Central States, Southeast and Southwest Areas Pension Plan

Item #8 

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 required determination and documentation are provided in the attached documents 8.1 and 8.2 

and the documents referenced therein. 

8.0
Section 3.03 Board of Trustees’ Determination of Projected Insolvency

Pursuant to Internal Revenue Code § 432(e)(9)(C)(ii), the Board of Trustees has determined that 

the Plan is projected to become insolvent unless benefits are suspended, even though all 

reasonable measures have been taken to avoid insolvency. 

As part of its certification that the Plan is in “critical and declining” status for the plan year 

beginning January 1, 2015, the Plan’s actuary determined that the Plan is projected to become 

insolvent in the year 2026. 

The Plan’s actuary reached this conclusion even though the Board of Trustees has taken all 

reasonable measures to avoid insolvency of the Plan. Those reasonable measures are described 

in the following documentation required by section 5 of Rev. Proc. 2015-34: 

• A detailed description of measures taken in order to avoid insolvency over the 10-year

period immediately preceding the plan year in which this application is being submitted.

Section 5.01. See document number 18.

• The information concerning “Plan factors” required by Section 5.02 of Rev. Proc. 2015-

34. See document numbers 19.1 through 19.8.

• Descriptions of how each of the factors identified in document numbers 19.1 through

19.8 was taken into account (or why that factor was not taken into account) in the plan

sponsor’s determination that all reasonable measures have been taken to avoid

insolvency. Section 5.03. See document number 20.

• A description of how any other factors were taken into account in the plan sponsor’s

determination that all reasonable measures have been taken to avoid insolvency. Section

5.04. See document number 20.

Attached as document number 8.2 are the Summary of Trustees’ Study and Deliberations

Concerning MPRA and Potential MPRA Suspension Plans at the September 16, 2015 Meeting 

and the September 16, 2015 Findings and Determinations Relating to the Proposed MPRA 

Suspension Plan (including Tab A - Summary of Trustees’ Study and Deliberations Concerning 

MPRA and a Potential MPRA Suspension Plan and Tab B – Actuarial reviews presented to the 

Trustees between 2008 and 2014 in connection with the Trustees’ formulation of the 

rehabilitation plan and updates to that plan). 

8.1.1
SOURCE: THOMAS C. NYHAN

MARK ANGERAME

JAMES P. CONDON

SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM

On September 16, 2015 a Meeting was held to discuss MPRA suspension options. 

The following individuals were in attendance at the Meeting:

Employee Trustees Employer Trustees 

Charles A. Whobrey Arthur Bunte, Jr. 

Marvin Kropp Gary F. Caldwell 

George Westley Greg R. May 

William Lichtenwald (via phone) Ronald DeStefano 

 

Pension Fund Staff Groom Law Group Segal Consulting

Thomas Nyhan Gary Ford Steve Rabinowitz

Mark Angerame Lars Golumbic Dan Ciner

James Condon 

Robert Coco Retiree Representative & Advisors

John Franczyk Sue Mauren

Peter Priede Pamela Nissen

Fernando Rodriguez Peter Rosen

 

Independent Special Counsel

 Hon. David Coar

1. Thomas Nyhan began the Meeting by indicating that the first order of business 

would be to review the legal opinions underpinning the suspension plan that the Trustees 

have been considering and formulating. Gary Ford of the Groom Law Group then reviewed 

those opinions and this review included a discussion of the following issues and topics:

a) With regard to “Tier 1” benefits (i.e., benefits earned with Employers that have

failed to pay their withdrawal liability which MPRA directs are to be subject to 

maximum suspensions), Mr. Ford discussed the meaning of a “failure to pay 

withdrawal liability” under MPRA and the use of contributions made by each 

8.2.1
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 2 

Employer on behalf of each participant as the basis of allocating benefits to Tier 1 

and to each of the MPRA Tiers.

b) With regard to “Tier 2” benefits (all other benefits, i.e., those not allocated to one of 

the other Tiers) and “Tier 3” benefits (benefits earned with UPS by participants 

whose Central States benefits have been guaranteed by UPS), Mr. Ford discussed 

whether MPRA commands that Tier 2 benefits be reduced to any specific level, 

and whether, and to what extent, any distinctions in the level of suspensions should 

be made between Tier 2 and Tier 3 benefits. 

c) Mr. Ford also discussed issues relating to: (a) the type of notice of the change in 

the future accrual rate (from 1.0% to 0.75%) that should be provided in connection 

with the proposed suspension plan, (b) the application to the Plan of the concept of 

a “credited year of service” as used in ERISA sec. 4022A with regard to the 

calculation of PBGC benefit guarantees, (c) parties that may have standing to 

challenge a suspension plan, (d) whether “critical and declining” plans are 

compelled to propose a suspension plan and to file an application seeking approval 

of the plan and (e) the application of the statutory age-based limitations on 

suspensions.

2. Steve Rabinowitz then presented data concerning the following topics relating 

to the three MPRA Tiers:

a) The number of participants and beneficiaries allocated to each Tier, and the 

number of participants with benefits allocated to more than one Tier.

8.2.2
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 3 

b) The suspension amounts (expressed as a percentage of reduction from 

current benefit entitlements) to be incurred by benefits and participants 

allocated to each Tier, including the average percentage of benefit 

reductions for each Tier and the distribution of percentage reductions within 

each Tier (e.g., the percentage of Tier 2 benefits that will experience no 

reductions, the percentage of Tier 2 benefits that will be reduced by 10%, by 

20% etc.).

c) There then followed a discussion among the Trustees concerning the 

average and maximum benefit reductions to be incurred under the 

suspension plan. The Trustees also reviewed and discussed the factors that 

will determine the amount of benefit reduction for various participants, 

including: 

i) The Tiers to which all or any portion of the participant’s benefit have

been assigned.

ii) The status of the participant (retiree, active or terminated with fewer 

than 20 years of Contributory Service Credit).

iii) The amount of contributions made on the participant’s behalf.

iv) The age of the participant and whether he has received a disabilitybased pension from Central States. 

v) Whether the Participant’s current benefit entitlement is below the 

110% of the PBGC guarantee amount.

8.2.3
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 4 

3. The Trustees then discussed the future accrual rate of 0.75% of contributions 

under the proposed suspension plan (reduced from the current accrual rate of 1.0%) and 

noted the following:

a) All classes of Participants are reliant upon the continued support for the 

Fund by active participants. Under the current benefit accrual rate of 1.0%, 

the Fund’s actuary has advised that $0.50 of every contribution dollar must 

be allocated towards the satisfaction of the Fund’s legacy costs, as opposed 

to paying the normal cost of the benefit earned by participant on whose 

behalf the contribution has been made.

b) The reduction in the accrual rate to from 1.0% to 0.75% is somewhat offset 

by the contribution rate increases, including rate increase for Employers 

whose rates are presently frozen, that are assumed under the proposed 

suspension plan.

c) At the current NMFA contribution rate of $342 per week, a participant will 

accrue an additional $133.80 each year towards his monthly benefit upon 

retirement under the suspension plan benefit accrual rate of 0.75%. 

d) At the average current contribution rate of $220 per week (excluding the 

Distressed Employer rate paid by YRC), a participant will accrue an 

additional $85.80 per year towards his monthly benefit upon retirement 

under the suspension plan benefit accrual rate of 0.75%.

e) The Trustees determined, with specific input from the Employee Trustees, 

that these accrual rates should be sufficient to continue the support of active 

8.2.4
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 5 

participants for the Fund; however, the Trustees also determined that if the 

future accrual rate were to be lowered to any significant extent below 0.75% 

of contributions (e.g., to 0.5%), there would be a serious risk of erosion of 

support for the Fund by the active participants.

4. Sue Mauren, the Retiree Representative, then stated as follows:

a) She has participated either personally or through her counsel in all the 

MPRA Meetings held by the Trustees since her appointment.

b) She and her counsel have also participated in numerous meetings and 

phone conferences with the Fund’s Staff. 

c) She has made extensive efforts to communicate with retirees and 

terminated participants via e-mail, her website, and other means. 

d) She has vigorously advocated for the interests of retirees and terminated 

participants, and she recognizes the hardship that will result from any level 

of benefit reduction incurred by these groups.

e) However, she also recognizes -- based on advice received from her legal 

and actuarial advisors (which she anticipates will soon be confirmed in a 

formal report) -- that the consequences for these groups will be even more 

severe if a suspension plan is not put in place, and the Fund is allowed to 

slide into insolvency.

f) In order to mitigate the hardship caused by the proposed suspension plan, 

she has also advocated a relaxation of the Fund’ restricted reemployment 

rules, and asked that the relaxed rules be given immediate effect; the 

8.2.5
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 6 

Trustee have agreed to the relaxation of the prohibited reemployment rules, 

but have decided not to give them immediate effect -- and she appreciates 

that the Trustees have rational reasons to delay the effective date of the 

new liberalized rules.

g) Based upon her communications with retirees and terminated participants, 

the following issues are of the highest concern among these participants:

i. What is required to qualify for the protection of disability-based 

pensions? Will receipt of social security disability payments suffice?

ii. What groups besides those with disability-based pensions and those 

aged 75-80 (or older) will be protected (in whole or in part) in the 

suspension process?

h) She recognizes that when protections are expanded beyond the groups of 

participants that are protected from suspensions by the law, the expanded 

protection offered to one group of participants tends to result in the 

imposition of more severe suspensions on other groups of participants. 

Therefore, she agrees that the Trustees have chosen a wise course in 

creating a rule concerning “caps” on the maximum percentage reduction in 

current benefits that will be applicable to a wide range of participants.

i) She also recognizes that retaining the support of actives for the Fund is 

important to all the participants who rely on the Fund, and she has tried to 

communicate this to the retirees and terminated participants whom she 

represents.

8.2.6
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 7 

The Trustees and Fund Staff then thanked Sue Mauren and acknowledged that 

her assistance and input was invaluable in formulating the proposed suspension plan.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 

ACTION OF THE PENSION BOARD MEETING – SEPTEMBER 16, 2015

1. Thomas Nyhan then discussed the attached Proposed Findings and 

Determinations Relating to the Proposed Suspension Plan (“Findings and Determinations”), 

including Tab A to those Findings and Determinations (Summary of Trustees Study and 

Deliberations concerning MPRA and a Potential Suspension Plan) and recommended that 

the Trustees approve and adopt those Findings and Determinations (which had been 

distributed to the Trustees for their review via e-mail in draft form on September 11, 2015), 

subject to any final changes which Staff may propose to those Findings and Determinations

after giving notice to the Trustees via e-mail.

WHEREUPON, following a full discussion, a motion was made, seconded and 

unanimously supported to approve and adopt the Findings and Determinations. 

2. Mr. Nyhan also recommended that the Trustees approve the proposed

suspension plan described in Section II of the attached Findings and Determinations. 

WHEREUPON, following a full discussion, a motion was made, seconded and 

unanimously supported to approve this suspension plan. 

3. Finally, Mr. Nyhan recommended that the Trustees (a) approve the filing with 

the Department of Treasury on September 25, 2016 of an application for approval of the 

above-referenced proposed suspension plan and (b) authorize Trustee Arthur Bunte to sign, 

8.2.7
SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND 

POTENTIAL MPRA SUSPENSION PLANS AT THE SEPTEMBER 16, 2015 MEETING

TM: 538293/ 9/22/2015 6:31 PM 8 

on behalf of the full Board of Trustees, the documents required to complete the application to 

be filed with the Department of Treasury. 

 WHEREUPON, following a full discussion, a motion was made, seconded and 

unanimously supported to approve the filing of an application for approval of the suspension 

plan with the Department of the Treasury on September 25, 2015 and to authorize Trustee 

Bunte to sign, on behalf of the full Board of Trustees, the documents required to complete the 

filing of the application. 

8.2.8
SOURCE: THOMAS C. NYHAN

MARK ANGERAME

JAMES P. CONDON

SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN

TM: 538038 / 9/22/2015 6:28 PM

I. INTRODUCTION. 

The Trustees have indicated that they wish to request approval from the United 

States Department of the Treasury (“Treasury”) for the plan of benefit suspensions 

described in section II below, pursuant to the Multiemployer Pension Reform Act of 2014 

(“MPRA”). Beginning in December 2014, the Trustees have held a series of 11 meetings to 

discuss options under MPRA and to receive advice from legal counsel, actuaries and other 

advisers concerning these options (“MPRA Meetings”); the Fund’s MPRA retiree’s 

representative, and/or her legal advisers, have also participated in most of those meetings. 

The topics discussed in the MPRA Meetings are summarized in Tab A (Summary of 

Trustees’ Study and Deliberations Concerning MPRA and a Potential Suspension Plan) 

attached hereto and that summary is incorporated herein. 

On the basis of the MPRA Meetings -- and on the basis of the Trustees’ general 

experience with the Pension Fund, with the bargaining units and Contributing Employers 

that participate in the Fund and with the industries in which those bargaining units and 

Employers function -- the Trustees have made various determinations and findings that 

have led them to conclude that the suspension plan outlined in section II below complies 

with MPRA and is in fact fair, equitable and in the best interests of the participants and 

beneficiaries of the Pension Fund.

8.2.9
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 2

The purpose of this Item is to set forth those determinations and findings that 

support the MPRA suspension plan set forth in Section II below and to request that the 

Trustees expressly approve and adopt those determinations and findings.

All capitalized terms used in this Item that refer to types of Pension Fund benefits or 

to conditions and requirements relating to those benefits (e.g., Contributory Service 

Pension, Contribution-Based Pension, Contributory Service Credit, Service Credit, 

Covered Service, Contributing Employer etc.) are defined terms as used in the Fund’s Plan 

Document.

II. DESCRIPTION OF PROPOSED SUSPENSION PLAN. 

A. Overview of Benefit Suspensions. 

The Board of Trustees proposes the following reduction of benefits, which will 

remain in effect indefinitely. 

Generally, under the proposed suspension plan the amount of a participant’s 

suspension is based upon three main factors, subject to certain protections described 

below. The first factor concerns the “Tier” (or Tiers) to which a participant’s benefits are 

attributable. Second, the amount of contributions made to the Plan on a participant’s 

behalf. Third, whether the participant is an active participant, a terminated participant, or a 

retiree as of July 1, 2016.

Additionally, as described below, participants with at least 20 years of Contributory 

Service Credit (and their beneficiaries in pay status) as of July 1, 2016, will receive lesser 

suspensions than other participants. Also, the suspensions are affected by both the age of 

8.2.10
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 3

the participant upon retirement and whether the participant elected a joint and survivor 

form of benefit upon retirement.

B. Contribution Tiers. 

1. MPRA establishes three “Tiers” of benefits under the Plan, and establishes 

different conditions for the reductions that are applied to the benefits attributable to each 

Tier. ERISA § 305(e)(9)(D)(vii). The Tiers are defined as follows:

a) Tier 1 consists of benefits attributable to contributions made by an employer 

that withdrew from the Plan on or before July 1, 2016, but failed to pay (or is 

delinquent with respect to paying) the full amount of its withdrawal liability 

under law or an agreement with the Plan. 

b) Tier 2 consists of all benefits attributable to contributions not assigned to Tier 

1 or Tier 3. 

c) Tier 3 consists of benefits attributable to contributions made by an employer 

that (i) has withdrawn from the Plan in a complete withdrawal in which the 

employer paid the full amount of the employer’s withdrawal liability under law 

or an agreement with the Plan, and also (ii) pursuant to a collective 

bargaining agreement, has agreed to provide benefits to participants and 

beneficiaries of the Plan under a separate, single-employer-sponsored plan, 

in an amount equal to any reduction in the amount of benefits for such 

participants and beneficiaries as a result of the financial status of the Plan.

