Checklist Item #8 Application for Approval of a Suspension of 

Benefits Under MPRA

Iron Workers Local 17 Pension Fund EIN: 51-0161467

Plan No.: 001

Does the application 

include the plan sponsor’s 

determination of projected 

insolvency that includes 

the documentation set 

forth in section 5 of the 

revenue procedure. 

See section 3.03.

The Board of Trustees for the Iron Workers Local 

17 Pension Fund determined after review of all of 

the available information and possible reasonable 

plan changes that the Pension Fund would become 

insolvent unless benefits are suspended as 

required under Internal Revenue Code Section 

432(e)(9)(C)(ii). 

The Segal Company, the Pension Fund’s Actuary, 

determined that the Pension Fund was in critical 

status as of May 1, 2008 when the Pension Fund 

first became subject to compliance with the 

Pension Protection Act of 2006. In August 2008, 

the Board of Trustees adopted its initial 

Rehabilitation Plan which was designed to 

eliminate adjustable benefits in order to bring the 

Pension Fund’s liabilities into line with the 

contribution rate being paid on an hourly basis. 

Thereafter, the Pension Fund suffered a decline of 

over 30% of its assets due to the losses from the 

Recession for the Plan Years 2008-2009. 

In early 2011, the Plan Actuary advised the Board 

of Trustees that the Pension Fund was facing 

insolvency in 2025. The Board of Trustees 

adopted a new Rehabilitation Plan effective May 1, 

2011 that provided for an increase in the 

contribution rate to forestall the insolvency of the 

Pension Fund for one additional year, to 2026. 

Since this time, the contributions and work hours 

exceeded projections for several years; however, 

these gains are being offset by the losses 

sustained due to the withdrawal of employers and 

actuarial changes necessary to account for 

changes in the long term mortality and investment 

assumptions. 

In July, 2015, the Fund’s Actuary certified to the 

Board of Trustees that the Pension Fund was in 

IW17PF_58
critical and declining status for the Plan Year 

beginning May 1, 2015. The Plan’s Actuary initially 

determined that the Pension Fund would be 

insolvent in the Plan Year 2032; however, after 

adjustment for the loss of a withdrawal liability 

assessment and actuarial changes to the 

assumptions for mortality and investment returns, 

the Actuary determined that the Pension Fund 

would again be insolvent in 2025. 

The Pension Fund’s Actuary reached this 

conclusion even though the Board of Trustees has 

taken all reasonable measure to avoid the 

insolvency of the Pension Fund. The series of plan 

changes, contribution increases and studies which 

the Trustees undertook since initially determining 

that the funding levels for the Pension Fund were 

declining in 2004 are included in support of this 

Application on behalf of the Pension Fund. 

Specifically, the following studies and information 

relating to the determination by the Board of 

Trustees that the benefit suspension was the only 

viable alternative to termination of the Pension 

Fund are being presented:

• Summary of Trustees’ determination and 

Special Studies Undertaken in making the 

decision to file this application on behalf of 

the Iron Workers Local 17 Pension Fund 

(pages IW17PF_062-067); 

• Segal Report dated February 17, 2015 

Board of Trustees Meeting Initially 

Evaluating the provisions under MPRA

(pages IW17PF_068-105); 

• Segal Report dated March 12, 2015 to the 

Board of Trustee with initial plan design 

changes for suspension of benefits(pages 

IW17PF_106-113);

• Segal Report dated April 20, 2015 to the 

Board of Trustees with updated plan design 

changes for suspension of benefits(pages 

IW17PF_114-120) 

• Segal Report dated May 15, 2015 to the 

Board of Trustees with updated plan design 

changes for suspension of benefits(pages 

IW17PF_59
IW17PF_121-133);

• Segal Report dated June 9, 2015 for the

Board of Trustees Meeting with updated

plan design changes for suspension of

benefits(pages IW17PF_134-151);

• Segal Report dated August 7, 2015 to the

Board of Trustees with updated plan design

changes for suspension of benefits (pages

IW17PF_152-170);

• Segal Report dated October 1, 2015 to the

Board of Trustees with updated plan design

changes for suspension of benefits (pages

IW17PF_171-184);

• Segal Memo dated October 14, 2015 to the

Board of Trustees with the revised plan

design changes for suspension of benefits

(pages IW17PF_185-186); and

• Segal Report dated October 20, 2015 with

the final plan design changes adopted by

the Board of Trustees at the October 16,

2015 Special Called Board of Trustees

meeting (pages IW17PF_187-198).

The application filed on behalf of the Pension Fund 

also provides detailed information on the 

reasonable measures taken into account in making 

this determination that the proposed Suspension 

Plan is necessary to avoid insolvency. These are 

detailed in the following sections of the application 

as outlined below:

• A detailed description of the measures

taken in order to avoid insolvency over the

10 year period beginning May 1, 2004 is

provided in response to Checklist Item #18

(pages IW17PF_234-239).

• Information concerning the contribution

levels, benefit reductions, measures taken

to retain and attract new contributing

employers, compensation levels and

competitiveness and other economic factors

is provided in response to Checklist Item

#19 (pages IW17PF_240-244).

• Description of how the various Plan Factors

were taken into account during the

determination by the Board of Trustees that 

IW17PF_60
all reasonable measures had already been 

taken to avoid insolvency is provided in 

response to Checklist Item #20 

(page IW17PF_ 245-247). 

• A Description of all other factors taken into

account during the Board of Trustees’

determination that all reasonable measures

were taken to avoid insolvency prior to filing

this application for approval of a benefit

suspension is provided in response to

Checklist Item #21 (page 

IW17PF_248-249). 

