Page 21.0

Automotive Industries Pension Plan

Checklist Item #21

Does the application describe how the plan sponsor took into account – or did not take into 

account – in the determination that all reasonable measures have been taken to avoid 

insolvency the impact of:

 benefit and contribution levels on retaining active participants and 

bargaining groups under the plan, and

 past and anticipated contribution increases under the plan on employer 

attrition and retention levels?

See section 5.03.

Yes. The documentation is attached as Document No. 21.1. 
Page 21.1.1

Document No. 21.1

Impact of Benefit and Contribution Levels on Retaining Active Participants and 

Bargaining Groups under the Plan

The Trustees considered the impact of benefit and contribution levels on retaining active 

participants and bargaining groups under the Plan. The active participants’ adjustable benefits 

were previously eliminated under the Rehabilitation Plan and the future service accrual rate 

reduced as much as possible in the default schedule, including to a very low benefit accrual rate

of 1%. Due to the impact of the Rehabilitation Plan, active participants have already been 

seeking alternatives instead of remaining in the Plan. For example, at Union contract proposal 

meetings, participants often propose new retirement money should be bargained into a 401(k) 

plan or a different pension plan. See Declaration of Donald Crosatto (“Crosatto Decl.”), 

Document No. 19.2., ¶ 13. Any further reductions to the benefit accrual rate would put the Plan 

at increased risk of losing support from active participants. Nevertheless, once informed about 

MPRA, active participants tend to support the Plan making an application because they believe 

that the Plan’s projected insolvency will mean they will receive little, if any, of their pension 

when they retire. Crosatto Decl., Document No. 19.2., ¶ 14. 

Impact of Past and Anticipated Contribution Increases on Employer Attrition and 

Retention Levels

As for the impact of past and anticipated contribution increases on employer attrition and 

retention levels, the average contribution levels have stayed relatively flat over the last 10 years 

($393.84 in 2006 to $398.43 in 2015). Employers have been reluctant to agree to higher 

contribution levels because they must also pay the supplemental employer contributions under 

the Rehabilitation Plan. Crosatto Decl., Document No. 19.2, ¶ 12. Trustees initially enacted a 

12.5% cumulative supplemental employer contribution as part of the 2008 Rehabilitation Plan, 

scheduled to take effect beginning in 2013. Some employers were financially healthy and could 

afford such an increase. However, the smaller employers informed the Union that they would be 

unable to pay this supplemental employer contribution and threatened that they would have no 

choice but to go out of business or file for bankruptcy. Crosatto Decl., Document No. 19.2, ¶ 6. 

The Trustees were convinced that the 12.5% cumulative supplemental employer contribution 

would cause the three largest contributing employers to pull out of the Plan and that if those 

employers left, the smaller employers would follow suit, leading to a mass withdrawal. Crosatto 

Decl., Document No. 19.2, ¶ 7. In light of these factors, when it came time to update the 

Rehabilitation Plan in 2012, the Trustees determined that a maximum cumulative surcharge of 

5% would allow the Plan to retain contributing employers and discourage withdrawals thereby 

allowing the Plan to maintain or possibly improve its funding status and forestall insolvency as 

long as possible. Crosatto Decl., Document No. 19.2., ¶ 10.

Any increase in contributions would also make contributing employers less competitive 

in the marketplace and increase the risk of future bankruptcies or withdrawals.