8.2.11
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 4

2. The only benefits assigned to Tier 3 are those attributable to contributions 

made by United Parcel Service, Inc. and its controlled group (“UPS”) for participants that 

are part of the Transfer Group under an agreement between UPS and the Plan dated 

September 29, 2007 (generally those participants who were active participants with UPS 

or whose last employer prior to becoming a terminated participant was UPS as of that 

date). Participants who retired prior to that date are not part of Tier 3, even if they worked 

for UPS, because the pension benefits of those participants are not protected by UPS.

3. MPRA requires that benefits attributable to Tier 1 be reduced to the 

maximum extent permissible. ERISA § 305(e)(9)(D)(vii)(I). In general, the amount of Tier 1 

benefits after the reduction will be determined by multiplying 110% of the PBGC guarantee 

amount (described below) by the participant’s percentage of total contributions in Tier 1. In 

addition, reductions to Tier 1 benefits will be limited by the disability and age-based 

protections described under MPRA Limitations on Benefit Reductions set forth below. 

4. Benefits that are attributable to Tier 2 or Tier 3 contributions (determined 

based on the participant’s percentage of their total contributions that was from Tier 2 and 

Tier 3, respectively) generally will be reduced in accordance with the structure outlined 

below under General Benefit Reduction Provisions, subject to the MPRA Limitations on 

Benefit Reductions below.

5. For benefits attributable to Tier 2 contributions, the benefit reduction to 

participants with at least 20 years of Contributory Service Credit as of July 1, 2016 will not 

be greater than 50% of the amount that would otherwise have been payable with respect 

8.2.12
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 5

to such contributions before this reduction (prior to application of the age 75-80 protection 

described below).

6. For benefits attributable to Tier 3 contributions, the benefit reduction to 

participants with at least 20 years of Contributory Service Credit as of July 1, 2016 will not 

be greater than 40% of the amount that would otherwise have been payable with respect 

to such contributions before this reduction (prior to application of the age 75-80 protection 

described below).

C. MPRA Limitations on Benefit Reductions. 

1. 110% PBGC Guarantee Protection. 

a) Under MPRA, a participant’s pension cannot be reduced below 110% of the 

amount that the PBGC would guarantee if the Plan were to become 

insolvent. The calculation of the PBGC guarantee considers both the years of 

service that have been worked and rate of benefit accrual that the Plan has 

credited. ERISA sec. 4022A.

b) The maximum monthly benefit that the PBGC will guarantee is $35.75 for 

each year of service that has been earned. Thus, for a participant with 30 

years of service, the maximum PBGC guarantee is $1,072.50 per month. 

110% of this amount is $1,179.75.

c) The PBGC formula generally does not guarantee all benefits that have been 

earned. For example, in order for a participant with 30 years of service to 

receive the maximum monthly PBGC benefit of $1,072.50, the benefit 

payable from the Plan would have to be higher than this amount. Also 

8.2.13
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 6

participants with benefits from the Plan that are below the PBGC maximum 

guarantee would generally receive less than their full benefits under the 

PBGC guarantee formula.

d) To calculate the PBGC guarantee amount, it is first necessary to calculate 

the rate of monthly benefit accrual that the Plan has provided. This is equal 

to the monthly benefit payable from the Plan, divided by the years of credited 

service that have been earned. The amount of the guarantee is then equal to 

100% of the first $11 of the monthly benefit accrual rate, plus 75% of the next 

$33 of the monthly benefit accrual rate, times the years of credited service. 

There is no limit to the total years of service that are credited for calculating 

the guaranteed benefit.

e) The guaranteed monthly benefit, therefore, is limited to $35.75 per month 

(($11 x 100%) + ($33 x 75%) = $35.75) times a participant's year of credited 

service. For example, if a participant has 30 years of service, the maximum 

benefit guaranteed by the PBGC is $35.75 x 30 = $1,072.50. 

f) If the application of the General Benefit Reduction Provisions outlined below 

for benefits attributable to Tier 2 and Tier 3 contributions would result in a 

benefit that is below 110% of the PBGC guarantee for a particular participant, 

then that participant’s benefit would not be reduced below 110% of the 

PBGC guarantee. The years of service used in the PBGC guarantee amount 

(which is the number of years listed the individualized estimate section of this 

notice) may differ from the number of years of Contributory Service Credit 

8.2.14
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 7

and/or Service Credit due to different definitions for those terms under the 

Plan.

2. Disability Protection. 

Disability benefits under the Plan cannot be reduced under MPRA. Additionally, if a 

participant receiving a disability benefit under the terms of the Plan converts to a 

retirement pension under the Plan, that participant’s benefits cannot be reduced below the 

amount of the disability benefit received prior to the conversion.

3. Age Protection. 

a) MPRA provides that if a participant is 80 or older as of the end of the month 

containing the effective date of the benefit reduction, in this case July 31, 

2016, the participant will not be subject to any reduction. All benefits payable 

to participants who meet this condition are fully protected from benefit 

reductions.

b) Pension benefit reductions for participants who are at least 75 but less than 

80 as of July 31, 2016 are determined by the number of months remaining 

until the participant reaches 80 divided by 60 months. For example, if a 

participant is exactly 78 years old as of July 31, 2016, there are still 24 

months remaining until the participant reaches 80 years of age. Dividing 24 

months by 60 months results in a fraction equal to 0.4.

c) So if, for example, the maximum amount of benefit reduction that could apply 

to a 78-year old participant (after taking into account the General Reduction 

Provisions described below, the 110% PBGC Guarantee Protection and the 

8.2.15
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 8

Disability Protection) is $500 per month, then the age-based protection would 

limit this maximum reduction to $200 per month (0.4 x $500). If the general 

reduction provisions described below would otherwise result in a greater 

benefit reduction, that amount would be overridden so that the actual 

reduction amount applied to this participant would be $200 per month.

d) In the case of the surviving spouse of a participant who is deceased as of 

July 1, 2016, the surviving spouse’s age as of July 31, 2016 is used to 

determine whether the age-based protection applies to the benefit. However, 

if a participant is not deceased as of July 1, 2016, the participant’s age as of 

July 31, 2016 will be used to determine the age-based protection for a joint 

and survivor. As has always been the case, regardless of the effect of the 

reduction, neither the participant nor spouse may change a Joint and 

Survivor Option (JSO) election that has already been made.

e) If a benefit has been split in a divorce in accordance with a Qualified 

Domestic Relations Order (“QDRO”), the application of the age-based 

protections to the alternate payee’s benefit depends on the type of QDRO. 

For a shared interest QDRO in which the alternate payee receives a portion 

of each benefit payment, but the participant retains the right to choose the 

time and form of the payments, it is the participant’s age as of July 31, 2016 

that will determine the age-based protections. However, for a separate 

interest QDRO where the alternate payee has a right to receive benefits at a 

8.2.16
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 9

different time and in a different form from the participant, the alternate 

payee’s age as of July 31, 2016 will determine the age-based protections.

D. General Benefit Reduction Provisions (Tier 2 and Tier 3 Contributions Only). 

1. The following general benefit reduction provisions apply only to benefits 

attributable to Tier 2 or Tier 3 contributions. 

a) Except as provided below, under the benefit reductions that the Trustees 

have proposed, a plan amendment will take effect on July 1, 2016 that will 

reduce participants’ monthly pension benefits to 1% of the Tier 2 and Tier 3 

contributions that have been made on their behalf as of that date, adjusted 

for any early retirement and JSO benefit adjustments as described below.

o For example, if a participant has a plan benefit of $1,000 per month on 

July 1, 2016, and 1% of the total contributions made on that participant’s 

behalf is $800, then the $1,000 benefit will be reduced by $200 to $800 

effective July 1, 2016.

b) For terminated participants with less than 20 years of Contributory Service 

Credit who do not have a Benefit Commencement Date on or before October 

1, 2015, benefits as of July 1, 2016 will be 0.5% of the total Tier 2 and Tier 3 

contributions made on their behalf and adjusted for any early retirement and 

JSO as described below.

o A participant will be in “terminated” status for purposes of the suspension 

plan if, as of July 1, 2016, any of the following is true:

8.2.17
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 10

 The participant (a) has a Year of Employment under the Plan 

during any year ending on or before December 31, 2014, and 

(b) earned no Contributory Service Credit during 2014;

 The participant (a) has a Year of Employment under the Plan 

during any year ending on or before December 31, 2015, and 

(b) earned no Contributory Service Credit during 2015; or

 The participant (a) has earned or earns an Hour of Service 

while employed with a Contributing Employer (or any 

predecessor or successor entity) that at any time on or after 

October 1, 2015 incurs a Rehabilitation Plan Withdrawal, and 

(b) has either (i) earned the last year of Contributory Service 

Credit on or before October 1, 2015 while a member of a 

Bargaining Unit (or any predecessor or successor Bargaining 

Unit) ultimately incurring such Rehabilitation Plan Withdrawal or 

(ii) earned the last year of Contributory Service Credit on or 

before July 1, 2016 while a member of a Bargaining Unit (or 

any predecessor or successor Bargaining Unit) ultimately 

incurring such Rehabilitation Plan Withdrawal. This provision 

shall not apply to Rehabilitation Plan Withdrawals occurring 

after July 1, 2016 unless the Bargaining Unit, on or before July 

1, 2016, ratifies or otherwise agrees to a Collective Bargaining 

Agreement (or other agreement) which permits the withdrawal 

8.2.18
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

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of the Bargaining Unit in whole or in part from the Plan 

(regardless of when the withdrawal in fact occurs).

c) As already provided under the Plan, benefits are reduced for each month that 

the age of retirement precedes age 65. As applied here, in the event that a 

participant retired with less than 20 years of Service Credit at retirement, the 

1% (or 0.5% as the case may be) of total contribution monthly benefit will be 

reduced by 0.5% for each month that the age of the participant at retirement 

precedes age 65. This reduction applies down to age 57, with participants 

who retired prior to age 57 treated as having retired at age 57 for this 

purpose.

o For example, a participant who retired at exactly age 57 or earlier would 

have the 1% of contributions benefit reduced by 48% (0.5% x 96 months). 

If 1% of the contributions made on that participant’s behalf is $1,000, the 

monthly benefit will be reduced to $520 (reducing $1,000 by 48%).

d) As already provided under the Plan, benefits are reduced for each month that 

the age of retirement precedes age 62 if the participant had at least 20 years 

of Service Credit at retirement. As applied here, if a participant had at least 

20 years of Service Credit at retirement, the 0.5% per month reduction 

applies to the 1% of total contribution monthly benefit for each month that the 

age at retirement precedes age 62 instead of age 65. 

8.2.19
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

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o For example, a participant with 20 or more years of Service Credit who 

retired at exactly age 57 or earlier would have the 1% of contributions 

benefit reduced by 30% (0.5% x 60 months). If 1% of the contributions 

made on that participant’s behalf is $1,000 per month, the monthly benefit 

will be reduced to $700 (reducing $1,000 by 30%).

e) Under the terms of the Plan’s Rehabilitation Plan, a participant subject to an 

adjustable benefit reduction will have the 1% (or 0.5% as the case may be) of 

contributions benefit reduced by the percentage listed in the Rehabilitation 

Plan.

f) In addition to any reduction for early retirement, the 1% or 0.5% of 

contribution monthly benefit will also be adjusted to reflect any adjustment 

factors for election of a JSO in accordance with the terms of the Plan in effect 

on October 1, 2015.

E. Restricted Reemployment Changes. 

1. The following changes are effective July 1, 2016, apply only to those 

participants whose benefits are, in fact, reduced under this application (not including 

reductions to future benefit accruals), and are contingent upon approval of the application 

as provided under MPRA. In all other circumstances, the existing (pre-MPRA suspension) 

restricted reemployment rules in the Plan continue to apply.

2. For a participant with a Benefit Commencement Date on or before October 1, 

2015, the participant shall not be subject to any restricted reemployment rules effective 

8.2.20
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 13

July 1, 2016 provided that prior to October 1, 2015 the participant has surrendered and 

severed any and all aspects of the employment relationship, including any seniority rights, 

with any Contributing Employers.

3. For a participant whose Benefit Commencement Date is after October 1, 

2015 and who is at least 62 but less than 65 on the Benefit Commencement Date, and is 

performing Covered Service immediately prior to the Benefit Commencement Date, the 

participant must avoid reemployment in a Core Teamster Industry (as defined in the Plan), 

and with any Contributing Employer for whom the participant worked during the one year 

period immediately prior to his retirement and, prior to retirement, must have surrendered 

and severed all aspects of the employment relationship, including any seniority rights, with 

any such Contributing Employer(s). Once such participant turns 65, the rules in the next 

paragraph apply.

4. For a participant whose Benefit Commencement Date is after October 1, 

2015 who has reached age 65 (regardless of age at time of retirement), the participant 

shall not be subject to any restricted reemployment rules as long as the participant has 

previously surrendered and severed all aspects of the employment relationship, including 

any seniority rights, with any Contributing Employers. The only exception is that a 

participant whose last year of Contributory Service Credit was earned while employed by a 

labor organization, or other Contributing Employer with whom the participant did not have 

seniority rights under a collective bargaining agreement, will not be eligible for this “No 

Restrictions” rule unless the participant has first spent one continuous post-retirement year 

8.2.21
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 14

without any restricted reemployment under the existing (pre-MPRA suspension) restricted 

reemployment rules.

F. Reduction of Early Retirement Subsidies for Contribution-Based Pension. 

1. Currently, the Contribution-Based Pension (section 4.02 of the Plan) is 

reduced by 0.5% for each month the age of the participant on his retirement date is less 

than 62 if the participant has at least 20 years of Service Credit (the reduction occurs from 

age 65 if the participant has less than 20 years of Service Credit). However, if the 

participant is subject to the Default Schedule, Rehabilitation Plan Withdrawal, or 

Distressed Employer Schedule, the Contribution-Based Pension payable at age 65 is 

reduced to an actuarially equivalent benefit in accordance with the terms of the Plan.

2. Effective July 1, 2021 (five years from the effective date of the reductions), 

the Contribution-Based Pension (section 4.02 of the Plan) will be reduced by 0.5% for 

each month the age of the participant on his retirement date is less than 63 if the 

participant has at least 20 years of Service Credit (the reduction occurs from age 65 if the 

participant has less than 20 years of Service Credit).

3. Effective July 1, 2023, the Contribution-Based Pension (section 4.02 of the 

Plan) will be reduced by 0.5% for each month the age of the participant on his retirement 

date is less than 64 if the participant has at least 20 years of Service Credit (the reduction 

occurs from age 65 if the participant has less than 20 years of Service Credit).

4. Effective July 1, 2025, the Contribution-Based Pension (section 4.02 of the 

Plan) will be reduced by 0.5% for each month the age of the participant on his retirement 

8.2.22
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 15

date is less than 65 for all participants regardless of whether the participant has at least 20 

years of Service Credit.

5. Thus, for example, if a participant who has at least 20 years of Service Credit 

retires on or after July 1, 2021 (and before July 1, 2023) at age 62, the participant’s benefit 

would be reduced by 6% (12 months x 0.5% per month) as compared to currently when 

there would be no reduction. If a participant retires on or after July 1, 2023 (and before July 

1, 2025) at age 62, the participant’s benefit would be reduced by 12% (24 months x 0.5% 

per month) as compared to currently when there would be no reduction. If a participant 

retires on or after July 1, 2025 at age 62, the participant’s benefit would be reduced by 

18% (36 months x 0.5% per month) as compared to currently when there would be no 

reduction.

6. Regardless of these changes, if a participant is subject to the Default 

Schedule, Rehabilitation Plan Withdrawal, or Distressed Employer Schedule as defined in 

the Rehabilitation Plan, the participant’s benefit will be reduced based on age using the 

actuarial equivalence table in the Rehabilitation Plan.