IW17PF_61
Summary of Board of Trustees’ Determination and Special Studies

The Board of Trustees for the Iron Workers Local 17 Pension Fund had been working since 2002 

to adopt plan changes and contribution increases with the intent to improve the funding levels of 

the Pension Fund. The specific changes and projects undertaken since 2004 are detailed in the 

response to Checklist Item #18. However, in early-2013 the Trustees were in the middle of 

working through the terms of a possible termination of the Pension Fund under a managed mass 

withdrawal with the Pension Benefit Guaranty Corporation. The Trustees reviewed the proposed 

legislation from the National Coordinating Committee for Multiemployer Plans (NCCMP) entitled 

at the time “Solutions not Bailouts”. At that time, the Trustees authorized the Plan Actuary to 

prepare a study to determine the level of benefit suspensions which would be needed to avoid 

insolvency under the proposed legislation. In April 2014, the Trustees were provided with a 

general study which determined that an approximate 9.8% reduction in benefits for all 

participants and beneficiaries in the Pension Fund would be enough to permanently avoid 

insolvency. Portions of this study were provided to the NCCMP to assist in its lobbying efforts 

relating to the Multiemployer Pension Relief Act of 2014 (MPRA) which eventually was passed 

in December 2014. 

February 17, 2015 Board of Trustees Meeting

• February 17, 2015 was the first Board of Trustees meeting scheduled after the passage 

of MPRA. Segal Company and Legal Counsel presented detailed information on the 

provisions which were adopted as part of this new statute during the regular Board 

meeting. 

• Since MPRA adopted limitations which do not allow benefit suspensions to apply to any 

participants or beneficiaries who receive a benefit based upon disability and limits the 

suspensions for participants between ages 75-80, Segal now determined that the Pension 

Fund would need and approximate 20-25% reduction in the benefits for all affected 

participants and beneficiaries.

• Trustees reviewed the current plan design, prior plan changes, the impact of the 

elimination of adjustable benefits on retirees since May 1, 2009 and issues regarding the 

early retirement subsidies and $100.00 Benefit Credit in effect prior to 2004. 

• After lengthy discussion on the possible plan changes which could be adopted to bring 

parity between the retirees prior to 2009 and those after, the Trustees approved moving 

forward with modeling and discussed preliminary designs of suspension with Segal. 

These were as follows:

o Determine a new average accrual rate that if applied to all affected participants 

and beneficiaries would allow the Pension Fund to avoid insolvency; 

o Determine all early retirement benefits based upon the post-2009 plan rules which 

provide a full benefit for 30 years of Vesting Service at age 62, but full actuarial 

adjustment for all early retirees without the 30 years of Vesting Service;

o Eliminate excess Benefit Credits over one year for all affected participants because 

these will be eliminated upon insolvency of the Pension Fund under the PBGC 

rules;

o Adjust Benefit Credits to afford some parity between the participants that earned 

credits under the 1,200 schedule prior to May 1, 2005 and those earning under the 

1,900 schedule since that time. 

IW17PF_62
o Review possible changes to reflect the fact that prior to August 2008 participants 

had the ability to take 10% of the accrued benefit in the form of a lump sum 

payment.

March 12, 2015

• Segal was provided with sample retiree information needed to provide basic modeling on 

benefit suspensions after the February 2015 Board meeting. 

• Segal produced a preliminary report showing benefit suspension scenarios A-D for 29 

sample retirees along with the average terminated vested and active participants. 

• The data on the 1,078 participants in pay status was updated to show that 304 would be 

younger than age 75 as of May 1, 2016, 83 would be between ages 75 and 79 and 138 

would be over age 80. Additionally, there were 351 disabled participants in the population

as well. This showed that approximately 53% of the in pay status participants were 

subject to limited or no benefit suspensions under MPRA.

• During this conference call meeting of the Trustees, they requested further benefit 

suspension models as follows:

o (Scenario C) Reduce average accrual level to $81 with full actuarial changes for 

early retirees under age 62 without 30 Year Service Pension; 

o (Scenario D) Reduce average accrual level to $78 with elimination of excess 

Benefit Credits over one per year;

o (Scenario E) Reduce average accrual level to $83 with a 3% per year reduction for 

early retirees under age 62 with 30 Year Service Pension and elimination of excess 

Benefit Credits over one per year; and 

o (Scenario F) Reduce average accrual level to $81 with a 2% per year reduction for 

early retirees under age 62 with 30 Year Service Pension and elimination of excess 

Benefit Credits over one per year. 

Mid-April 2015

• Segal worked with the Fund Office and prepared the additional benefit models requested 

as Scenarios C-F in a report published to the Trustees April 20, 2015. 

• The new benefit suspension scenarios included deterministic projections showing that the 

Pension Fund would start making a slow recovery and move away from the projected 

insolvency during the Plan Years 2040 – 2044. 

• This Report was reviewed with the Board of Trustees during a conference call meeting 

held May 5, 2015. 

• The Trustees requested that Segal use the actual pensioner data to prepare their 

projections on the overall probability that the various scenarios would avoid insolvency. 

Additionally, the following two additional scenarios were requested:

o (Scenario G) Reduce average accrual level to $75 with a 1% per year reduction 

for early retirees under age 62 with 30 years of Vesting Service and elimination of 

excess Benefit Credits over one per year; and; 

o (Scenario H) Reduce average accrual level to $75 with a 1% per year reduction 

for early retirees under age 62 on the 30 Year Service Pension with NO elimination 

of excess Benefit Credits over one per year. 

• Fund Office began working on data collection for all retirees for Segal to use for more 

accurate models.

IW17PF_63
May 15, 2015

• Segal worked with the Fund Office and prepared the additional benefit models 

requested as Scenarios D-H in a report published to the Trustees May 15, 2015. 

