA

and $348 per week under the NMATA—could not reasonably be expected to absorb additional 

contribution rate increases. Accordingly, in November 2010, the Trustees approved an 

amendment to the rehabilitation plan that froze the top NMFA and NMATA rates at such levels. 

For other Contributing Employers, the $342 per week rate became the maximum rate necessary 

to be deemed to be in compliance with the Primary Schedule without the need for additional rate 

increases.

During this time period, the Trustees recognized that the trucking industry, along with the 

rest of the economy, was struggling through the recession and the slow recovery from that 

economic low. See Trucking Economic Review, American Trucking Association, Inc., at 4 (July 

22, 2011) (“[C]arriers are getting hit very hard with price increases and have to contain costs as 

much as possible; otherwise, bottom-lines are going to suffer dramatically. . . . [T]here is no 

denying that trucking, like the rest of the economy, hit a soft patch so far this year.”). Carriers 

faced continued high fuel costs throughout 2011 as the result of political uncertainty in the 

Middle East and other economic forces. See Harnessing American Resources to Create Jobs and 

Address Rising Gasoline Prices: Impacts on Businesses and Families, Statement of William P. 

Graves on behalf of the American Trucking Association before the U.S. House of 

Representatives Committee on Natural Resources (Mar. 31, 2011) (“Graves Statement”), at 3-5; 

Critical Issues in the Trucking Industry – 2011, The American Transportation Research Institute 

(Oct. 2011) (“Critical Issues”), at 7 (citing an industry report finding that “fuel and oil was the 

second highest motor carrier cost center after driver wages and benefits”). The Trustees 

understood that the trucking industry is “a highly competitive industry with very low profit 

margins” and that “the price of diesel fuel and motor carrier failures are highly correlated.”

Graves Statement at 2-3. The Trustees recognized that many trucking companies would not be 

able to withstand these increased economic pressures. 

During this difficult economic time, the Trustees continued to seek innovative solutions 

to minimize employer withdrawals from the Plan. In particular, the Trustees in February 2011 

3

 The waiver request remains pending with the Internal Revenue Service (“IRS”). 

18.8
adopted a special “Distressed Employer Schedule” under the rehabilitation plan to avoid the 

withdrawal of one of the major Contributing Employers to the Plan, YRC, Inc. and its affiliates 

(“YRC”). YRC, which at that time had more than 14,000 active participants in the Plan, had 

suffered a severe financial decline and become severely delinquent in its contributions to the 

Plan. The Distressed Employer Schedule allowed YRC to continue to contribute to the Plan at a

reduced contribution rate (25 percent of the previously-agreed rate) without contribution rate 

increases, in exchange for benefit reductions approximately equivalent to those required under 

the rehabilitation plan’s Default Schedule. The Trustees approved the Distressed Employer 

Schedule and applied it to YRC because they determined, based on rigorous financial and

actuarial analysis, that (a) YRC would likely liquidate in bankruptcy (with minimal or no 

recovery of withdrawal liability by the Plan) unless the Trustees approved the application of the 

Distressed Employer Schedule, and (b) the Plan was better off financially with YRC’s continued 

participation in the Plan than under a scenario in which the Plan insisted on higher contribution 

rates that resulted in the dissolution and withdrawal of YRC.

Also in 2011, the Trustees took an additional innovative step designed to encourage 

continued participation in the Fund and increase withdrawal liability collections. In October, the 

Trustees obtained approval by the Pension Benefit Guaranty Corporation (“PBGC”) to use an

alternative method of determining employer withdrawal liability. Under this alternative method, 

a current Contributing Employer can effectively limit its exposure to future withdrawal liability 

growth by paying the current withdrawal liability amount in a lump sum and then continuing to 

contribute to the Plan as a “New Employer.” An employer that is not currently contributing to 

the Plan and does not owe any outstanding withdrawal liability or other obligations to the Plan

can also qualify as a New Employer and become eligible for the alternative withdrawal liability

method. Under this alternative (or “hybrid”) method approved by the PBGC, the New 

Employers’ withdrawal liability is to be determined based on the benefits accrued by each New

Employer’s employees, plus a proportionate share of any underfunding that develops among the 

New Employers as a whole (the “New Employer Pool”). However, because the New Employer

Pool is fully funded (approximately 200% funded, in fact), and current contribution rates are 

more than sufficient to fund current benefits, the New Employers have a very low risk of 

incurring withdrawal liability in the future. The hybrid method helps to retain existing 

Contributing Employers and to attract new Contributing Employers by alleviating their concerns 

about potential growth in withdrawal liability exposure. Further, the Plan will not enter an 

agreement resolving a Contributing Employer’s withdrawal liability and deeming the employer 

to be a New Employer under the hybrid method unless the employer commits to continue to 

contribute to the Plan for an extended period (usually 5-10 years) and at a guaranteed level of

participation. Approximately 80 employers have qualified as New Employers under the hybrid 

method to date, and these employers have paid approximately $130 million in withdrawal 

liability while continuing to contribute to the Plan. 