G. Reduction of Future Benefit Accrual Rate. 

1. At present, the Accrued Benefit (section 1.01) of a participant who is eligible 

for a Contribution-Based Pension includes 1% of all contributions made on the participant’s 

behalf on and after January 1, 2004. Effective for contributions attributable to a 

participant’s service on and after July 1, 2016, the Accrued Benefit will be 0.75% of all 

contributions made on the participant’s behalf if the suspension is approved by Treasury 

and implemented on July 1, 2016. 

8.2.23
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 16

2. Thus, for example, if a participant had $10,000 in contributions made on his 

behalf prior to July 1, 2016, the monthly Accrued Benefit increased by $100 ($10,000 x 

1%). If $10,000 in contributions are made on the participant’s behalf on and after July 1, 

2016, the monthly Accrued Benefit would increase by $75 ($10,000 x 0.75%).

H. Other Considerations. 

1. In determining the benefit amount after the reduction, only contributions 

made to this Plan are considered and any service (including Service Credit and 

Contributory Service Credit) with another plan used for reciprocity or other purposes is 

disregarded except for a transfer to the Plan pursuant to ERISA section 4235. No 

reciprocal pensions will be allowed for a Benefit Commencement Date on or after July 1, 

2016.

2. The following will not be considered as contributions for purposes of applying 

the 1% (or 0.5% as the case may be) of contributions benefit in determining the amount of 

the reduction:

• Self-payments that are received by the Plan after September 30, 2015.

• Contributions for periods prior to a Break in Service.

• Contributions for periods prior to becoming a Participant.

3. A participant, beneficiary, or alternate payee must still satisfy the vesting 

rules and other rules contained in the Plan to qualify for a benefit, and no benefit may be 

created or increased as a result of the suspension plan.

4. No restorations of adjustable benefits that have been eliminated under the 

Fund’s rehabilitation plan will be recognized under the suspension plan, unless the 

8.2.24
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 17

conditions for establishing the restoration of benefits have been fully satisfied as of 

October 1, 2015. 

5. All terms of the current Plan Document not expressly altered or modified by 

the suspension plan rules stated above shall remain in effect.

6. With respect to contribution rate increases, the suspension plan contains (a) 

the current rehabilitation plan contribution rate increases – and (b) with respect to 

employers currently subject to the $342 and $348 weekly rates and YRC, Inc. (whose 

contribution rates are presently not subject to rate increases), the suspension plan 

contains continuing compounded annual rate increases of 2.5% each year until 2028, at 

which point continuing compounded annual rate increases of 3.0% are required 

indefinitely. These rates also apply to the maximum rate required under the rehabilitation 

plan for Employers with currently lower rates (i.e., rates below the current maximum rates 

of $342 and $348 per week) and currently making annual increases. The increases 

applicable to Contributing Employers currently at the $342 and $348 per week rates begin 

on August 1, 2018, and for YRC, Inc. on August 1, 2019. 

III. MEASURES TAKEN BY THE TRUSTEES TO AVOID INSOLVENCY. 

A. History of contribution rate increases over the last ten years.

1. From 2005 to 2014, the average rate at which current Contributing

Employers have contributed to the Pension Fund has increased 83.2% (a 57.9% increase 

after adjustment for inflation), from a rate of $120.42 in January 2005 to a rate of $ 220.63

in December 2014; these figures exclude rates applicable to YRC, which presents a 

special case under the rehabilitation plan’s Distressed Employer Schedule (see ¶¶ 9-12

8.2.25
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 18

below), and rates applicable to United Parcel Services, Inc., which withdrew from the Fund 

in 2007. Fourteen percent of the Fund’s active participants (or 8,700 full-time equivalent

participants out of a total active participant population of 61,000 in 2014) currently have 

contributions made to the Fund on their behalf at the maximum contribution rate currently 

required under the Fund’s rehabilitation plan ($342 or $348 per week, depending on which 

of the national labor agreements discussed below is applicable). These “top rate” 

participants are all covered by the National Master Freight Agreement ("NMFA,” with a rate 

of $342 per week), the National Master Auto Transport Agreement (“NMATA,” with a rate 

of $348 per week) or local agreements that mirror the contribution rates under those 

agreements. Since 2004, the NMFA and NMATA pension contribution rates have 

increased by 100% (69% after adjustment for inflation).

2. In November 2005, the Trustees approved a communication to all

participating Local Unions and Contributing Employers notifying them that renewals of all 

collective bargaining agreements that expired in 2006 would be acceptable to the Fund

only if they included compounded contribution rate increases of 7% per year for the 

duration of each such renewal agreement.

3. The Trustees then approved a similar communication to Local Unions and 

Contributing Employers in November 2006 with respect to renewals of collective 

bargaining agreements expiring in 2007, except that compounded 8% annual rate

increases were required for 2007 renewals.

4. In addition, the parties to the major national contracts (NMFA, NMATA, and 

National Master UPS Agreements) reallocated employee benefit plan contribution rate 

8.2.26
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 19

increases from health plan contributions to the Pension Fund from 2004 through 2007. The 

reallocations made during the 2004 through 2007 period provided, as of August 2007, and

this provided an additional $500 million in revenue per year to the Pension Fund. 

5. The Pension Protection act of 2006 (“PPA”) generally became effective on 

January 1, 2008, and in March 2008, following the actuary’s certification that the Fund was 

in critical status under the PPA, the Trustees approved a rehabilitation plan. Under the 

2008 PPA Zone certification and rehabilitation plan, although the Fund was not at that time 

projected to become insolvent, it was not projected to emerge from critical status. The 

rehabilitation plan contained a Primary Schedule that 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 5 years of compounded 8% annual 

contribution rate increases, two years of 6% increases and then 4% annual increases

indefinitely thereafter. 

6. The Trustees also approved a Default Schedule under the rehabilitation plan 

calling for compounded annual rate increases of 4% into the indefinite future, but which 

would eliminate all PPA “adjustable benefits”. 

7. As of May 2015, 26 bargaining units representing 259 active participants (out 

of a total active participant population of approximately 65,000) were under the Default 

Schedule. All other actives, except for those employed by YRC, Inc. and its affiliates (see

¶¶ 10-12 below) were under the Primary Schedule.

8.2.27
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 20

8. In 2009 the Fund was certified not only to be in critical status under the PPA, 

but for the first time, was projected to become insolvent. Insolvency was projected at that 

time to occur in the year 2022. 

9. YRC, Inc. (“YRC”) is one of the major Contributing Employers (with 

approximately 14,000 active participants). In February 2011, following the severe financial 

decline and pension contribution delinquency of YRC, the Trustees approved the

application of a special “Distressed Employer Schedule” to YRC under the rehabilitation 

plan. 

10. The Distressed Employer Schedule allowed YRC to continue to contribute to 

the Pension Fund at a reduced contribution rate ($70 per week, 25% of the previously 

agreed rate of $280 per week, as specified in YRC’s 2010 and 2014 collective bargaining 

agreements) and without contribution rate increases. However, this schedule imposed 

benefit reductions on the YRC bargaining unit approximately equivalent to the Default 

Schedule.

11. The YRC bargaining unit also agreed to defer wage increases and made 

other wage concessions under the 2010 and 2014 collective bargaining agreements 

applicable to YRC.

12. The Trustees approved the Distressed Employer Schedule and applied it to 

YRC because they determined, on the basis of financial and actuarial analysis presented 

to them, that (a) YRC would likely incur a business failure and liquidate in bankruptcy (with 

minimal or no recovery of withdrawal liability by the Fund) unless the Trustees approved 

the application of the Distressed Employer Schedule to that Employer, and (b) the Fund 

8.2.28
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 21

was better off financially with YRC’s continued participation in the Fund -- even at reduced 

contribution rates and subject to a Contribution Deferral Agreement under which the Fund 

would only receive interest payments on approximately $109 million in deferred 

contribution obligations for a number of years (apart from receipt of the proceeds from 

sales of certain properties given as collateral to secure the deferred contribution 

obligations) -- than under a scenario in which the Fund insisted on higher contribution rates 

that resulted in the dissolution of YRC.

13. As part of the 2010 rehabilitation plan update process, in September 2010 

the Fund engaged Stout Risius and Ross (“SRR”), a consulting firm with business 

valuation expertise, to study the ability of the Fund’s Contributing Employers to continue to 

absorb contribution rate increases. In November 2010, SRR reported to the Trustees that 

a number of the Fund’s larger, publicly traded Employers -- whose pension contribution

rates already were (or soon would be) at $342 per week under the National Master Freight 

Agreement (“NMFA”) and $348 per week under the National Master Auto Transporter’s 

Agreement (“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 indicated 

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

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

increases.

14. On average, since 2010, approximately 8,200 active participants of the Fund 

have worked under the NMFA or NMATA (or agreements that follow the pension’s rates 

8.2.29
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 22

established under those agreements) or approximately 15% of total actives. The average 

non-frozen rate paid during the 2010-2014 period was approximately $ 220 per week

(exclusive of the Distress Employer Contribution rate paid by YRC). 

15. In July 2015, SRR provided an update to its 2010 study and was asked its 

opinion concerning the reasonableness of the following proposed contribution rates 

increases for the employers listed below --

[*] An NMFA Employer currently subject to the “cap” of $342 per week placed on NMFA 

contribution rate increases.

[**] An Employer currently subject to the Distress Employer Schedule (which does not 

require contribution increases).

Proposed Change in Contribution Rates

Employer Name 2015 2016 2017 2018 2019

ArcBest Corporation [*] 0.0% 0.0% 0.0% 2.5% 2.5%

YRC Worldwide, Inc. [**] 0.0% 0.0% 0.0% 0.0% 2.5%

Grupo Bimbo, S.A.B. de C.V, 4.0% 4.0% 4.0% 4.0% 4.0%

The Kroger Co. 4.0% 4.0% 4.0% 4.0% 4.0%

SpartanNash Company 4.0% 4.0% 4.0% 4.0% 4.0%

Dean Foods Company 4.0% 4.0% 4.0% 4.0% 4.0%

Deutsche Post AG

 Air Express International USA Inc. 4.0% 4.0% 4.0% 4.0% 4.0%

 DHL Express, Inc. 0.0% 0.0% 0.0% 2.5% 2.5%

 Standard Forwarding LLC 8.0% 8.0% 8.0% 6.0% 4.0%

SuperValue, Inc. 4.0% 4.0% 4.0% 4.0% 4.0%

Roundy’s, Inc. 4.0% 4.0% 4.0% 4.0% 4.0%

Kellogg Company 4.0% 4.0% 4.0% 4.0% 4.0%

Associated Wholesale Grocers, Inc. 6.0% 4.0% 4.0% 4.0% 3.5%

8.2.30
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 23

16. In its July 2015 report SRR concluded, on the basis of information available 

concerning the Employers listed above, that it is reasonable to expect those entities to 

sustain the indicated contribution rate increases, with the exception of the increases shown 

for YRC beginning in 2019. However, with respect to YRC, SRR also noted that -- because 

SRR based its conclusion solely upon the financial statements of the publically traded 

Employers it was asked to analyze its July 2015 report -- its report did not take account of 

any potential ability of YRC to absorb the proposed pension contribution rate increases by 

means of reducing other costs (e.g., health coverage costs) in the collective bargaining 

process or through other negotiations.

17. Accordingly, the Trustees have determined to accept the recommendations 

and conclusions of SRR, except that the Trustees concluded that YRC will likely have the 

ability to absorb the rate increase shown above by means of reducing other costs in 

collective bargaining or through other negotiations. Therefore the Trustees have 

determined, on the basis of information currently available, that the future rate increases 

shown in Paragraph 15 above, including the increase in 2019 of 2.5% for YRC, are

reasonable. Further, as indicated in Paragraph II.H.6. above, the Trustees have 

determined that for Employers currently subject to the $342 and $348 weekly rates and 

YRC (whose contribution rates are presently frozen), the proposed suspension plan

contains additional compounded annual contribution rate increases of 2.5% subsequent to 

2018 (2019 in the case of YRC) until 2028, at which point those employers whose 

contribution rates are currently frozen will increase their contributions at the compounded 

annual rate of 3.0% indefinitely. In addition, the Trustees have determined that under the 

8.2.31
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 24

suspension plan, these same “capped” rate increases will apply to those Employers whose 

rates are currently below the rehabilitation plan maximum rates of $342 and $348 per 

week. 

18. Prior to the enactment of MPRA, which provided the Fund with the option to 

avoid its projected insolvency under a duly approved suspension plan, various hypothetical 

changes to the Fund’s benefits and contribution rate structure would have little effect on 

the Fund’s financial condition. This was due to the fact that the Fund’s currently projected 

insolvency in 2026 limited the amount of time during which changes of this nature could be 

accumulated to have a positive effect. For example, at the November 14, 2014 Board 

Meeting the Fund’s actuary presented a report containing a table that showed the impact 

on insolvency of the measures listed below: 

8.2.32
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 25

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 

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

8.2.33
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

TM: 538038 / 9/22/2015 6:28 PM 26

As this table indicates, even if the estimated impact on “attrition” (loss of employers, 

participants and contribution revenue) is disregarded, none of the listed measures would 

forestall insolvency by more than few months.

19. Similarly, prior to the enactment of MPRA at the end of 2014, the Fund’s 

actuary advised that in light of the Fund’s projected insolvency, even if the Contributing 

Employers who were subject to the rate caps approved in 2010 were later required to 

continue to increase their contributions at the compounded rate of 4% per year (which the 

Rehabilitation Plan would have required prior to the rate caps), there would not have been 

sufficient time prior to the projected insolvency for those rate increases to have a material 

positive impact on the Fund’s financial condition. However, the Fund’s actuary has 

reported that because implementation of the proposed MPRA suspension plan would 

eliminate the projected insolvency, some measures that had little or no positive impact on 

the Fund’s financial condition when the Fund was under projections that assumed an 

insolvency (such as the future contribution rate increases described above) can now be 

presumed to have a material positive impact. In addition, the July 2015 SRR report (in 

conjunction with YRC’s likely ability to cover pension increases by reductions in other

employee compensation costs in the collective bargaining process, if necessary) indicates 

that, based on currently available information, it is not unreasonable to expect those

Employers to pay the increased rates in the future described above. 

20. As noted above, 2009 was the first year in which the Fund was projected to 

become insolvent in a later year (the 2009 projection showed 2022 as the year in which 

insolvency would occur). The Trustees’ decision in 2010 to place upper limits or caps on

8.2.34
SPECIAL MEETING OF THE PENSION BOARD CONCERNING MPRA

SEPTEMBER 16, 2015

FINDINGS AND DETERMINATIONS RELATING TO THE PROPOSED MPRA 

SUSPENSION PLAN 

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the amount by which contributions would be required to increase under the rehabilitation 

plan was designed to avoid Employer business failures; as such it was part of the 

Trustees’ effort to fulfill their obligations under the PPA to take “reasonable measures...to 

forestall possible insolvency,” pursuant to ERISA § 305(e)(A)(ii).

21. The Trustees have also determined, based on their experience in negotiating 

collective bargaining agreements that include contribution obligations to the Pension Fund 

(and in particular, the experience of the Employee Trustees, all of whom are present or 

former principal officers of Teamster Local Unions) that, regardless of the Employer size 

and financial strength, the pension contribution rates required under the Pension Fund’s 

rehabilitation plan have grown to such an extent that requiring additional rate increases 

significantly in excess of those already required (or the anticipated future contribution rate 

increases described above; see ¶ 17 above) would create an unreasonable risk that 

Contributing Employers would seek to negotiate withdrawals from the Fund at a 

substantially increased rate, and that an increased number of bargaining units would

cease their efforts to negotiate agreements requiring contributions to the Fund. The 

Trustees have concluded that these risks of increased Employer withdrawals and declining 

contribution revenue would in large part result from a perception that the Fund’s demands 

for increased contributions would be absorbing too much of the limited amounts of 

Employer funds available in the collective bargaining process to cover employee 

compensation.