• The new benefit suspension scenarios which were based upon actual pension data 

instead of a sample, included deterministic projections showing that the Pension Fund 

would start making its recovery earlier in 2036-2037. Additionally, the lowest market 

value of assets increased from $38 million under the old projections to $59 million with 

the live data. 

• This Report was reviewed with the Board of Trustees during a conference call meeting 

held May 15, 2015. 

• The initial investment and contribution income was just being received for the Plan Year 

end April 30, 2015, so the Trustees requested that Segal provide updated scenarios and 

sensitivity testing based upon the investment return assumption over time before moving 

forward with further discussions over the possible benefit suspension plan. 

• Fund Office began collection of data on inactive vested participants.

July 7, 2015 Board of Trustees Meeting

• At this Board of Trustees meeting, the Trustee reviewed the Segal Report dated June 9, 

2015 with its updated benefit suspension scenarios G-I. 

o (Scenario I) Reduce average accrual level to $75 with no change for early retirees 

under 30 Year Service Pension and elimination of excess Benefit Credits over one 

per year 

• The Trustees discussed concerns regarding the changes to early retirees that retired 

under the Service Pension. It was of great concern that these participants were receiving 

the highest amount of subsidy from the Pension Fund; however, the Trustees

acknowledged that they were only following the rules of the Pension Fund at the time. 

Additional benefit scenarios that were requested that showed the reduction to the average 

accrual rate of $75 with no additional reduction for the Early Retirees on the 30 Year 

Service Pension and with the elimination of the excess Benefit Credits. 

• Segal provided deterministic and stochastic models on these new scenarios. While both 

models G and I met the deterministic tests, neither were determined to have a 50% or 

greater chance to avoid insolvency under the stochastic modelling. Additionally, the 

Segal Report showed that the Pension Fund no longer has a 50% or greater probability 

to achieve a 7.5% investment return on an annual basis. 

• After review of these results, the Trustees requested information on the new average 

benefit accrual rate which would be needed to avoid insolvency under both deterministic 

and stochastic modeling with the additional change for the 6.5% interest assumption.

• Legal Counsel reviewed the IRS Proposed and Temporary Regulations including:

o Clarification that the Board can appoint a Retiree Representative but is not 

required to because of the size of the Plan

o The requirement that participant notices must be sent within days of the filing of 

the application – the model notice is extensive and will require additional 

information to be prepared for the Fund Office to meet this requirement

o Issues with the 5% test to determine if the level of benefit suspensions are 

reasonable

IW17PF_64
• After review of the best case scenario outlined below, the Trustees determined that it was 

highly improbable that the Treasury will conduct the member vote and provide final 

authorization prior to May 1, 2016. The Trustees suggested using November 1, 2016 as 

the benefit suspension date and authorized Segal to perform the 5% test to determine if 

the current benefit suspension scenarios under consideration would meet this test. 

July 29, 2015

• Segal prepared the 2015 Actuarial Status (Zone) Certification which found that the Plan 

is in critical and declining status. The certification included a year-by-year cash flow 

projection showing the projected insolvency date.

• Notice to the Participants was mailed to the participants 30 days later.

August 7, 2015

• Segal prepared the updated Scenarios G-I and added J-L based upon the results of the 

5% testing required under the Proposed Regulations. These updated scenarios included 

new proposed average benefit accrual rates and early retirement reductions for Early 

Retirees on a 30 Year Service Pension as follows:

o (Scenario J) Reduce average accrual level to $77 with no change for early retirees 

under 30 Year Service Pension and elimination of excess Benefit Credits over one 

per year

o (Scenario K) Reduce average accrual level to $80 with a 1.5% per year reduction 

for early retirees under age 62 with 30 Year Service Pension and elimination of 

excess Benefit Credits over one per year; and;

o (Scenario L) Reduce average accrual level to $75 with a 0.5% per year reduction 

for early retirees under age 62 with 30 Year Service Pension and elimination of 

excess Benefit Credits over one per year. 

• This Report was reviewed with the Board of Trustees during a conference call meeting 

held August 7, 2015. 

• The Report contained the updated investment and contributions for April 30, 2015 along 

with the change to the interest assumption to 6.5%. 

• Additionally, the Trustees requested that Segal provide sensitivity testing regarding the 

future payment of disputed withdrawal liability in light of the imminent decision by the 

Arbitrator. 

• The proposed scenarios passed the 5% test for the design under the deterministic 

projections. However, in reviewing the results of this testing, Segal advised the Trustees 

that due to the small margin afforded under the Proposed Regulations, a loss of only 1-

2% in the markets could result in the Pension Fund no longer avoiding insolvency. 

• The Trustees were concerned over the possibility that this 5% test could require them to 

make too few benefit reductions and have to repeat this process and make continuous 

suspensions in the future. The Trustees authorized Legal Counsel to work with Segal to 

prepare a comment on the Proposed Regulations with a suggested modification for the 

5% rule that would lessen the harmful impact on Pension Funds like, Iron Workers Local 

17, which are not making large reductions to accrued benefits under their proposed 

Suspension Plan. 

IW17PF_65
August 18, 2015

• Pension Fund issued a comment requesting modification of the 5% test to allow for some 

flexibility on behalf of plans that are seeking modest reductions to the benefit accruals. 