Between 2011 and 2014, the Plan remained in critical status, and the Trustees reviewed 

the rehabilitation plan annually to consider whether there existed any other reasonable measures 

they might take to avoid insolvency. Each year, the Trustees concluded that requiring additional 

contribution increases above those included in the 2010 rehabilitation plan update, or adopting 

additional benefit reductions, would not have a significant positive impact on the projected 

insolvency of the Plan, and instead would increase the likelihood of additional employer 

18.9
withdrawals.4

For example, in a November 2014 Board Meeting, the Plan’s actuary presented a 

variety of possible benefit reduction scenarios, including reducing the rate of future benefit 

accrual and further cutting adjustable benefits. As reflected in the chart below, none of these 

scenarios resulted in more than nine months of additional solvency, even disregarding the impact 

that the changes would have on employer withdrawals. In large part, the inability of additional 

measures available under PPA to materially improve the Plan’s funding projections resulted from 

the fact that insolvency was expected to occur in the near future, leaving very little time for the 

changes to have a significant positive impact.5 

4

 In 2013, the Trustees determined that, under the Plan’s rules permitting participants to 

contribute to the Plan on their own behalf (“self-contributions”), many participants were able to 

gain just enough Contributory Service Credit to enable them to improve their pension benefits 

significantly. Permitting self-contributions to increase pension benefits in this way was very 

costly to the Plan because the value of the benefits gained by the participants nearly always 

greatly exceeded the value of the self-contributions. In November 2013, the Trustees eliminated 

the ability of participants to make self-contributions on a prospective basis. 

5

 The proposed MPRA benefit suspensions, on the other hand, are accompanied by proposed 

increases in the rehabilitation plan contribution rate schedules and reductions in the rate of future 

benefit accruals because the proposed benefit suspensions extend solvency sufficiently to allow 

these changes to have a meaningful positive impact on the future funding levels. 

18.10
In sum, excluding the application of the distressed employer schedule to YRC, the 

average contribution rate at which employers contribute to the Plan increased 83.2% from 2005 

to 2014. This figure represents an excess of 57.9% over inflation, during a period of great 

Estimated year and month 

of insolvency and 

approximate number of 

months insolvency is 

forestalled/(accelerated)

Attrition

Assumed to 

Vary by 

Change

Ignores

Impact of 

Change on 

Attrition

Current Rehabilitation Plan 2/26 2/26

Hypothetical Changes to Primary Schedule Benefits:

1. 1% benefit unreduced at age 65 effective 1/1/2015 4/26 2 4/26 1

2. 1% benefit unreduced at age 65 effective 1/1/2017 3/26 1 3/26 1

3. Future contribution increases not subject to benefit

accruals

2/26 0 2/26 0

4. Actuarial equivalent reduction from unreduced age

(see page...)

3/26 1 3/26 1

5. Maximum Red Zone cuts effective 1/1/2020 11/26 -3 3/26 1

6. Maximum Red Zone cuts effective 1/1/2015 10/25 -4 7/26 5

7. Future benefit accruals limited to $100/year effective

1/1/2015

3/26 1 3/26 1

8. Total benefit capped at higher of $3,000 or current

active 1/1/2015

3/26 1 3/26 1

9. Benefit freeze effective 1/1/2015 1/26 -1 6/26 4

10. Maximum Red Zone cuts plus benefit freeze 1/1/2015 1/16 -1 11/26 9

11. All Withdrawals are Rehabilitation Plan Withdrawals 3/26 1 3/26 1

12. Minimum retirement age of 65 for future

Rehabilitation Plan Withdrawals effective 1/1/2015

2/26 0 2/26 0

13. Minimum retirement age of 58 effective 1/1/2015 3/26 1 3/26 1

14. Minimum retirement age of 59 effective 1/1/2015 4/26 2 4/26 2

15. Minimum retirement age of 60 effective 1/1/2015 5/26 3 5/26 3

16. Maximum retirement age of 58 effective 1/1/2015,

59 effective 1/1/2017, and 60 effective 1/1/2019

4/26 2 4/26 2

17. Maximum Red Zone cuts to current and future

terminated vested participants effective 1/1/2015

3/26 1 3/26 1

Mass withdrawal effective 12/31/2014; 20% of contributions 

continue as withdrawal liability payments

3/25 -11 3/25 -11

18.11

Chart of Effect of Time Horizon on Plan Changes