22. The likelihood of severe adverse consequences resulting from additional

contribution rate increases beyond those outlined in these findings comes into sharper 

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focus in light of the burden of unfunded vested benefits. The Fund’s actuary estimates that 

50% of each contribution dollar currently contributed to the Fund must be allocated to 

legacy costs, as opposed to paying the normal cost of the pension accrual of the active 

participant whose behalf the contribution was made.

23. The findings of the Trustees in Paragraphs 21-22 above are corroborated by 

the trends shown in a June 10, 2015 News Release by the Bureau of Labor Statistics

(“BLS”) entitled Employer Costs for Employee Compensation. Page 22 of that report 

indicates that in the unionized sector of the “service producing industries,” which include

transportation and warehousing -- industries in which a high percentage of the Fund’s 

active participants are engaged -- an average of $4.23 per hour of total employee 

compensation (or 9% of total compensation) is absorbed by retirement benefits. On the 

other hand, this same BLS study indicates that the non-unionized sector of the service 

producing industries have retirement benefit costs of $0.93 per hour (3.2% of total 

compensation). Further, although the average union employee (across all industries) 

enjoys higher wages than comparable non-union workers, in recent years non-union 

wages have grown more rapidly than union wages. See George L. Long, “Differences 

Between Union and Non-Union Compensation,” Monthly Labor Review (April 2013) 

(between 2001 and 2011 non-union wages grew at a rate of 28% faster than union 

wages). Therefore, it appears likely that pension costs in the unionized sector of the 

economy as a whole are acting as a drag on wage growth in that sector.

24. The discrepancy between the unionized and non-unionized pension costs 

and the problems created by that discrepancy are even more pronounced in the case of 

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the Central States Pension Fund. For example, the Fund currently has 4,000 active 

participants who are working under the NMFA (or under contracts that mirror the NMFA

wage rates and benefits). Over the last ten years, pension contributions under the NMFA 

have increased by approximately 60%, (after inflation) while wages under that labor 

agreement have been relatively stagnant. As a result, today NMFA Employers pay an 

average of approximately $17,500 per year in pension contributions for each bargaining 

unit employee; yet the average annual wage paid to NMFA employees is less than 

$50,000. This contrasts with the non-union trucking industry in which annual pension costs 

average between $1,000 and $3,000 per employee. 

B. The Fund’s withdrawal liability collection program.

1. The Fund has diligently pursued the collection of withdrawal liability, pursuant 

to the Multiemployer Pension Plan Amendment Act of 1980 (“MPPA”) and the Trustees’ 

fiduciary obligations under ERISA. See, e.g., Central States Pension Fund v. Georgia 

Pacific, LLC, 639 F.3d 757, 760 (7th Cir. 2011) (“[T]he Central States Plan has been a 

uniquely aggressive seeker of withdrawal liability payments”).

2. For example, since withdrawal liability was created under MPPAA in 1980, 

the Pension Fund has collected approximately 45% of the amount of withdrawal liability 

that has been assessed (this figure excludes the extraordinary lump sum withdrawal 

liability payment of $6.1 billion from United Parcel Service, Inc. in December 2007). This is 

a significant achievement in light of the fact that during this period a high percentage of 

withdrawals from the Fund involved Employer bankruptcies. Further, since 2007 nearly all 

of the Fund’s withdrawal liability assessments have failed to fully amortize due to the 

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twenty year limitation on withdrawal liability payment schedules mandated under ERISA 

sec. 4219(c)(1)(B). Indeed, since 2007, the Fund has issued over 300 withdrawal liability 

assessments in which the statutory “cap” on the payment schedule has limited the 

Employers’ obligations -- resulting in approximately $500 million in assessed withdrawal 

liability that will not be collected. 

3. It should be noted that the Fund’s experience in collecting 45% of the face 

amount of the withdrawal liability referenced above has been measured from the inception 

of the Fund’s withdrawal liability program in 1980; a shorter period (the last ten years) was 

used as a basis for the withdrawal liability collection assumption used in the actuarial 

projections relating to the suspension plan. In the early period of the Fund’s withdrawal 

liability program, there tended to be more withdrawals by employers that were solvent and 

could pay their withdrawal liability; over time many of the Fund’s Employers with greater 

financial strength have left the Fund. In addition, as noted above, beginning in 2007 the 

collection of the face amount of many withdrawal liability assessments has been restricted 

by the statutory 20 year limitation on withdrawal liability payment schedules. 

C. Pre-Pension Protection Act (Pre-2008) history of benefit accruals.

1. In the years prior to 2008 (when the PPA’s multiemployer plan provisions 

became effective) the Trustees approved an adjustment in the Fund’s Contribution-Based 

Pension / Accrued Benefit formula that reduced this benefit from 2% of contributions to 1% 

of contributions [meaning that, for example, after the Plan Amendment, a participant who 

had $5,000 contributed to the Fund by his Employer during a single year, could expect his 

monthly lifetime pension payment to increase by $50 as a result of contributions made on 

8.2.38
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his behalf during that year (1% of $5,000 = $50); under this example, prior to this 

Amendment that became effective on January 1, 2004, the “2% of contributions” 

Contribution-Based Pension formula would have resulted in a $100 increase in the 

participant’s monthly lifetime pension payment (2% of $5,000 = $100)]. 

2. Another Plan Amendment that became effective on January 1, 2004 froze 

the amount of the early retirement / “and-out” pensions based upon the years of Service 

Credit earned as of the date the Amendment became effective on January 1, 2004. As 

required under the anti-cutback rules (IRC 411(d)(d)(6)(B); ERISA § 204(g)) this

amendment also protected participants’ accrual of Contributory Service Credit towards 

early retirement or “and-out” Contributory Service Pensions (e.g., “25-and-out” and “30-

and-out” pensions), and allowed participants to grow in to eligibility for those benefits by 

means of gaining additional years of Contributory Service Credit in the future. See, e.g., 

Bellas v. CBS, Inc., 221 F.3d 517 (3rd Cir. 2000) (the anti-cutback rules protect 

participants’ right to “grow into” a benefit subsidy by satisfying the plan’s pre-amendment 

eligibility requirements). For example, if a participant had 20 years of Contributory Service 

Credit earned towards a “25-and-out” early retirement pension as of January 1, 2004 

which, prior to the Amendment, would yield a life time monthly pension benefit payment of 

$2,500 upon achievement of 25 years of Contributory Service Credit, the 2004 

Amendment allowed the participant to continue to earn Service Credit towards eligibility for 

the 25-and-out pension. However, the amount of this pension would be calculated by 

multiplying the full pre-amendment value of the 25-and-out benefit ($2,500) by a fraction 

formed by dividing the years of Contributory Service Credit earned as of January 1, 2004 

8.2.39
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(20) by the total number of years to qualify the and-out benefit (25). Thus in the example

described above, the effect of the 2004 Plan amendment is to reduce the monthly lifetime 

benefit derived from the “25-and-out” pension from $2,500 to $2,000 ($2,500 x 20/25 = 

$2,000).

3. Effective as of January 1, 2004 the Trustees also froze the various “Classes,” 

of Contributory Service Pensions, meaning, with limited exceptions, that bargaining units 

could no longer qualify for a higher Benefit Class by entering into a collective bargaining 

agreement calling for increased pension contributions (“bargaining-up”). The “bargainingup” rules in effect prior to this change permitted a participant to jump to a whole new 

benefit class -- and thus make a significant increase in his ultimate benefit entitlement --

after having had only a few weeks of contribution made on his behalf at the rate specified 

for the new Classes. 

4. Under the benefit modifications that the Trustees approved in November 

2003, the Trustees also eliminated prospectively the ability of participants to make selfcontributions. By means of incremental self-contributions, many participants previously 

were able to gain just enough Contributory Service Credit to enable them to improve their 

pension benefits significantly. In this sense, self-contributions were a very costly benefit 

because the value of the benefits gained by the participants through making the selfcontributions almost always greatly exceeded the value of the self-contributions to the Plan

by the participants. 

5. In November 2003, the Trustees took the measures described in Paragraphs 

1 - 4 above, and committed to the program of mandated contribution rate increases 

8.2.40
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generally described in Sec. III.A. above, after reaching a deadlock between the Employee 

and Employer Trustees concerning the proper measures to take in response to the 

deteriorating financial condition of the Fund (which coincided with the general economic 

and stock market decline in 2000, 2001 and 2002). 

6. This deadlock was resolved under a November 18, 2003 Memorandum and 

Order issued by U.S. District Court Judge James Moran, who had jurisdiction of this matter 

pursuant to a 1982 consent decree entered between the Pension Fund and the U.S. 

Department of Labor. Chao v. Fitzsimmons, 2003 WL 2272324, Case No. 78-C-342 

(N.D.IL. Nov. 18, 2003). Judge Moran held in his Memorandum and Order that without the 

measures to control benefits and increase contributions described above, the Pension 

Fund would likely incur a statutory funding deficiency under ERISA, and would be in 

violation of key requirements of the applicable consent decree. Id. at *2. In its November 

18, 2003 Memorandum and Order the Court also described the financial difficulties then 

facing the Pension Fund:

The Court has learned [through the reports of the 

Independent Special Counsel appointed by the Court 

pursuant to the consent decree] that the unfavorable 

economic climate that has prevailed for the past 

several years has taken its toll on the economic health 

of the Funds. The Pension Fund, despite the 

independent professional investment management 

structure required by its consent decree, fell well short

of its assumed investment return in 2000, 2001 and 

2002. It also has been hurt by the liquidation of 

Consolidated Freightways [a major industry 

Contributing Employer that began liquidating in 

bankruptcy in September 2002] and other experience 

losses. The trustees have been advised that, absent 

adequate corrective measures, the Pension Fund will 

8.2.41
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begin to experience annual Funding Deficiencies as 

early as 2004.

Id. at *1 (emphasis added). 

See also Solis v. Fitzsimmons, Memorandum, No. 78-C-342 (N.D.IL. June 21, 

2011)(Judge Milton Shadur, to whom the consent decree matter has been transferred, 

noting that the Independent Special Counsel’s reports “reflect Board of Trustees actions 

that have been fully sensitive and response to the last several years’ economic difficulties 

confronting the entire country”)(emphasis added).

7. The Trustees have determined that the contribution rate increases and 

benefit reductions described above in Section III.A. & B., and ultimately mandated under 

Judge Moran’s November 18, 2003 Memorandum and Order, consisted of all the 

reasonable measures that could have been taken at that time to combat the further 

deterioration of the Fund’s financial condition.

D. In July 2005 the Fund was granted an amortization extension.

1. Despite the measures taken to control benefits and to increase contribution 

revenue that began in January 2004, the Fund’s actuary advised the Trustees that these

measures would not be sufficient to completely eliminate the prospect that the Fund would 

soon incur a statutory funding deficiency. 

2. For plan / calendar 2004, the actuary estimated that funding deficiency would 

have been $1.3 billion, and large funding deficiencies for subsequent years were also 

projected. The Trustees determined that the imposition of this liability, plus associated 

excise taxes, on the Fund’s Contributing Employers would have caused additional

8.2.42
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business failures among those Employers and would have accelerated the deterioration on 

the Fund’s own financial condition. 

3. As a result, in January 2004, the Fund filed a request with the Internal 

Revenue Service for a ten (10) year extension of the period for amortizing liabilities 

described in § 412(b)(2)(B) of the Internal Revenue Code and § 302(b)(2)(B) of ERISA.

4. On July 13, 2005 the Service issued a letter granting the Fund’s request for 

an amortization extension, subject to the ability of the Fund to satisfy certain funding 

targets (while also noting that the funding improvement targets may be modified if the 

Fund could not satisfy them due to “unforeseen circumstances beyond control of the 

Fund”). 

5. In the wake of severe economic crisis and stock market decline that occurred 

in 2008 (in which the Fund, like almost all investors, incurred significant investment 

losses), it became apparent that the Fund would not be able to satisfy the funding target 

conditions of the amortization extension. 

6. As a result in February 2009, the Fund filed a request with the Service for 

modification of the funding target conditions.

E. Reductions of adjustable benefits under the PPA (IRC § 432(e)(8)) and other 

measures to forestall insolvency under the Fund’s rehabilitation plan. 

1. As noted, the PPA became effective in January 2008, and that statute 

provided the Trustee with additional tools to help address the Pension Fund’s financial 

difficulties.

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2. The Trustees have approved and annually updated a rehabilitation plan each 

year beginning with 2008, as required of all multiemployer pension funds certified to be in 

critical status under the PPA.

3. As authorized under the PPA [IRC § 432 (e)(8)], the Fund’s rehabilitation 

plan has provided for the elimination of “adjustable benefits” (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). The 

following events trigger a loss of adjustable benefits under the rehabilitation plan:

a) application of the rehabilitation plan’s Default Schedule; 

b) application of the rehabilitation plan’s Distressed Employer Schedule; and 

c) application of the rehabilitation plan’s Rehabilitation Plan Withdrawal rule 

(under which bargaining units that voluntarily withdraw from the Fund, or are 

complicit in a withdrawal, incur the elimination of all adjustable benefits). 

4. The Fund’s actuary advises that in total, as of December 31, 2014 adjustable 

benefits with an accumulated present value of approximately $1.64 billion (as reflected in 

the Fund’s funding standard account) have been eliminated under these rehabilitation plan 

rules, including the elimination of the adjustable benefits attributable to the United Parcel 

Service, Inc. bargaining unit that withdrew from the Pension Fund at the end of 2007. 

5. In 2008 and 2009, the Trustees directed the Fund’s Staff to research

potential regulatory or legislative solutions to the Fund’s financial challenges, and, where 

appropriate, to communicate with federal government agencies and officials concerning 

such proposed solutions.

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6. On May 27, 2010, the Fund’s Executive Director and General Counsel, 

Thomas Nyhan, testified before the U.S. Senate Committee on Health, Education Labor 

and Pensions concerning a bill (S.3157) that had been proposed by Senator Casey (D-PA) 

as a means to provide additional federal funding to the PBGC, so that the agency could 

financially support a partition of the “orphan’’ liabilities of struggling multiemployer pension 

plans, including the Central States Fund; a similar bill (H.R. 3936) had been introduced in 

the House of Representative by Congressman Pomeroy. However, this proposed 

legislation did not gain sufficient support in Congress and was not brought to a vote in 

either house. 

7. As noted above, in 2009, the Fund for the first time was certified to be in 

critical status under the PPA and was also projected to become insolvent in 2022.

8. As an additional part of the effort to forestall this projected insolvency, under

a 2010 amendment to the rehabilitation plan, the Trustees approved a rule establishing 

age 57 as the minimum retirement age under the Plan, and this rule was made effective on 

June 1, 2011. Prior to this amendment, there were minimum service requirements for 

various types of pensions, and reductions in benefit amounts for pre-age 65 retirements for 

those who did not qualify for early retirement pension, but there was not a minimum 

retirement age. 

9. In formulating the rehabilitation plan and in the process of annually updating

that plan, the Trustees considered a more expansive rule that would have eliminated all

the adjustable benefits of all active participants, but as noted above, determined that doing 

so would likely (a) cause many active participants to withdraw their support for the Plan,

8.2.45
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(b) increase Employer withdrawals, and (c) ultimately cause a more rapid deterioration of 

the Fund’s financial condition and an acceleration of its projected insolvency. 