October 1, 2015 Board of Trustees Meeting

• At this Board of Trustees meeting, the Trustee reviewed the Segal Report dated October 

1, 2015. The prior scenarios A-L were determined to no longer be viable due to the 

changes to the investment assumption and loss of the withdrawal liability payments from 

Stevens Engineers & Constructors Inc. These updated scenarios included new proposed 

average benefit accrual rates and early retirement reductions for Early Retirees on a 30 

Year Service Pension as follows:

o (Scenario M) Reduce average accrual level to $75 with a 2.0% per year reduction 

for early retirees under age 62 with 30 Year Service Pension and elimination of 

excess Benefit Credits over one per year; and;

o (Scenario N) Reduce average accrual level to $72 with no change for early 

retirees under 30 Year Service Pension and elimination of excess Benefit Credits 

over one per year

• The Trustees reviewed the information on the September public hearing and Temporary 

Regulations on the voting procedure.

• Trustees tabled the decision to consider whether to move forward with the filing of the 

application. A special called meeting was set for October 16, 2015 to make this decision. 

October 16, 2015 

• Segal worked with Fund Office and Investment Consultant to update the investment return 

for the Third Quarter 2015. A Memorandum was provided to the Board of Trustees dated 

October 14, 2015 which included further revisions to the scenarios to account for the market 

losses. 

o (Revised Scenario M) Reduce average accrual level to $73 with a 2.0% per year 

reduction for early retirees under age 62 with 30 Year Service Pension and 

elimination of excess Benefit Credits over one per year; and;

o (Revised Scenario N) Reduce average accrual level to $70 with no change for 

early retirees under 30 Year Service Pension and elimination of excess Benefit 

Credits over one per year

• This Report was reviewed with the Board of Trustees during a conference call meeting 

held October 16, 2015. The Trustees discussed the overall equity issues between the 

two final scenarios. The Scenario M provides an overall benefit reduction to all affected 

participants but also allows for some additional reduction to the affected participants that 

received the most in early retirement subsidies. After review of the prior October 1, 2015 

Report along with the updates for the market losses, the Trustees approved filing an 

application for approval of the following Suspension Plan:

o Reduction of Benefit Credit Rate - the accrued benefit and benefit in pay status for 

any affected participant, beneficiary or Alternate Payee will be recalculated as of April 

30, 2016 (the fiscal plan year-end immediately prior to the Suspension Date) to be 

reduced so the highest average accrual rate is no more than $72.00 per year of Benefit 

Service. 

o Elimination of Excess Benefit Credits - the accrued benefit and benefits in pay status 

will be adjusted so any additional Benefit Credits over one (1) will be eliminated as of 

IW17PF_66
December 1, 2016.

o Modification of Unreduced Early Retirement Benefit - the benefits in pay status for any 

affected participant, beneficiary or Alternate Payee that received an unreduced early 

retirement benefit will be recalculated as of December 1, 2016 to apply a 1.5% 

reduction for each month that the person’s pension commenced prior to age 62. 

These changes will only apply to Affected participants, beneficiaries and Alternate 

Payees. The Proposed Suspension Plan recognizes that certain groups are exempted 

from the application of these benefit reductions. These groups which the Suspension 

Plan refers to as Exempted Participants are as follows:

o All participants that were awarded with a disability pension and beneficiaries of such 

participants;

o All participants and beneficiaries who are at least age 80 as of December 1, 2016; 

and

o Any participant or beneficiary that would receive a benefit that is less than 110% of 

the PBGC guaranteed level.

Additionally, the Proposed Suspension Plan will limit the application of these proposed 

reductions for any participant, beneficiary or Alternate Payee that is between age 75 and 

80 as of December 1, 2016. This group, which the Suspension Plan refers to as Limited 

Suspension Participants, will have their accrued benefit or benefit in pay status 

recalculated under the changes that apply to the Affected Participants above called the 

recalculated benefit. However, the Pension Fund will then determine 1/60th of the 

difference between the current benefit and suspended benefit. This factor will be 

multiplied by the number of months the Limited Suspension Participant is over age 75 as 

of December 1, 2016 to determine the increase factor. The new benefit under the 

Proposed Suspension Plan for this Limited Suspension Participant group is the sum of 

the reduced benefit plus the increase factor. 

• The Trustees discussed the issues that may be faced by retirees who are now faced with 

reduced monthly pensions. Replacement income was a concern based upon the current 

Suspension of Benefit Rules that do not allow Early Retirees younger than age 65 to 

return to work in any position related to the iron workers industry. After additional 

discussion, the Trustees agreed to change the Suspension of Benefit rules under the 

Pension Fund to allow any participant in pay status as of December 1, 2016 when the 

proposed Suspension Plan will go into effect to return to work for up to 39.5 hours (on a 

paid basis) per month without having to forfeit their monthly benefit. 

• The October 20, 2015 Segal Report was provided to the Trustees based upon the final 

Proposed Suspension Plan design with the required demonstrations on a deterministic 

and stochastic basis and showing the adoption of the Plan would avoid insolvency of the 

Pension Fund. 

IW17PF_67
Copyright © 2015 by The Segal Group, Inc. All rights reserved. 

Multiemployer Pension Reform Act of 2014

Iron Workers Local 17 Pension FundFebruary 17, 2015Presented by: Megan K. Kelly, CEBS, Vice President and Benefits Consultant

Harold S. Cooper, FSA, MAAA, EA, Vice President and Actuary

This document has been prepared by Segal Consulting and is not complete without the presentation provided at the February 17, 2015 meeting of the Board of Trustees of the Iron Workers Local 17 Pension Fund. This document should not be shared, copied, or quoted, in whole or in part, without the consent of Segal Consulting, except to the extent otherwise required by law. As with all issues involving the interpretation or application of new laws, Trustees should rely on the advice of Fund Counsel in interpreting and applying the Multiemployer Pension Reform Act of 2014. The actuarial calculations were completed under the supervision of Henry Wong, ASA, MAAA, FCA, EA.