10. In developing the proposed suspension plan, the Trustees have also 

considered the elimination of all PPA adjustable benefits accrued by terminated

participants who have fewer than 20 years of Contributory Service Credit. However, even 

after the proposed plan of benefit suspension is given effect (so that the elimination of the 

terminated participants’ adjustable benefits has a longer time horizon in which to improve 

the Fund’s overall financial condition, and the duration of the impact of the elimination of 

the benefits is not limited by a projected insolvency date), the Fund’s actuary has advised 

that this measure, in conjunction with potential suspension plans would result in a 

reduction in the overall “caps” (or upper limits as a percentage reduction from current 

benefits entitlements) on suspensions that the Trustees have built into their proposed 

suspension plan of less than 1% of pre-suspension benefits. The Trustees have 

determined that this amount of reduction in the maximum suspension for the general 

population of affected participants is not large enough to justify the elimination of all the 

PPA adjustable benefits of terminated participant who have less than 20 years of Service 

Credit. 

F. Measures undertaken to retain or attract Contributing Employers. 

1. As explained above, one of the measures taken by the Trustees to retain 

Contributing Employers was to place “caps” on the contribution increases required under 

the rehabilitation plan. See ¶¶ III.A.13 – 17 above. That is, the caps were set on the basis 

of advice received from an expert financial consultant at a level judged to be reasonable in 

8.2.46
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light of the Contributing Employers’ financial condition. Therefore, the caps on contribution 

rate increases were designed to assure that Employers contribute to the Fund at a level 

that is as high as possible without creating unreasonable risks of increased employer 

attrition.

2. In addition, in October 2011, the PBGC approved an application submitted by 

the Fund for approval of the use of an alternative method of determining Employer

withdrawal liability.

3. Under this alternative method, a current Contributing Employer can 

effectively limit its future exposure to withdrawal liability by paying liability in a lump sum 

and then continuing to contribute to the Fund as a “New Employer”. 

4. An Employer that is not currently contributing to the Fund, and does not owe 

any outstanding withdrawal liability or other obligations to the Fund, can also qualify as a 

New Employer and become eligible for the alternative withdrawal liability method. 

5. 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 (in fact it is approximately 200% funded), and current 

contribution rates are more than sufficient to fund current benefits, the New Employers 

have a very low risk of incurring liability in the future.

6. The hybrid method helps to retain existing Employers and to attract new 

Contributing Employers because it offers a means of relieving concerns about potential 

8.2.47
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growth in exposure to withdrawal liability. Further, the Fund 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 Fund for an extended period (usually 5-10 years) and at a guaranteed 

level of participation. 

7. 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 Fund.

G. Impact on the Fund’s solvency of subsidized and ancillary benefits available to 

active participants. 

1. The Fund has, as noted above, for some time offered benefits that include

early retirement subsidies e.g., “25-and-out” and “30-and-out” Contributory Service Credit 

Pensions.

2. Although, as indicated in the discussion of the benefit modification that 

became effective on January 1, 2004 (see ¶ III.C. above), the Trustees have acted to limit 

the cost of subsidized early retirement benefits, there are still retired Fund participants in 

pay status who are receiving some subsidized early retirement benefits.

3. The Fund’s actuary has estimated that as of January 1, 2015 approximately

3% of the Fund’s total actuarial accrued liability of $35.1 billion is comprised of subsidized 

early retirement benefits accrued by currently active participants. 

4. Therefore, the impact on the Fund’s solvency of subsidies and ancillary 

benefits accrued by currently active participants is relatively minor, compared to the more 

8.2.48
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pronounced impact of the early retirement subsidized benefits that are currently being paid 

to participants who have already retired and are in pay status; the Fund’s actuary 

estimates that as of January 1, 2015, the latter benefits comprised approximately 16% of 

the Fund’s total actuarial accrued liability of $35.1 billion. 

H. Compensation levels of active participants relative to employees in the participants’ 

industries generally. 

1. As indicated above (¶ III.A.), the retirement benefit costs in the unionized 

sector of the service industries generally are significantly higher than in the non-unionized 

sector of those industries ($4.23 per hour for unionized retirement benefits, as opposed to 

$0.93 for non-unionized). Moreover, as is also discussed above, this discrepancy is even 

more pronounced in the case of the Fund: Fund participants working under the NMFA 

have pension contributions made on their behalf at the rate of approximately $10 per hour, 

which on average is more than 20% of their total compensation. 

2. This large allotment of total compensation to retiree benefits naturally tends 

to suppress wage growth for the Fund’s participants, thus intensifying for them the impact 

of the general trend discussed above (¶ III.A. 23) towards more rapid wage growth among 

non-unionized workers than unionized workers.

3. At the same time that the Fund participants were being asked to sacrifice 

larger portions of their total compensation to fund pension contributions, they were 

experiencing reductions in the amount of pension benefit accruals they could expect to 

yield for every dollar contributed on their behalf. This decline in the participants’ benefit 

accruals on a per contribution dollar basis was due to the reduction (from 2% to 1%) in 

8.2.49
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their accrual rates, and the other benefit modifications that the Trustees instituted in 2004

(discussed above at III.C.). 

4. Due to these trends and the desire of many workers to augment their wages 

rather than to see increasing amounts of their total compensation dedicated to pension 

contributions particularly when approximately $0.50 of each dollar contributed to the Fund 

must be dedicated to paying unfunded pension obligations, the Trustees have determined

(based on their experience with current trends in hiring and the preferences of the various 

bargaining units that participate in the Fund) that mandatory additional contribution rate 

increases beyond those already scheduled and the increases incorporated into the

proposed suspension plan (see ¶¶ III.A. 16-17 above) would be likely to (a) cause a net 

decline in support for the Fund among active participants and (b) to make it more difficult 

for Contributing Employers to attract and retain qualified employees. These consequences, 

in turn, will lead to more Employer withdrawals and to a decline in contribution revenue for 

the Fund.

I. Competitive and other factors facing Contributing Employers. 

1. The competitive pressures and financial constraints faced by the Fund’s 

Contributing Employers have been addressed above. As noted in those discussions, the 

Trustees have been guided by the advice of SRR, an expert financial consultant, in their 

effort to determine the levels of contribution rate increases that Contributing Employers 

can reasonably sustain. 

2. Further, the Trustees have been mindful that if they set contribution 

requirements at a level that is too high for the Fund’s Contributing Employers to sustain, 

8.2.50
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irreparable harm to the Employers could result (e.g., business failures, liquidations and 

bankruptcies). This would, in turn, cause a permanent disruption of the stream of 

contribution revenue on which the Fund relies. 

3. Although the SRR studies have focused on relatively large, publicly traded 

Contributing Employers, the Fund’s smaller Contributing Employers do not appear to be 

any more capable of absorbing unstrained contribution rate increases. 

4. For example, between 2010 and 2014 the Fund experienced a total of 

approximately 260 involuntary withdrawals resulting from Contributing Employer 

bankruptcies. Ninety-eight percent of the 2010 – 2014 Employer bankruptcies involved 

Employers with fewer than 50 active Pension Fund participants on a full-time equivalent 

(“FTE”) basis prior to the contribution withdrawals, while 92% of the Fund’s total Employer 

population employed on average 50 or fewer active participants during the same period.

5. These figures indicate that the Funds’ smaller Contributing Employers are 

under the same level of financial stress as the larger Employers (and perhaps a slightly 

higher level of stress given that the small Employers experienced 98% of the Employer 

bankruptcies between 2010 and 2014, but comprised only 92% of the total Employer 

population). 

6. As discussed above (¶¶ III.A. 17-19), over the last ten years -- prior to the 

enactment of MPRA -- the Trustees considered, but rejected, (a) the option of requiring

contribution rate increases at even higher levels than have been mandated to date under 

the Fund’s rehabilitation plan, and, (b) the option of imposing additional benefit reductions. 

However, based on the financial and actuarial advice described above, and based upon 

8.2.51
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the Trustees’ own experience with the bargaining units and Contributing Employers that 

participate in the Fund, the Trustees determined that any such additional contribution rate 

increases or benefit reductions would likely result in a net loss of active participants and of 

contribution revenue, thus accelerating the Fund’s insolvency. 

J. The impact of past and anticipated contributions increases under the Plan on

Employer attrition and retention levels.

1. As explained in Paragraph III.A. above, the Trustees have mandated 

substantial contribution increases in the past, and they have concluded that it would be 

reasonable to expect Employers to be able to sustain certain additional future contribution 

rate increases, and included those increases in their proposed suspension plan. 

2. In 1980 there were approximately 12,000 Employers that contributed to the 

Fund but in July 2015 there were approximately 1,800 Contributing Employers.

3. The Trustees believe that contribution rate increases required of Contributing 

Employers in the past have was a factor in the loss of Contributing Employers.

4. For example, Hostess Brands, Inc., a former Contributing Employer that 

employed approximately 2,800 Fund participants prior to its shutdown in 2012, failed to 

pay any of the pension contribution obligations it had accrued during July 2011. This 

created a delinquency of approximately $1.9 million owed by Hostess to the Pension Fund, 

and the company informed the Fund in August of 2011 that it was experiencing severe 

financial difficulties and would not be making any further contributions to the Pension Fund 

until it implemented a planned overall debt restructuring. Hostess claimed that one of the 

principal causes of its financial distress was the amount of pension contributions it owed 

8.2.52
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each month to various multiemployer pension plans, with the Pension Fund at or near the 

top of the list of plans that Hostess believed was dragging it down. Hostess incurred a total 

contribution delinquency of approximately $6 million to the Pension Fund in 2011 before 

the Trustees determined that Hostess’ participation in the Fund should be terminated in 

November 2011. In early 2012, Hostess then filed bankruptcy, and subsequently ceased 

all operations and began liquidating its assets. 

5. Similarly, Allied Automotive Group (“Allied”), another Contributing Employer, 

entered bankruptcy in 2012, and claimed that its pension contribution obligations 

contributed significantly to its financial problems. Allied employed approximately 600 active 

participants prior to its bankruptcy. Like Hostess, Allied is undergoing a liquidation of its 

assets, and in both these bankruptcies the liquidations are expected to yield little or no 

payment on the Fund’s claims for withdrawal liability (withdraw liability assessments of 

approximately $584 million in the case of Hostess and approximately $968 million in the 

case of Allied). 

6. More broadly, deregulation of the trucking industry, which began in 1980, 

prompted a sharp decline in all segments of the unionized trucking industry, and exposed 

trucking Employers to intense rate and route competition. This enabled non-union trucking 

Employers that pay lower wages and have lower pension and health costs to flourish at the 

expense of the unionized trucking industry.

7. As noted in IRS publication entitled “Trucking Industry Overview” (MSB 04-

1107-075) (www.irs.gov/Business/Trucking-industry-overview-history-of-trucking):

8.2.53
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In the decade after deregulation [resulting from the Motor 

Carrier Act of 1980] the competition in trucking was fierce. 

There were not only hundreds of new companies, but also 

the formerly gentlemanly manner in which the big players 

dealt with each other became a battle to the death. Ten 

years after trucking was deregulated, one third of the 100 

largest trucking companies were out of business, casualties 

of the fierce competition.

It became increasingly difficult for the trucking companies to 

operate with union drivers. Their compensation is usually 35 

percent more than non-union drivers. To reduce operating 

costs, new corporations were formed to operate with nonunion drivers or independent contractors.

8. Further, deregulation has intensified competition for qualified drivers, with 

many drivers (particularly those who are younger) attracted to non-union carriers where --

even if the total compensation is less than in the unionized sector -- they can receive a 

larger percentage of their total compensation in the form of cash wages. At the same time, 

as explained above, the Fund’s participants have seen increasing percentages of their 

total compensation devoted to pension contributions, while at the same time their actual 

pension accruals, measured on a percentage of contributions basis, have decreased 

significantly. 

9. Therefore, although growth in the Fund’s contribution requirements has been 

a factor in the loss of some Contributing Employers, more broadly deregulation has 

exposed Contributing Employers to competition from employers with lower pension costs.

This has been significant cause of the decline in the number of Contributing Employers. As 

indicated above, the Trustees have employed expert financial advisors to help assure that 

8.2.54
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the mandated contribution rate increases are at the highest level that is reasonable and 

sustainable. 

K. The Trustees have taken all reasonable measures to avoid insolvency.

1. Because since 2009 the Fund has been in critical status and has been 

projected to become insolvent, the Trustees duty has been “forestall [the] projected 

insolvency” ERISA § 305(e)(9).

2. As discussed in the preceding Paragraphs of this Section III, the Trustees 

over the course of a number of years implemented measures to improve the Fund’s 

financial condition and to prevent insolvency. 

3. Prior to the enactment of MPRA, the Trustees have engaged professional, 

financial and actuarial advisors in an effort to improve the Fund’s financial condition, and 

the Trustees, with the assistance of these advisors, considered taking a number of 

additional measures (such as more drastic contribution rate increases and sharper benefit 

reductions). However, the Trustees rejected those measures because they were deemed 

on balance to be counter-productive and unreasonable. [See, e.g., Actuarial reviews 

presented to the Trustees between 2008 and 2014 in connection with the Trustees’ 

formulation of the rehabilitation plan and updates to that plan, Tab B hereto.]

4. Specifically, as part of the process of formulating and updating the

rehabilitation plan, the Trustees considered the possibility of requiring additional increases 

in the contribution rates, additional decreases in benefit accrual rates, and eliminations of 

adjustable benefits, beyond those than are reflected in the rehabilitation plan as currently 

formulated. 

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5. In doing so, the Trustees asked the Funds’ actuary to model how such 

additional changes might reasonably be expected to postpone or accelerate the projected 

date of insolvency. These requests pre-dated MPRA.

6. The Fund’s actuary prepared actuarial reviews and sensitivity analyses in 

response to these requests (copies included as Tab B.) The actuary’s sensitivity analyses 

accounted for the risk that the possible additional changes in question (e.g., additional 

reduction in benefit accruals) might change behaviors (e.g., accelerated attrition of 

bargaining units). In each case, the actuary’s analyses showed that the additional changes 

could be expected, at best, to postpone projected insolvency by a matter of months and, at 

worst, to accelerate projected insolvency date by a year or more). 

7. Based on the actuary’s sensitivity analyses, Trustees concluded that all of 

the additional changes they had considered would likely do more harm than good in terms 

of their effect on the projected insolvency date.

8. The availability of benefit suspensions under MPRA affects this balance 

because, with the elimination of the projected insolvency, some changes can continue to 

contribute to the Fund’s actuarial soundness for a much longer period. As a result, in 

connection with their deliberations concerning a MPRA suspension plan, Trustees asked 

the actuary to update its modeling of possible additional changes to contribution and 

accrual rates and adjustable benefits. The Trustees and the actuary concluded that, while 

those changes had been unlikely to materially contribute to forestalling insolvency when a 

near-term insolvency was projected, certain of the additional changes would contribute to 

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the Fund’s actuarial soundness over the longer term if projected insolvency is eliminated. 

Changes in this category include:

• Reduction in future accrual rate to 0.75% of employer contributions;

• Additional contribution rate increases (projected to go into effect starting 

in 2018).

9. Accordingly, the Trustees have determined, based on the updated 

projections of the actuary and currently available information concerning the financial 

condition of the Fund’s Contributing Employers, that the suspension plan should include 

the future contribution rate increases beginning in 2018 and the reduction in the rate of 

future benefit accruals.

10. Therefore, in light of the findings and considerations set forth herein, the 

Trustees have determined that they have taken all reasonable measures to prevent the 

Fund from becoming insolvent.

IV. THE PLAN IS PROJECTED TO BECOME INSOLVENT UNLESS THE PROPOSED 

BENEFIT SUSPENSION IS IMPLEMENTED. 

1. Based upon the actuarial analysis and projections prepared by the Fund’s 

actuary to be included with the Fund’s application filed with the U.S. Department of the 

Treasury, the Trustees have determined that unless the suspension plan described in Par. 

II. above is implemented, the Fund is projected to become insolvent. 

2. Further, based on the actuary’s projection and analysis, the Trustees 

determined that the benefit suspensions set forth in Paragraph II above are not materially 

greater than is necessary to avoid the projection of insolvency that would result in the 

absence of implementation of those suspensions.

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3. Among the assumptions used by the Fund’s actuary in these projections and 

analyses is that Contributing Employers will provide future pension contribution rate 

increases as described in Paragraphs III.A.15 – 19 above.

V. SELECTION AND APPLICATION OF FACTORS RELATING TO THE EQUITABLE 

DISTRIBUTION OF SUSPENSIONS. 

A. Rationale for the use of the “1% of contributions” formula in the suspension plan.

1. The Trustees have selected the “1% of contributions” formula described 

above as a basic feature of the proposed suspension plan. Under this formula, subject to 

requirements and limitations of MPRA, benefits allocated to Tiers 2 and 3 and accrued by 

active and retired participants, as well as benefits in those Tiers accrued by terminated

participants with 20 or more years of Contributory Service Credit, will generally be limited 

to a lifetime post-suspension monthly benefit equal to 1% of all contributions made on 

behalf of each participant (before any reduction for early retirement or JSO). 

2. The Trustees have determined that the “1% of contributions” formula is 

equitable because it embodies the fundamental fairness of allowing each participant to

receive benefits from the Fund in proportion to the revenue that was contributed to the 

Fund as a result of his Covered Service under the Plan Document.

3. In addition, since January 1, 2004, a “percent of contributions” benefit has 

been the most significant benefit accrued by the Fund’s active participants, and it also is a

major component of the pensions currently being paid to retirees. See § 4.03 of the Plan 

Document. (85% of the total benefits currently accrued by active participants are 

attributable to the Contribution-Based Pension / “1%-2% of contributions” formula, while 

8.2.58
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17% of the total actuarial liability is attributable to this Contribution-Based Pension

formula.)

4. Therefore, the Trustees have selected the “1% of contributions,” approach 

and applied it in the manner described above. They have determined that this formula is 

fundamentally fair and will cause the least disruption or frustration of the participants’

expectations. 

5. Further, the “1% of contributions” suspension formula, like the current 

Contribution-Based Pension which it mimics, is not a subsidized benefit (as compared to 

the early retirement / “and-out” benefits that the Fund is also currently obliged to pay). And 

§ 305(e)(9)(D)(vi)(V) of ERISA (as amended by MPRA) provides that in deciding how to 

equitably distribute suspensions the Trustees may consider the “[e]xtent to which 

participant or beneficiary is receiving a subsidized benefit.” (Emphasis added.) For 

example, there are 8,684 Fund participants who (a) retired ten years ago or more with 

subsidized early retirement “and-out” / Contributory Service Pensions, (b) have received 

monthly pensions payments of $3,000 or more since commencing their retirements and (c) 

who to date have received total pension payments with a dollar value 6 times in excess of 

the total Employer Contributions paid to the Fund on their behalf while they were in active 

status under the Plan.

6. Basing the benefit suspension on the “1% of contributions” formula results in 

greater benefit preservation for retired participants with smaller, unsubsidized normal 

retirement benefits, compared to those who retired early with larger, subsidized benefits. 

Under ERISA § 305(e)(9)(D)(vi)(III) – (IV), it was equitable and appropriate for the 

8.2.59
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Trustees to consider “amount of benefit” and “type of benefit” in fashioning a suspension 

that applies the “1% of contributions” formula (subject to the rule discussed below 

prohibiting post-suspension benefit amounts that are more than fixed percentages below 

the pre-suspension benefit entitlements).

7. The subsidized early retirement benefits that many retirees are currently 

receiving are the result of past benefit increases that were added to the Plan over a period 

of many years. In some cases, these provisions resulted in large benefit increases for 

participants who only worked in covered employment for a short time after they were 

adopted. As discussed above, the “1% of contributions” formula does not include any 

subsidized benefits, which means that the benefit suspensions will prospectively eliminate 

these past benefit improvements. ERISA § 305(e)(9)(D)(vi)(VII) provides that an equitable 

distribution of the suspensions may consider the past history of benefit increases and 

reductions. Additionally, these subsidized benefits have already been largely phased out 

for active participants, which has resulted in a large discrepancy between active and 

retiree benefits. Under ERISA § 305(e)(9)(D)(vi)(IX), this is a factor that may be considered 

in determining whether the distribution of the suspension is equitable.

A. Rationale for distinguishing between retirees, actives and terminated participants

with twenty or more years of Contributory Service Credit (on the one hand), and 

terminated participants with fewer than twenty years of Contributory Service Credit 

(on the other).

1. As explained above, the Trustees have determined that, subject to the 

requirements and limitations of MPRA, terminated participants with benefits allocated to 

Tiers 2 and 3, and with fewer than 20 years of Contributory Service Credit, will receive

8.2.60
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post-suspension monthly benefits equal to 0.5% (rather than 1.0%) of the total 

contributions paid to the Fund on their behalf.

2. First, it is appropriate to make a distinction between suspensions to be 

applied to retirees and active participants, as opposed to the general class of terminated 

participants. With respect to retirees, ERISA subsections 305(e)(9)(D)(vi)(I) – (II) permit

the Trustees to take into account age, life expectancy and length of time in pay status in 

resolving issues concerning the equitable distribution of benefits. All of these factors

support an application of relatively more favorable suspension rules to retired participants,

and this is what the Trustees have done with respect the “1% of contributions” formula. 

3. With respect to the suspension rules to be applied to active participants, the 

Trustees were mindful that the Fund and all of its participants (actives, retirees and 

terminated participants) and beneficiaries must rely upon the active participants to 

continue to support the Fund and to negotiate collective bargaining agreements requiring 

contributions to the Fund. Section 305(e)(9)(D)(vi)(X) of ERISA indicates that the Trustees 

may consider the following factor in determining how to equitably distribute suspensions:

[The] [e]xtent to which active participants are reasonably likely 

to withdraw support for the plans, accelerating Employer

withdrawals from the plan and increasing the risk of additional 

benefit reductions in and out of pay status.

(Emphasis added.) Accordingly, the Trustees have determined that all active participants, 

subject to the statutory limitations and requirements relating to suspensions, should be 

treated at least as favorably as any other class of participant with respect to the benefits 

that are payable after the suspensions are implemented, and should in general therefore 

8.2.61
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have their basic suspension amounts determined based upon the “1% of contributions” 

formula.

4. However, the Trustees have also determined that a distinction should be 

made between terminated participants who have earned 20 or more years of Contributory 

Service Credit under the Plan and those with less than 20 years of Contributory Service 

Credit.

5. Based on data presented by the Fund’s Staff, the Trustees have determined 

that (a) the average age at which terminated participants in Tiers 2 and 3 who have fewer

than 20 years of Contributory Service Credit last performed Covered Service under the 

Plan was 39.2 years, and the average current age of these participants is 51.4 years; and 

(b) in contrast, terminated participants with 20 years or more of Contributory Service Credit 

last performed Covered Service under the Plan when they were (on average) 49.6 years 

old, and their average current age is 57.5 years. 

6. The Trustees have determined that the fact that the terminated participants 

with 20 or more years of Contributory Service are, on average, older than those with fewer 

years of Contributory Service indicates that these “20+” terminated participants are nearer 

to retirement and more likely to be reliant on their accrued benefit under the Plan than 

terminated participants with less Contributory Service Credit.

7. Similarly, ERISA § 305(e)(9)(D)(vi)(I) provides that the Trustees may take 

account of “age and life expectancy” as a factor in resolving the equitable distribution, and 

§ 305(e)(9)(D)(vi)(VII) provides that “years to retirement” may also be considered. 

Although the statute specifically mentions “years to retirement” for active participants, the 

8.2.62
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same concept applies to terminated participants in the exact same manner. In this case, 

the Trustees determined that preserving greater benefits for terminated participants with 

20 or more years of Contributory Service Credit (compared to those with fewer than 20 

years) was justified consistent with this “age and life expectancy” and “years to retirement” 

statutory equitable factor, because the “20+” terminated participants are older, and 

therefore have fewer remaining working years, and are likely to be more reliant on

retirement benefits from the Plan. In addition, because the terminated participants with 

fewer than 20 years of Contributory Service Credit are significantly younger, they are more 

likely to be currently employed and less likely to be dependent on benefits under the Plan. 

B. Rationale for placing a cap on the maximum percentage by which any suspended 

participant’s current benefit may be reduced and for the application of that cap. 

1. As indicated above, the Trustees have determined (again, subject to the 

express requirements and limitations MPRA), that with respect to participants with at least 

20 years of Contributory Service Credit, a cap should be placed on the amount by which 

Tier 2 or Tier 3 pre-suspension benefits are suspended under the proposed suspension 

plan. These caps are 50% in the case of Tier 2 and 40% in the case of Tier 3. 

2. The effect of this “maximum suspension” rule is to reduce the burden and 

hardship that might otherwise be experienced by some individual participants with long 

service. 

3. As noted above, there are a number of participants who have retired with 

relatively large ($3,000 - $4,000 per month) “and-out” pension who are currently receiving 

benefits that are disproportionately large in relation to the amount of Employer 

8.2.63
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Contributions paid to the Fund on their behalf. At the same time, the Trustees have 

determined that it is appropriate to supplement the “percent of contributions” suspension 

formula with a “cap” on the maximum benefit suspensions that can result under that 

formula so as to avoid disproportionately large suspensions and undue hardship. 

Therefore, the Trustees have determined that, in view of the expectations and reliance

interest of these participants, the severity of their suspensions should be mitigated by 

capping them at 50% (in the case of Tier 2 benefits) and 40% (in the case of Tier 3 

benefits). 

4. The Trustees also have determined that these caps on the maximum amount 

by which benefits are suspended should only be applied to participants with twenty or

more than of Contributory Service Credit, because (for the reasons set forth above) 

participants with fewer than twenty years of Contributory Service Credit have a less 

significant reliance interest in these benefits. 

5. For illustrative purposes, consider a hypothetical recently retired participant 

(i.e., with a 2015 retirement date, “Retiree 1”), who is receiving a pension benefit of $3,000

per month under the Contribution-Based Pension / “1% / 2% of contributions” formula 

established by the Fund’s current Plan Document. Assume further that Retiree 1 would 

incur a reduction in his current monthly pension payment of 25% (for a post-suspension 

benefit of $2,250 per month), if his post-suspension benefit were to be determined solely 

on the basis of the “1% of contributions” suspension formula.

6. In addition, assume there is another Tier 2 retiree (“Retiree 2”) who retired 

ten years ago, with more than twenty years of Contributory Service Credit and with a 

8.2.64
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subsidized “and-out” / early retirement Contributory Service Pension of $3,000 per month, 

and that Retiree 2 would receive a post-suspension reduction in his current benefit of 58% 

(to $1,260 per month), if his post-suspension benefit were to be determined solely on the 

basis of the “1% of contributions” formula.

7. In order to alleviate some of the burden on Retiree 2, and those similarly 

situated, the Trustees have utilized a “maximum percentage reduction” rule in the Fund’s 

proposed suspension plan. With regard to Retirees 1 and 2 this rule has the following 

effect:

 

Pre-Suspension 

Benefit

Post-Suspension Benefit 

after

Application of

“1% of contributions” rule

Final Post-Suspension

Benefit of

Application of the

“Maximum Suspension” 

rule

Retiree 1

(recently retired) 

(Contribution-Based 

Pension)

$3,000 $2,281 / 25% reduction $2,250 / 25% reduction

Retiree 2 

(retired 10 years ago) 

(Contributory Service/ 

“and-out” pension) 

$3,000 $1,260 / 58% reduction $1,500 / 50% reduction

8. The “maximum percentage reduction” rule thus helps alleviate, in the words 

of the statute, a “discrepancy” that might otherwise be more severe “between active and 

retiree benefits” in a way that is consistent with ERISA § 305(e)(9)(D)(vi)(X); this is another 

“equitable distribution” factor that the statute permits the Trustees to consider, and which 

the Trustees have considered and applied. 

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9. In addition, the “maximum percentage reduction” and the “percent of 

contribution” suspension rules acting in conjunction take account of the principal types of 

benefits under the Plan (the early retirement / “and-out” Contributory Service Pension and 

the “percent of contribution” benefits / Contribution-Based Pension) in a way that attempts 

to minimize the frustration of expectations of those who have relied on each of those 

benefits types. The Trustees have determined under ERISA § 305(e)(9)(D)(vi)(IV) to take 

account of the “[t]ype of benefit: survivor, normal retirement, early retirement” in this 

manner to achieve what the Trustees have determined to be an equitable distribution of 

suspensions. 

C. Rationale for selecting and applying reductions for age under the “1.0% / 0.5% of 

contributions” suspension formula. 

1. As explained above, with respect to Tier 2 and 3 benefits, the proposed 

suspension plan generally applies age reductions of 0.5% per month for the first 60 

months that a participant has retired prior to his 65th birthday (the age reductions stop at 

age 57 even if the participant retired at an earlier age). 

2. However, as is the case under the existing Plan Document, this age 

reduction under the suspension plan is measured from the participant’s 62nd birthday for 

participants that have 20 or more years of Service Credits. Further, the “20 year” exception 

to the age reduction rule is not applicable to participants who have lost adjustable benefits 

under the Fund’s rehabilitation plan (and pursuant to the PPA); these latter participants will 

have their age reductions calculated from age 65, regardless of their years of Service 

Credit. 

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3. Further, the age reduction factors for these participants will be drawn from an 

actuarial table attached to the rehabilitation plan; that table requires more aggressive age 

reductions than the 0.5% per month age reduction rate applicable to participants who have

not incurred a loss of their adjustable benefits.

4. These suspension plan rules relating to age reduction substantially follow the 

Fund’s existing Plan Document rules relating to the Twenty Year Service Pension, as well 

as the rehabilitation plan rules. Therefore these rules simply take account of existing 

benefit types under the Plan Document and are largely consistent with the participants’ 

current expectations. (See ERISA § 305 (e)(9)(D)(vi)(IV) (“type of benefits” may be 

considered as a factor in determining how to distribute benefits equitably).

5. Over a period of ten years these rules that currently permit non-PPA 

impacted participants with 20+ years of Service Credit to retire prior to age 65, while 

having their age reductions measured from 62, will be gradually phased out. Ten years 

after the suspension effective date all pre-age 65 retirements will be subject to reductions 

for age measured from the participant’s 65th birthday. This rule honors the expectations 

and reliance interest of participants who are currently near to retirement in the existing 

benefit types.

D. The Trustees have selected and applied appropriate factors in distinguishing 

between the maximum percentage reductions to be applied to Tier 2 benefits as 

opposed to Tier 3 benefits.

1. Benefits that are allocated to Tier 3 under the Trustees’ proposed suspension 

plan are guaranteed by an Employer against reduction “as a result of the financial status of 

the plan.” (ERISA §305(e)(9)(D)(vii).

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2. Because benefits in Tier 2 that are suspended are not protected by an

Employer, and because, unlike Tier 1 benefits, Tier 2 benefits are not required to be 

reduced to the maximum extent permitted, the Trustees have determined that it would not 

be appropriate to reduce Tier 2 benefits to the maximum extent permitted.

3. However, in light of the 3-Tiered sequential method of applying suspensions 

under ERISA §305(e)(9)(D)(vii), the Trustees have determined that it would be appropriate 

to apply suspension rules to Tier 3 benefits that are in some respects more favorable than 

those applied to Tier 2 benefits.

4. As a result, for participants with at least 20 years of Contributory Service 

Credit, the Trustees’ proposed suspension plan would suspend benefits allocated to Tier 3 

by no more than 40%, while similarly situated Tier 2 benefits may be suspended by no 

more than 50% of their present level. This lower cap on suspension for Tier 3 benefits

mitigates benefit losses for Tier 3 benefits and increases the suspensions experienced by 

Tier 2 participants correspondingly. 