5486087 / 01031

IW17PF_68
 Multiemployer Pension Reform Act of 2014 (MEPRA)

 Enacted December 16, 2014 Part of the Consolidated and Further Continuing Appropriations Act

the “omnibus” government funding bill

Eliminates Pension Protection Act of 2006

(PPA) “sunset” provisions

Includes many proposals from NCCMP

Retirement Security Review CommissionReport “Solutions not Bailouts” including:

 Benefit suspension provisions for plans

in “critical and declining” status,

 Zone certification modifications, PBGC facilitated mergers, and Certain withdrawal liability calculation changes

Overview

IW17PF_69
 Other notable items:

 PBGC premiums doubled for 2015 Revised partition rules Several other changes and technical corrections

Provisions generally effective for

the 2015 plan year

 Some effective as of date of enactment

(December 16, 2014)

 NOT included in the law:

 New “composite” (target) flexible

benefit plan design

Overview continued

IW17PF_70
Existing PPA “zone rules” continue indefinitelyStatus certifications of endangered (yellow zone) or critical (red 

continue

Information collection early in 2015 plan year still necessary 

 Trustee input for industry activity levels  Financial information 

Scope of needed information expanded 

 Zone certification requirements may require longer term industry ac Additional information also needed for new “critical and declining st

determination

Automatic approval for certain amortization extensions also co

PPA Sunset Repealed

Eliminates all uncertainty surrounding the scheduled su

IW17PF_71
PBGC premium increased to $26 per participant in 2015

 Doubles announced pre-MEPRA 2015 rate of $13 per participant For this Plan, the expected increase is approximately $27,000 Rate indexed for years after 2015, based on US national average w

PBGC report to Congress by June 1, 2016

 Whether premium level is sufficient to meet “projected mean stocha

benefit obligations”

 If not, propose premium levels sufficient to meet such obligations

PBGC Premiums

Expect higher administrative expenses in light of new PBGC 

IW17PF_72
 Critical status surcharges disregarded in:

 Allocation of unfunded vested benefits, and Highest contribution rate used for withdrawal liability annual payme Applicable to surcharges payable in 2015 (and beyond)

 Contribution rate increases pursuant to a funding improvement or reh

disregarded in:

 Allocation of unfunded vested benefits, and Highest contribution rate used for withdrawal liability annual payme Applicable to increases going into effect during 2015 and later plan  Exceptions for rate increases tied to increased work levels or highe Exclusion ceases when plan emerges from critical or endangered s PBGC to provide simplified methods

 Intended to encourage employers to remain in yellow and red plans These changes do not currently affect the Iron Workers Local 17 

Fund since there are no employers paying surcharges and there contribution rate increases required by the Rehabilitation Plan

Withdrawal Liability Calculation Changes

IW17PF_73
Status certification requirements are expanded to identify “crit

declining status” (red C&D) plans

 Plans that meet one or more of the red zone tests, plus  Insolvency projected within:

– 15 years – 20 years, if inactive/active ratio is at least 

2 to 1, or less than 80% funded

 For insolvency projections:

– Assume, if reasonable, that each 

employer’s rehabilitation plan schedule continues after CBA expiration

– Reflect any prior suspensions that 

are still in effect

 Based on the May 1, 2014 actuarial 

valuation, we estimate the Iron Workers Local 17 Pension Fund will be in Critical and Declining Status for the 2015 Plan year.

Critical and Declining Status

Employer information will require Trustee input 

IW17PF_74
 Red C&D status must be disclosed in annual funding notice 

 Notice provided to participants, bargaining parties and PBGC 

Information required 

 Statement that the plan is in red C&D status Projected date of insolvency Clear statement that projected insolvency 

may result in benefit reductions

 Statement whether Trustees have taken 

legally permitted actions to prevent insolvency

Critical and Declining StatusAnnual Funding Notices

Status, implications and Trustee actions need to be discl

IW17PF_75
Trustees of critical and declining status (red C&D) plans may s

benefits, subject to certain criteria and restraints

Suspension means “temporary or permanent reduction” of:

 Current or future payment obligation to  Any participant or beneficiary, including those in pay status

 Conditions for suspension include:

 Trustees determine that plan is projected to be insolvent although a

measures have been taken (and continue to be taken) to avoid ins

 The actuary certifies that plan is projected to avoid insolvency unde

suspension

Benefit Suspensions

Benefit suspension is not mandatory

IW17PF_76
In its all reasonable measures and benefit suspension determtrustees may consider the following:

Benefit SuspensionsReasonable Measures 

Trustee determinations must be in writing, maintaine

throughout suspension, and subject to agency revie

 Current and past contribution levels Levels of benefit accruals Prior benefit reductions Prior suspensions The impact on plan insolvency of plan 

subsidies and ancillary benefits

 Compensation levels of active 

participants relative to the industry

 Competitive and other 

factors

 The impact of benefit a

contribution levels on reactive participants and groups

 The impact of past and 

contribution levels on eattrition and retention

 Measures taken to reta

employers

IW17PF_77
Limitations on suspensions include:

 Monthly benefit cannot be reduced below 110% of each participant

guarantee

 No reductions for participants over age 80 at time of suspension Gradual phase-in of protection for those between 75 and 80 No reductions for disability benefits

 Any reduction must be “reasonably estimated to achieve, but 

exceed, the level that is necessary to avoid insolvency”

 When suspension is done in conjunction with partition, suspen

take effect prior to effective date of partition

Benefit SuspensionsLimitations

Assumptions for solvency determination 

must be carefully considered

IW17PF_78
Suspension must be equitably distributed across participant and bepopulation, taking into account factors that may include the following:

Benefit SuspensionsEquitable Distribution

Trustees decide on equitable terms of suspension 

distribution that they deem appropriate

 Age  Life expectancy Length of time in payment status Amount of benefit Type of benefit – survivor, normal 

retirement, early retirement

 Extent of benefit subsidy Extent of post-retirement benefit 

increases

 History of benefit increase

reductions

 Years to retirement for act Discrepancies between ac

benefits

 Extent to which suspensio

withdrawal of participant splan 

 Extent to which benefits a

service with an employer tpay its full withdrawal liabi

IW17PF_79
 Submit application for 

proposed suspensions to Treasury 

 Provide required notice to 

interested parties at time of submission, including individualized estimates to participants and beneficiaries

 Publishes request for 

comments in Federal R

 Publishes application o

Treasury website

 Has 225 days to review

approve submission − Submission consider

approved if no respowithin 225 days

Suspension can be implemented only after approval proce

 Concurrent application to Treasury and notice to participants Approval by Treasury in consultation with DOL and PBGC  Participant ratification 

 Application Process

Benefit SuspensionsApproval Process

Trustees Treasury

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Approved application is subject to ratification by plan participan

beneficiaries

 Vote is administered by Treasury Must be conducted no later than 30 days after agency approval Suspension goes into effect, unless a majority of all participants and 

vote to reject suspension

 Agency can override participant rejection vote for “systemically imp

– Plans where projected PBGC financial assistance exceeds $1 bill

 Rules for judicial review of approved or denied suspensions ar

 Suits must be brought within one year of approval or denial Affected participants and beneficiaries may not bring suit

Benefit SuspensionsRatification and Review

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Plans with over 10,000 participants must select a “retiree repre

 Must be a participant in pay status  Advocate for interests of non-active participants Must be selected at least 60 days before suspension application su

Special rules apply to benefit improvements after suspensionSuspended benefits disregarded in withdrawal liability determi

 For withdrawals within 10 years of effective date of suspension

Benefit SuspensionsOther Rules

Process to implement suspension can be lengthy

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The following slides contain solvency projections based on be

reductions effective May 1, 2016

Benefits are assumed to be reduced across the board to not le

110% of each participant’s PBGC guaranteed benefit 

 No reduction for disabled pensioners and participants age 80 a

May 1, 2016

 Smaller reduction for participants between age 75 – 80

Projected contribution income is based 607 active participants

active working an average of 1,700 hours each year, and inclu

withdrawal liability income from Stevens Painton

7.5%, 7.0%, and 6.5% market return scenarios  Mortality assumptions updated to RP-2014 Blue Collar Mortalit

generational projection using Scale MP-2014

Full description of assumptions in Appendix B

Benefit SuspensionsProjection Scenarios

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Benefit SuspensionsProjections Based on 7.5% Market Returns

Projected Market Value of Assets as of April 30

The Plan is projected to become insolvent in the Plan year beginning May 1, 2028 under the cur

We recommend stochastic analysis to determine the probability of remaining solvent under ran

IW17PF_84
Benefit SuspensionsProjections Based on 7.0% Market Returns

Projected Market Value of Assets as of April 30

Future changes in asset allocations may result in lower investment returns. A reduction in 

return assumption by 50 basis points is equivalent to an additional 3% benefit redu

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Benefit SuspensionsProjections Based on 6.5% Market Returns

Projected Market Value of Assets as of April 30

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Benefit SuspensionsAdditional Data on Pay Status Participants

Participants in Pay Status as of April 30, 2014 Counts

Total Monthly 

Benefit

Average Monthly 

Benefit

Non-Disabled Pensioners

Under age 751 304 $687,317 $2,261 

Age 75 – 791 83 157,313 1,895 

Age 80 and over1 138 198,139 1,436 

Total 525 $1,042,769 $1,986 

Disabled Pensioners3 351 $446,390 $1,272 

Beneficiaries 202 $118,848 $588 

Total Pay Status 1,078 $1,608,007 $1,4921As of May 1, 20162Benefit reduction must be prorated based on number of months between the month following the effecti

suspension and participant’s 80th birthday

3223 will be over Normal Retirement Age (65) as of May 1, 20164Amount of benefit reduction will most likely be small since the benefit amount for majority of beneficiarie

of the PBGC guaranteed amount

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Benefit SuspensionsPotential Designs

Trustees must decide on equitable terms of suspension distrib

they deem appropriate

Some factors that the Trustees should contemplate

 Current and past benefit rates ($50 versus $100 per benefit credit) Current and past early retirement provisions (e.g., Service Pension, 

Early Pension, etc.)

 Current status (active, inactive vested, payment status) Age Length of time in payment status

Trustees may also want to consider changes to current Plan p

before suspension

Viability of participant support should also be consideredThe following slides are illustrations of potential designs based 

benefit suspension 

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Benefit SuspensionsPotential Designs – Example 1

20% reduction for every participant

 Benefit is greater of: 

– 80% of benefit calculated under current provisions, and– 110% of PBGC guaranteed benefit – Benefit cannot be greater than current benefit

 Pre-2009 retiree with 18 years of service at $100 accrual rate and 2 

service at $50 accrual rate retiring at age 60 will have following amo

– Current benefit after early retirement reduction = $1,780.00– Current benefit after early retirement reduction with 20% benefit suspensi

– 110% of PBGC guaranteed benefit = $786.50 

 Post-2009 retiree with 8 years of service at $100 accrual rate and 1

service at $50 accrual rate retiring at age 58 will have the following 

– Current benefit after early retirement reduction = $789.60– Current benefit after early retirement reduction with 20% benefit suspensi– 110% of PBGC guaranteed benefit = $711.92