E. Rationale for reducing the future rate of benefit accrual to 0.75%

1. As indicated above, under the proposed suspension plan the Trustees have 

reduced the rate at which future benefits will be accrued, as of the July 1, 2016 suspension 

effective date, to 0.75% of Contributions (reduced from the current accrual rate of 1%).

2. The Trustees are mindful of the need to retain the continued support of active 

participants for the Fund, and of the burdens felt by active participants in the past as a 

result of benefit adjustments and other measures the Trustees were required to implement 

in order to protect the financial condition of the Fund. For example, even under the current 

8.2.68
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accrual rate of 1 percent of Contributions, $0.50 of every dollar contributed on behalf of 

active participants is allocated to the Fund’s legacy costs, rather than to the payment of the 

normal pension costs associated with the active participant on whose behalf the 

contribution has been made.

3. However, with respect to the protection of previously accrued benefits, the 

proposed suspension plan generally places the active participants on an equal footing with 

retirees, and in a better position than terminated participants, except for terminated 

participants with 20 or more years of Contributory Service Credit (whose accrued benefits 

are protected to the same extent as -- not more than -- those of active participants, 

regardless of the amount of Contributory Service Credit earned by the active participants).

4. In light of these considerations, and in light of the requirement that a MPRA 

suspension plan include suspensions large enough to enable the Fund to avoid a 

projected insolvency (but not materially larger than is necessary to do so), the Trustees 

have determined that a reduction of the future accrual rate to 0.75% is necessary in order 

to comply with the MPRA requirements relating to the avoidance of insolvency, while still 

providing a rate of future benefit accrual that is still reasonably attractive. Thus the 

Trustees have determined an accrual rate significantly lower than 0.75% (for example, a 

0.50% accrual) would risk a serious erosion of support for the Plan among active 

participants.

5. For example, an active participant who is 55 years old and has a presuspension benefit entitlement of $1,700 per month reduced to $1,150 per month after the 

suspension effective date, may wish to continue to work in Covered Service for an 

8.2.69
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additional ten years (i.e., until age 65). If contributions are made on his behalf at the NMFA 

rate of $342 per week during this ten year period, each year he will add $133.38 to his 

monthly pension benefit upon retirement ($342 per week x 52 weeks x 0.75% = $133.38). 

Therefore, after ten years he will have added $1,333.80 to his initial suspended pension 

entitlement of $1,150 per month, for a total benefit of $2,483.80 per month (or $29,805.60

per year) on retirement at age 65. The average salary of an NMFA Teamster is 

approximately $50,000 per year, and so this projected pension of nearly $30,000 per year 

under the suspension plan would be sufficient to replace the majority of the average NMFA 

salary. 

6. It is true that the NMFA contribution rate of $342 per week is very nearly the 

highest contribution rate presently paid to the Fund, and the average contribution rate 

(exclusive of the Distressed Employer rate paid by YRC) is $220 per week. At this 

contribution rate, the 0.75% accrual rule under the suspension plan will add approximately 

$85 to a participants monthly pension benefit for every year of Covered Service. However,

in general bargaining units with lower pension contribution rates also receive lower wage 

packages. As a result, the lower pension amounts produced by lower contribution rates are 

also likely to result in reasonably attractive pensions at the 0.75% accrual rate, because 

the lower pensions will be replacing lower levels of pre-retirement wages. 

7. In addition, because the suspension plan assumes that certain contribution 

rate increases will be made in the future -- including rate increases from NMFA Employers 

whose rates are presently capped -- the “percent of contributions” formula, when applied to 

the increased contribution rates, will result in higher pension accruals. Those contribution 

8.2.70
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rate increases were not factored into the illustration of the impact of the 0.75% accrual rate 

set forth in Paragraph 5 above, and therefore that illustration conservatively estimates the 

pension benefits that would be accrued in the future. 

F. Calculation of PBGC Guaranteed Benefits / Interpretation of the Plan in light of the

“Year of Credited Service” concept. 

1. Participants and beneficiaries may not have their benefits reduced under a 

suspension plan to a level that is below 110% of the amount of the PBGC guarantee that 

would apply to the benefit. ERISA § 305(e)(9)(D)(i).

2. The PBGC multiemployer plan benefit guarantee formula is described in 

ERISA § 4022A and is summarized below:

• 100% of the first $11 of the monthly pension rate,

• plus 75% of the next $33 of the monthly rate,

• multiplied by the participants “years of credited service”.

(Emphasis added.)

3. Section 4022A(c)(3) of ERISA defines the concept of a “year of credited 

service” as follows:

(A) a year of credited service is a year in which the participant 

completed- 

(i) a full year of participation in the plan, or

(ii) any period of service before the participation which is 

credited for purposes of benefit accrual as the equivalent 

of the full year of participation;

(B) any year for which the participant Is credited for purposes of 

benefit accrual with a fraction of the equivalent of a full year of 

participation shall be counted as such in a fraction of the year of 

credited service; and

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(C)years of credited service shall be determined by including 

service which may otherwise be disregarded by the plan under 

section 411(a)(3)(E) or title 26.

4. As noted, the Central States Pension Fund employs two principal forms of 

retirement benefit:

a) a Contributory Service Pension, which depends on years of Contributory 

Service Credit, with 40 weeks of Contributory Service Credit in a calendar 

year -- 35 weeks prior to 1976 -- required to earn one full year of 

Contributory Service Credit, while 20 weeks are currently required to earn a 

fraction of a year (i.e., 1⁄2 year) of Contributory Service Credit; and 

b) a Contribution-Based Pension, or Accrued Benefit (“percent-ofcontributions”) Pension, which depends on the dollar amount contributed on 

behalf of the participant, and thus provides credit for all periods during a 

given calendar year in which contributions are owed on behalf of a 

participant. 

5. The Fund’s Plan Document itself does not define a “year of credited service,” 

and therefore the Trustees must interpret and apply the Plan Document in light of the 

“years of credited service” concept.

6. The Trustees have determined that a “year of credited service” should have 

the following meaning in the context of the Pension Fund’s Plan Document:

a) a full year of credited service is granted to a participant for purposes of the 

PBGC guarantee formula for every calendar year in which a participant 

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earned at least 40 weeks of Contributory Service Credit (or at least 35 weeks 

for years prior to 1976, at which time the Plan Document defined a year of 

Contributory Service Credit as a plan / calendar year in which 35 weeks of 

Contributory Service credit is earned, rather than 40 weeks); 

b) Non-Contributory Credit to which a participant may be entitled is only 

counted towards the “years of credited service” determination to the extent it 

actually increases the participant’s accrued benefit under the Plan 

Document; 

c) a fractional year of credited service (with 40 weeks -- or 35 weeks for years 

prior to 1976 -- as the denominator of the fraction) should be granted for all 

periods during each calendar year in which a participant worked in Covered 

Service or had contributions made on his behalf for fewer than 40 weeks (or 

35 weeks, prior to 1976), but no additional fractional year of credited service

should be given for periods worked in any plan / calendar year in excess of 

40 weeks;

d) with respect to reciprocal pensions, participants should only be granted a 

year of credited service for years or periods during which contributions were 

actually made to the Central States Pension Fund on their behalf, and not for 

the combined years of service credit between the reciprocating plans that are 

used as the basis for determining the participants’ eligibility for a particular 

type of Contributory Service Pension (e.g., for a 30-and-out Pension); and

8.2.73
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e) if a participant has incurred a Break-in-Service that resulted in negating 

pension credit earned prior to the Break-in-Service, none of the pre-Break-inService years should be counted as a year of credited service.

7. Therefore, the Trustees determined that although the Plan Document does 

not expressly address the statutory concept of a “year of credited service,” the application 

of that term in the context of the Plan Document as described in paragraph 6 above is a fair 

and reasonable interpretation.

G. Tier 1 determinations for withdrawn Employers.

1. United Parcel Service, Inc. (“UPS”) withdrew from the Pension Fund at the 

end of 2007 and satisfied its then existing withdrawal liability in full pursuant to an 

agreement with the Fund.

2. Under the terms of the IBT / UPS, Inc. Pension Plan, and the terms of 

various collective bargaining agreements entered between UPS and affiliates of the 

International Brotherhood of Teamsters, UPS has guaranteed payment of certain benefits 

owed by the Fund to UPS employees who (a) were active with UPS in Covered Service at 

the time of the UPS withdrawal from the Fund, or (b) were not retired at the time of the 

UPS withdrawal, but earned their last Hour of Service with the Fund (prior to the UPS 

withdrawal) while employed by UPS (collectively the “UPS Guarantee Group”); this 

commitment by UPS to the UPS Guarantee Group includes a guarantee of their Central 

States benefits against a reduction “as a result of the financial status of the Plan,” within

the meaning of ERISA § 305 (e)(9)(D)(vii)(bb).

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3. Therefore the Trustees have determined that the requirements of ERISA § 

305(e)(9)(D)(vii)(I)-(III), including those setting forth the three categories or “Tiers” of 

benefits that may be subject to suspension, are applicable to the Fund.

4. Under these requirements setting forth the three Tiers of benefit 

suspensions, ERISA § 305(e)(9)(D)(vii)(I) first requires that the Fund identify those 

Contributing Employers that “failed to pay (or [are] delinquent with respect to paying) the 

full of amount of [their] withdrawal liability under section 4201(b)(1) [of ERISA] or an 

agreement with the [Fund].”

5. To accomplish this task, the Fund began by compiling lists of all withdrawal 

liability assessments approved by the Board of Trustees during each year since the Fund’s 

withdrawal liability program began (1981 - present). 

6. These lists were organized by the year of assessment and included the 

following general information to the extent it is available in the Minutes of the Board of 

Trustees Meetings: (a) assessment approval date; (b) controlling entity of the withdrawn 

Employer; (c) withdrawn (formerly participating) Employer; (d) location of withdrawn 

Employer, (e) withdrawal date, (f) withdrawal type (e.g., partial or complete); (g) 

assessment amount; (h) assessment payment terms; (i) reason for assessment; (j) 

assessment number and (k) the terms of withdrawal liability settlements approved by the 

Board of Trustees(collectively this data formed the “Historical Record”). 

7. To the extent possible, the Fund supplemented and verified the Historical 

Record obtained from the Board Meeting Minutes with the Withdrawal Liability Monthly 

Operating Reports. These reports were produced each month from the commencement of 

8.2.75
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the Fund’s withdrawal liability collection program in 1981 through December 31, 2014. 

Each Monthly Operating Report generally identified, for each withdrawal liability 

assessment that was open, unresolved or not fully paid during the month the Report was 

prepared, the net assessment, cash received, any applicable write-off amounts and the 

outstanding principal balance.

8. Other resources used to supplement or verify the Historical Record were the 

withdrawal liability settlement agreements maintained in the Fund’s Executive Records 

Department, Legal Department files concerning withdrawal liability matters and the 

historical withdrawal Employer files maintained by the Withdrawal Liability Department 

(with respect to closed withdrawal liability matters, these historical files have generally only 

been retained for the period from 1996 to the present.)

9. With regard to open or unresolved withdrawal liability assessments, the Staff 

referred to current Employer withdrawal files.

10. Staff then utilized data concerning withdrawal liability collections and 

settlements gathered from the sources described above, and after consultation with the 

Fund’s Legal Department and outside counsel, made the determination that each 

Contributing Employer that has undergone a complete withdrawal from the Fund (other 

than UPS) should be assigned to either Tier 1 (ERISA § 305(e)(9)(D)(vii)(I)) or Tier 2 (§ 

305(e)(9)(D)(vii)(II)). In making these determinations, Staff employed the following criteria: 

a) If the principal amount indicated on the face of the assessment was paid in 

full, the Employer was assigned to Tier 2. 

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b) Even if the full principal amount stated in the assessment was not paid, the 

Employer was assigned to Tier 2 if, after application of the statutory 

adjustments listed in ERISA § 4201(b)(1) (i.e., de minimis adjustment under 

§ 4209, prior partial withdrawal credit under § 4026, the 20 year limitation on 

the withdrawal liability payment schedules under § 4219(c)(1)(B) and the § 

4225 limitations), the assessment was paid in full. 

c) If the Employer fully paid a stipulated amount pursuant to a withdraw liability 

settlement agreement that settled and satisfied the entire controlled group’s 

liability for a complete withdrawal assessment, the Employer was also 

assigned to Tier 2. 

d) All other withdrawn Employers were assigned to Tier 1.

I. Allocation of benefits to the MPRA Tiers.

1. A number of participants have earned benefits under the Plan with two or 

more Contributing Employers that have been assigned to different MPRA Tiers.

2. In those circumstances, it is necessary to allocate the total benefit earned by 

a participant between two or more Employers. 

3. The Trustees have determined that a participant’s total benefit should be 

allocated among different Contributing Employers that have been assigned to different 

MPRA Tiers on the basis of the contributions made by each Employer on behalf of the 

participant.

4. In making this determination, the Trustees have been advised that under 

federal pension law, contributions paid by an employer on behalf of participants in a 

8.2.77
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multiemployer pension plan form a fair basis for allocating benefits earned by the 

participants. 

5. Moreover, the Fund has conducted testing to compare the impact of benefit 

allocations to Employers made on the basis of the amounts of contributions paid by each 

Employer to the Fund on behalf of individual participants (on the one hand), with 

allocations made by attempting to specifically determine, on a case-by-case basis, how 

much of a participant’s total benefit under the Plan Document has been earned with each 

Employer (on the other). This testing used a random sample of 200 participants, all of 

whom have worked for both Tier 1 and Tier 2 employers, and therefore have some 

benefits that are subject to the suspension rules applicable to each of these Tiers. The 

testing focused on any differences produced by the two allocation methods in the 

suspension levels under hypothetical suspension plans that reduced Tier 1 benefits to the 

maximum extent (110% of the PBGC guarantee benefit, as MPRA requires), and reduced 

Tier 2 benefits in a range between 115% and 130% of the PBGC guarantee. At the “130%-

of-PBGC-guarantee” suspension level, there was an average discrepancy of only $1.31 

per month between the post-suspension benefit amounts resulting from the two methods 

of allocating total benefits between the Tier 1 and Tier 2 for the 200 participants in the 

sample. 

6. In addition, the Trustees have determined that because of the way the

Fund’s records are maintained, it would not be a prudent, practical or reasonable 

expenditure of the Funds resources to attempt to allocate portions of a participant’s total 

8.2.78
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benefit earned under the Plan Document to each Contributing Employer in any way other 

than by tracking the contributions paid by the Employer on behalf of the participant. 

7. Further, the Trustees have determined that an expensive and timeconsuming manually conducted, case-by-case effort to allocate benefits of particular 

employees would not yield more accurate results. The Plan Document rules were intended 

to calculate a total benefit on the basis of a participant’s total work history, and those rules 

do not provide a mechanism to value benefits earned with individual contributing 

employers earned in connection with isolated segments of a participant’s service history. 

For example, with regard to a participant who has earned a “30 and-out” Contributory 

Service Pension benefit over the course 30 years of Contributory Service, the early years 

of service of the participant looked at in isolation may appear less valuable than when 

considered in the context of the participant’s entire service history. This issue might be 

resolved by allocating the requisite Contributory Service Credit evenly among all 

Contributing Employers for whom the participant worked over the course of his 30 years of 

service under the Plan on the basis of the amount of time spent working in Covered 

Service with each Employer. But this method would be questionable if the participant 

earned a total of 35 years of Contributory Service credit, and 5 of his first 30 years were 

earned with a Tier 1 employer. A portion of his “30 and-out” pension (5/30) might be 

viewed as subject to the Tier 1 rule requiring a maximum suspension, or alternatively, 

perhaps no portion of his 30-and-out pension should be subject to maximum suspensions

because he earned a total of 30 years of Contributory Credit with employers outside of Tier 

8.2.79
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1. Because the answers to questions such as this are not clear under the Plan Document,

the Trustees have determined that a manual, case-by-case effort to allocate parts of a total 

benefit earned under the Plan Document to particular Employers would not yield a more 

accurate result than an allocation on the basis of contributions. The Plan Document offers 

no clear answers to such questions because, as noted, it was only intended to indicate the 

value of a participant’s total benefit and does not provide a mechanism to value benefits 

earned with individual Contributing Employers considered in isolation from the participant’s 

entire career in Covered Service under the Plan Document. 