IW17PF_89
Benefit SuspensionsPotential Designs – Example 2

$100 accrual rate for all years of service

 Benefit is greater of: 

– 80% of $100 multiplied by years of service, and– 110% of PBGC guaranteed benefit – Benefit cannot be greater than current benefit

 Pre-2009 retiree with 18 years of service at $100 accrual rate and 2 

service at $50 accrual rate retiring at age 60 will have following amo

– Current benefit after early retirement reduction = $1,780.00– $100 accrual rate after early retirement reduction with 20% benefit suspen– 110% of PBGC guaranteed benefit = $786.50 

 Post-2009 retiree with 8 years of service at $100 accrual rate and 1

service at $50 accrual rate retiring at age 58 will have the following 

– Current benefit after early retirement reduction = $789.60– $100 accrual rate after early retirement reduction with 20% benefit suspen– 110% of PBGC guaranteed benefit = $711.92

 Although the illustration is shown with a 20% reduction, the same a

the reduction will need to be greater than under Example 1.

IW17PF_90
Benefit SuspensionsPotential Designs – Example 3

Current early retirement factors applied to all participants

 Benefit is greater of: 

– 80% of benefit calculated under current ERFs – 110% of PBGC guaranteed benefit – Benefit cannot be greater than current benefit

 Pre-2009 retiree with 18 years of service at $100 accrual rate and 2 

service at $50 accrual rate retiring at age 60 will have following amo

– Current benefit after early retirement reduction = $1,780.00– Current ERFs with 20% benefit suspension = $1,086.80– 110% of PBGC guaranteed benefit = $786.50 

 Post-2009 retiree with 8 years of service at $100 accrual rate and 1

service at $50 accrual rate retiring at age 58 will have the following 

– Current benefit after early retirement reduction = $789.60– Current ERFs with 20% benefit suspension = $631.68– 110% of PBGC guaranteed benefit = $711.92

 Although the illustration is shown with a 20% reduction, the same a

the reduction could be less than under Example 1.

 This design could be combined with the features in Example 2.Note: New ERFs would be developed using current basis for pre-2009 retirees who retire

IW17PF_91
Benefit SuspensionsSample Timeline for May 1, 2016 Effective Date

February 2015

-Approval to proceed; discuss preliminary designs of suspension Trustees

Mid-March 2015

-Collect necessary data to calculate PBGC guaranteed benefit Fund Administra

Mid-April 2015

-Review and refine actuarial assumptions; run stochastic projections 

and stress testing; update design

Segal

End of April 2015

-Review all reasonable measures to avoid insolvency (see following 

slide); review updated design for viability and reasonableness

Trustees

End of May 2015

-Review 2014/2015 experience and fine-tune design Segal

Mid-June 2015

-Approve final design Trustees

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Benefit SuspensionsSample Timeline for May 1, 2016 Effective Date cont

Mid-February 2016

-Approval by Treasury-Develop participant ballots for suspension vote and submit to Treasury

IRS

Fund Counsel and Fund A

Mid-March 2016

-Conduct member vote IRS

Mid-April 2016

-Vote count-Prepare for implementation

IRS

Fund Administra

May 1, 2016

-Effective date of suspension Fund Administra

End of June 2015

-Complete 2015 Actuarial Status (Zone) Certification-Prepare Individual benefit impact estimates-Provide notice to participants and interested parties (including benefit 

impact estimates)

-Submit application to Treasury

Segal

Fund Administrator an

Fund Counsel and Fund A

Fund Counse

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 Consider appropriate statutory factorsFormulate potential rehabilitation plan changes for all reasona

Project implications of measures on preliminary deterministic s

projections 

 Make and document all reasonable measure decisions

Benefit SuspensionsReview All Reasonable Measures to Avoid Insolven

IW17PF_94
Discussion and Questions

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Plans projected to be in red zone soon may elect to enter red  Critical status certification expanded 

 Actuary required to determine whether plan will be 

in red zone in current or “succeeding 5 plan years”

If certified red in succeeding 5 plan years 

 Plan may elect to enter red zone—election due within 

30 days of certification 

– If red zone elected, notice to Treasury required– If red zone not elected, notice to PBGC required 

Special projection rules may apply for determining 

critical status beyond current year 

 But only to avoid eligibility for early election of red zone 

Some plans will be able to choose critical status 

as a means to avoid or leave endangered status

Appendix A: Other Provisions of MEPRAEarly Election of Red Zone

Provides potentially distressed plans 

earlier access to critical status tools

IW17PF_96
Plan may avoid entry into yellow zone, if no action required to 

 Allows affected plans to skip Funding Improvement process 

and related restrictions

 Determination done in conjunction with annual status 

certification process

– Actuary for potentially new yellow plan does 10-year 

endangered status projection 

Yellow zone may be avoided if:

 Plan green (not yellow or red) in the prior year, and Actuary certifies plan projected to no longer be yellow at the 

end of 11 years 

– Assuming no change in future CBAs, plan provisions

 Notice requirement

 If yellow zone entry avoided, notice must be provided 

to bargaining parties and PBGC

Appendix A: Other Provisions of MEPRA No Yellow Zone if “No Additional Action” is Required

Plans that need to “do nothing” to 

exit yellow may continue to be “green”

IW17PF_97
 Rules for red zone emergence clarified and revised to include 

following criteria (including new long-term solvency test):

 Plan does not meet any PPA tests for entering critical status, Plan is not projected to have an accumulated funding deficiency in t

years, (without regard to use of shortfall method, but taking into accamortization extensions), and

 Plan is not projected to be insolvent within 31 years

Special rule for plans with “automatic” amortization extensions 

emergence from and reentry to critical status 

 Those plans may encounter emergence earlier than anticipated

Appendix A: Other Provisions of MEPRA Clarification for Emergence from Red Zone

Emergence from red zone may be more difficult or 

less difficult depending upon plan’s circumstances

IW17PF_98
Yellow zone plan restrictions revised to parallel red zone durin

adoption and funding improvement periods including:

 Benefit increases Contribution reductions or suspensions Exclusion of certain participants 

Applicable schedule to be imposed specified when initial CBA 

parties fail to agree on renewed schedule

Adjusts yellow zone funding improvement plan target (funded 

 Might require funding improvement plan change for 2015 update 

 Reorganization rules eliminated 

 But insolvency rules amended to incorporate certain aspects for red 

PBGC to guarantee pre-retirement survivor annuities for spous

or after 12/16/14, retroactive for participant deaths on or after 

 Required disclosures expanded 

Appendix A: Other Provisions of MEPRA Other Changes and Technical Corrections

MEPRA changes generally apply to 2015 plan years

IW17PF_99
PBGC may approve a partition if:

 Plan is in critical and declining (red C&D) status Plan has taken, and is continuing to take, “all reasonable measure

insolvency 

– Measures include the maximum benefit suspensions, if applicable

 PBGC reasonably expects that partition:

– Will reduce its expected long-term loss; and – Is necessary for plan to remain solvent

 PBGC certifies to Congress that its ability to meet obligations will no

by such partition

 The cost of partition is paid out of PBGC multiemployer guarantee f

PBGC must notify Congressional Committees and affected pa

after partition approved

Appendix A: Other Provisions of MEPRA Partitions

PBGC must certify non-impairment to approve a partit

IW17PF_100
Plan remaining after partition

Insolvent plan created by transfer of liabilitfor partitioned participants or beneficiaries

Partition separates plan into two plans:

Appendix A: Other Provisions of MEPRA Partitions continued

Partition plan pays only guaranteed benefits Ongoing plan pays:

 partitioned plan participants to “make them whole” to post-suspensi

and 

 post-suspension benefit level to all other participants

Special withdrawal liability rules 

 Apply to employers who withdraw within 10 years of partition

Ongoing 

Plan

Partition 

Plan

IW17PF_101
Appendix A: Other Provisions of MEPRA PBGC Facilitated Mergers

 Determined to be in best interest of at 

plan’s participants, and 

 Not adverse to overall interests of part

any of the affected plans

 PBGC assistance may include training

assistance, mediation, communicationsupport with other agencies

PBGC will 

facilitate 

mergers upon 

request if 

merger is:

 At least one plan is red C&D,  Such assistance will reduce PBGC ex

long-term losses from involved plans, 

 Necessary for “merged plan to becom

solvent”

PBGC financial 

assistance 

available to 

merged plan if:

IW17PF_102
In addition:

 PBGC must certify ability to meet existing 

obligations to other plans will not be impaired by the financial assistance

 Financial assistance is paid out of PBGC’s 

multiemployer guarantee fund

PBGC must notify Congressional 

Committees when financial assistance is provided

Appendix A: Other Provisions of MEPRA PBGC Facilitated Mergers continued

PBGC must certify non-impairment to 

provide financial assistance for mergers

IW17PF_103
 The projections shown were based on the May 1, 2014 actuarial valuation and 

additional assumptions:

 7.5%, 7.0% or 6.5% future market returns. 607 actives for all future years, with each active working an average of 1,70

(1.03 million hours).

 Any reduction in benefit occurs on May 1, 2016.  Benefits will be reduced to the level described in the chart or 110% of the P

amount, whichever is greater, taking into consideration the following:

– No reduction for pensioners over age 80 and pensioners receiving a disab

– Pensioners between ages 75 and 80 get a pro-rated reduction.

– No reduction for current beneficiaries. – Participants with unknown service (except current beneficiaries) were red

consideration of their PBGC guaranteed amount as it cannot be determin

 Service pension is eliminated effective May 1, 2016. As such, the retiremen

pension is eliminated on and after that date. 

 Future benefit accrual rate remains at $50 per benefit credit.  Stevens Painton pays its withdrawal liability as assessed. Effective May 1, 2015, mortality assumptions change to RP-2014 Blue Colla

Tables with generational projection using Scale MP-2014 for non-disabled p2014 Disabled Retire Mortality Tables with generational projection using Scaparticipants disabled on and after May 1, 1997, and a 50/50 blend of the two mortality assumptions for participants disabled prior to May 1, 1997.

Appendix B: Assumptions Used in Projections

IW17PF_104
 Contribution rate remains at $10.00 per hour. Administrative expenses increases by 10% for the May 1, 2015 Plan year a

year for all future years. The additional increase in 2015 is due to the doublipremiums under MEPRA.

Caveat regarding projections: Projections, by their nature, are not a guarantee of future results. The are intended to serve as estimates of future financial outcomes that are based on the information availamodeling is undertaken and completed, and the agreed-upon assumptions and methodologies describeresults may differ significantly if the actual experience proves to be different from these assumptions or methodologies are used. Actual experience may differ due to such variables as demographic experiencmarket performance and the regulatory environment.Caveat regarding legal interpretations: Segal does not practice law and, therefore, cannot and does 

advice. Any statutory interpretations of PPA 2006 , PRA 2010 , and MEPRA 2014, including related IRS guidance presented or reflected in the presentations are subject to the review and opinion of Fund Counsuspension is solely the responsibility of the Trustees. Any sample designs contained in this presentatioassist the Trustees and do not imply any recommendation by Segal.

Appendix B: Assumptions Used in Projections c

IW17PF_105