8. Therefore, the Trustees concluded that the use of contributions made by the 

Contributing Employers on behalf of the affected participants is the most reasonable 

method of allocating benefits among the MPRA Tiers. 

8.2.80
Tab A

8.2.81
SOURCE: THOMAS C. NYHAN

MARK ANGERAME

JAMES P. CONDON

SPECIAL MEETING OF THE PENSION BOARD MEETING CONCERNING MPRA

SEPTEMBER 16, 2015

SUMMARY OF TRUSTEES’ STUDY AND DELIBERATIONS CONCERNING MPRA AND A 

POTENTIAL MPRA SUSPENSION PLAN

 This Agenda Item is attached as Tab A to the Findings and Determinations Relating to 

the Proposed MPRA Suspension Plan (“Finding and Determinations”). The purpose of this 

Summary of Trustees’ Study and Deliberations (“Summary of Trustees’ Study and 

Deliberations”) is to summarize the topics discussed at various meetings held in order to 

study the Multiemployer Pension Reform Act of 2014 (“MPRA”) and to consider benefit 

suspension plan options under that statute for which the Trustees might seek approval from 

the U.S. Department of Treasury.

I. December 10, 2014 Meeting

On December 10, 2014, all of the Fund’s Trustees met prior to a previously scheduled 

Trustee Subcommittee Meeting in order to discuss MPRA, which at that time had been 

passed by both houses of Congress but had not yet been signed into law by President 

Obama. The following persons were in attendance at the meeting:

Employee Trustees Employer Trustees Fund Staff

Charles Whobrey Arthur Bunte, Jr. Thomas C. Nyhan

Jerry Younger Gary F. Caldwell Mark Angerame

George Westley Greg R. May James P. Condon

Marvin Kropp Ronald DeStefano 

Mr. Nyhan discussed the structure and purpose of various provisions of MPRA with 

the Trustees, with special emphasis on the benefit suspension provisions of the new law. Mr. 

Nyhan also outlined a number of areas related to MPRA in which the Trustees would in the 

future be presented with detailed legal and actuarial analysis.

8.2.82
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II. January 13, 2015 Meeting

On January 13, 2015, during the Meeting of the full Board of Trustees of the Pension 

Fund held on that date, there was a discussion of options relating to MPRA. The following 

persons were in attendance during the portion of the Meeting that dealt with MPRA: 

Employee Trustees Employer Trustees Independent Special Counsel

Charles A. Whobrey Arthur Bunte, Jr. Hon. David Coar

Jerry Younger Gary Caldwell

George Westley Ronald DeStefano Groom Law Group 

Marvin Kropp Greg May Gary Ford

 

Pension Fund Staff Segal Consulting 

Thomas C. Nyhan Steve Rabinowitz

 Mark Angerame Dan Ciner

James P. Condon

John J. Franczyk, Jr. 

Peter Priede 

Fernando Rodriguez 

 

1. During the MPRA-related portion of the January 13, 2015 Meeting, Gary Ford 

covered the following topics:

a) Procedural matters leading up to the enactment of MPRA.

b) The ramifications of the new category of “critical and declining” 

multiemployer plan created under MPRA.

c) The general requirements, steps and measures that a “critical and declining” 

plan must meet in order to invoke the benefit suspension provisions of 

MPRA.

d) The limitations (age-based, etc.) that MPRA places on any plan of benefit 

suspensions, and the special “three-Tiered” structure of benefit suspensions 

8.2.83
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applicable to any Central States suspension plan [see ERISA sec. 

305(e)(9)(D)(vii).]

e) The necessity for, and role of, a retiree representative as a participant in 

deliberations and proceedings concerning any MPRA suspension plan.

f) Department of Treasury review of an application for approval of a 

suspension plan, procedural issues concerning that review and the timing of 

the final implementation of a suspension plan.

g) The requirements for equitable distribution of any benefit suspensions for 

which the Trustees may seek approval.

2. Peter Priede and Fernando Rodriguez then discussed and presented 

documents relating to the complexity of the data collection process needed to consider, 

study, apply and implement any potential MPRA benefit suspension plan in the context of 

Central States Pension Fund.

3. Steve Rabinowitz and Dan Ciner of Segal Consulting then made a presentation 

in which they discussed the relationship between delayed implementation of a suspension 

plan and the severity of the suspension that would be required in order to avoid a projection 

of insolvency, along with the following topics:

a) The percentage of total Pension Fund participants in pay status whose 

pension benefits would be reduced by less than 5% under any suspension 

plan. (Mr. Rabinowitz estimated this percentage to be approximately 52%).

8.2.84
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b) The sensitivity of the Fund’s performance under any suspension plan to 

future investment returns, to initial (pre-suspension) asset values, to 

mortality assumptions and to other factors.

c) The impact of the longer time horizons associated with the insolvency 

analysis of a suspension plan (as compared to a pre-suspension insolvency 

analysis) upon factors (such as increased contribution rates) that might 

influence the date of the insolvency, or succeed in eliminating a projected 

insolvency.

4. Thomas Nyhan then addressed the impact on the extent of any potential 

suspensions of any delay in Treasury’s issuance of guidance concerning the requirements for 

approval of a suspension plan application. Mr. Nyhan and the Trustees also discussed the 

appointment of a MPRA retiree representative, and the following topics were addressed in 

that context: 

a) Mr. Nyhan and the Trustees reviewed the qualifications and role under 

MPRA of the retiree representative. 

b) The Trustees then considered a number of present or former Trustees who 

could serve in this capacity.

c) It was noted that Susan Mauren, a retired principal officer of Teamster Local 

320, is a retiree of the Pension Fund and has significant experience in 

representing the interests of multiemployer plan participants.

d) A motion was then made, seconded and unanimously carried to appoint 

Susan Mauren as the Fund’s MPRA retiree representative, subject to further 

8.2.85
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vetting of Ms. Mauren in connection with an interview to be conducted by 

Trustee Charles Whobrey and Thomas Nyhan and confirmation of her 

willingness to serve in this capacity. 

[Following the interview referenced above, on January 18, 2015 Susan Mauren was offered 

the retiree representative position and confirmed her acceptance of that position in writing.] 

III. February 3, 2015 Meeting

On February 3, 2015 there was a Meeting to discuss MPRA options attended by the 

following persons:

Employee Trustees Employer Trustees

Charles Whobrey Arthur Bunte

George Westley Ronald DeStefano

Pension Fund Staff Groom Law Group

Thomas Nyhan Gary Ford

Mark Angerame Lars Golumbic

James Condon

John Franczyk Segal Consulting

Peter Priede Steve Rabinowitz (via Telephone)

Fernando Rodriguez Dan Ciner

 

 Counsel for Retiree Representative

 Pamela Nissen

1. At the February 3, 2015 Meeting, Gary Ford of the Groom Law Group 

discussed the following topics:

a) The history of various failed legislative efforts prior to the enactment of 

MPRA to assist the many troubled multiemployer plans throughout the 

United States by providing federal funding to protect those plans and/or to 

increase funding of the Pension Benefit Guarantee Corporation.

8.2.86
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b) The new category of “critical and declining” status created under MPRA.

c) The benefit suspension options available under MPRA for critical and 

declining plans.

d) The substantive limitations and conditions placed on any MPRA suspension 

plan, and the special circumstances applicable to a Central States 

suspension plan, e.g., the three-Tiered structure of benefits under ERISA § 

305(e)(9)(D)(vii).

e) Procedural requirements concerning the approval and implementation of 

any suspension plan proposed by the Trustees, including the amount of time 

required to complete agency (U.S. Department of Treasury, “Treasury”) 

review, and gain final approval of a benefit suspension plan.

f) Procedural matters relating to a MPRA application filed with Treasury, and

potential legal challenges to a benefit suspension plan.

g) Factors that could cause an acceleration of the Fund’s currently projected

date of insolvency (2026).

h) Legal consequences and inferences relating to the current actuarial estimate 

prepared by Segal Consulting showing that, as a result of the various 

statutory limitations on benefit suspensions created under MPRA, and 

undercurrent assumptions and asset values, approximately 50% of the 

Fund’s participants in pay status would not have their current benefits 

reduced at all under a MPRA suspension plan. 

8.2.87
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2. Pension Fund Staff members Peter Priede and Fernando Rodriquez then 

discussed the following topics:

a) Calculation of the “110% of PBGC guarantee” limit on the amount of any 

MPRA suspensions under ERISA § 4022A and the application of the 

concept of “year of credited service” under ERISA § 4022A in making those 

calculations. 

b) The need for further analysis of the application of the MPRA “three-Tiered” 

provisions to Central Sates participants and calculations with respect to the 

application of the various MPRA limitations and analysis of the rules 

concerning suspensions to Qualified Domestic Relations Orders (QDROs) 

and other benefit types under the Plan.

3. Steve Rabinowitz and Dan Ciner of Segal Consulting then discussed (and 

presented schedules) concerning the following topics:

a) The impact of delays in implementing any plan of benefit suspensions (i.e.,

delays in implementing suspensions generally will cause the average 

suspension amounts to grow larger, and a delay in implementation much 

beyond July 1, 2016 substantially increases the risk that any MPRA 

suspension plan will be unable to achieve the goal of avoiding projected 

insolvency).

b) The impact of various hypothetical changes in contribution rates, minimum 

retirement age, attrition rates (i.e., rates of loss of active participants and 

declines in contribution revenue), future rates of benefit accruals and other 

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factors could have on the scope of the benefit suspensions required to avoid 

the current projection of insolvency, and the impact of the suspensions on 

various classes of participants.

4. The Trustees then discussed various considerations that should guide the 

equitable distribution of any benefit suspensions. The Trustees also directed Segal to 

continue to model suspension plans utilizing a wide range of hypotheticals that that will allow 

the Trustees to better understand the sensitivity of the scope of the suspensions to various 

changes in the plan design and in the underlying assumptions.

IV. February 17, 2015 Meeting

On February 17, 2015 an additional Meeting was held to discuss MPRA suspension 

options. The following individuals were in attendance at that meeting:

Employee Trustees Employer Trustees Pension Fund Staff 

Charles A. Whobrey Arthur Bunte, Jr. Thomas C. Nyhan 

George Westley Ronald DeStefano Mark Angerame

 James P. Condon

Segal & Consulting Groom Law Group John J. Franczyk, Jr.

Steve Rabinowitz Gary Ford Peter Priede

Dan Ciner Lars Golumbic Fernando Rodriguez

Retiree Representative and Counsel Independent Special Counsel

Sue Mauren Hon. David H. Coar 

Peter Rosene

Pamela Nissen

1. Gary Ford reviewed the substantive and procedural issues previously discussed 

at the February 3, 2015 Meeting pertaining to any MPRA plan of benefit suspensions for 

which the Pension Fund may seek approval from the Department of Treasury, and also 

addressed the following topics: 

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a) The extent to which MPRA imposes an affirmative legal duty upon the 

Trustees to seek approval of a suspension plan.

b) Issues relating to the MPRA requirement that a proposed plan of benefit 

suspensions be projected to avoid an insolvency of the Fund, but must not 

impose suspensions that are materially greater than are necessary to 

achieve that goal.

c) The role of a retiree representative and the scope of the Fund’s obligation to 

pay expenses incurred by the retiree representative. 

d) The extent to which the implementation of any plan of MPRA suspensions 

should be supported by evidence that the Trustees have taken and are 

continuing to take all reasonable measures to avoid a Plan insolvency.

e) Issues relating to the equitable distribution of benefit suspensions under any 

MPRA suspension plan for which approval and implementation might be 

sought, as well as the special “three-Tiered” structure of benefit suspensions 

applicable to the Pension Fund.

f) Issues concerning the allocation of benefits to each of the three Tiers that 

are applicable to the structure of any benefit suspension plan for which the 

Central States Trustees may seek approval.

g) The impact of U.S. Department of Treasury’s guidance and request for 

comments concerning MPRA issued on February 12, 2015 on the form, 

substance and timing of any plan of benefit suspensions for which the 

Trustees may seek approval.

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2. Susan Mauren, retiree representative, then emphasized her commitment to 

advocate the interests of the retirees and terminated participants, and to independently 

communicate with this group of participants; she also urged that consideration be given to 

liberalizing the Fund’s restricted reemployment rules for participants whose benefits are 

subject to suspensions.

3. Peter Priede and Fernando Rodriquez of the Pension Fund’s Staff then made 

presentations in which they distributed and discussed schedules and other documents 

relating to the following topics:

a) Practical considerations related to the application of the MPRA “threeTiered” structure of benefit suspensions to the Pension Fund’s special 

circumstances. 

b) The percentage of withdrawal liability paid by various employers, either 

pursuant to the withdrawal liability statute or under an agreement with the 

Pension Fund. 

c) With reference to the three-Tiered structure of suspensions applicable to the 

Fund, the Staff’s review of employer files in order to determine which 

employers have failed to pay their withdrawal liability in full either (i) 

pursuant to the withdrawal liability statute or (ii) pursuant to an agreement 

with the Fund. 

d) The use of contributions paid on behalf of each participant by each employer 

in each of the three MPRA Tiers as a basis for allocating each participant’s

total benefit among the Tiers. 

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4. Steve Rabinowitz and Dan Ciner of Segal Consulting then distributed and 

discussed schedules and related documents concerning the following topics:

a) Continued analysis of the impact of a range of hypothetical benefit 

suspension plans on various categories of participants (retirees, actives, 

terminated participant) under various assumptions concerning future 

contribution rates, minimum retirement ages, future benefit accrual rates, 

and potential expansions of age protections or other limitations on 

suspensions mandated under MPRA.

b) The impact of hypothetical variations in a suspension plan based upon each 

of the 11 factors listed in MPRA that may be considered by the Trustees in 

the effort to equitably distribute the suspensions [see ERISA § 

305(e)(9)(D)(vi)(I-XI)]. 

c) Projections concerning the long-term impact on the market value of the 

Fund’s assets under a range of assumed suspension plans.

d) The process of determining a reasonable rate of return assumption 

applicable to the analysis of the projected impact on the Fund’s solvency 

under a MPRA suspension plan.

e) The sensitivity of long-term asset values to investment returns in the initial 

years of implementation of any suspension plan. 

f) The impact of varying the amount of any suspension based upon the 

percentage of withdrawal liability paid by the participant’s employer. 

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g) The impact of a general rule (subject to statutory limitations and 

requirements) that would base the suspensions upon the amount of 

contributions paid by employers on behalf of each participant.

h) An analysis of the impact on the present value of the accrued benefits of the 

general population of the Fund’s participants and beneficiaries under a 

range of suspension plan options, as compared to a scenario in which the 

Fund proceeds without a suspension plan, becomes insolvent in 2026 (as 

presently projected) without the support of the PBGC guarantee payment 

due to the insolvency of that agency’s guarantee fund.

5. The Trustees in attendance at the February 17, 2015 Meeting expressed a 

preference for a general rule (applicable except where MPRA requirements and limitations 

are controlling) that would base each participant’s post-suspension benefit on the total 

amount of contributions paid on behalf of each participant by Contributing Employers. The 

Trustees directed the actuary to continue its working in modeling suspension plans utilizing 

that rule.

6. Thomas Nyhan then discussed the issue of the timing of communications to 

participants concerning the possibility that the Trustees may seek approval of a MPRA 

suspension plan, and the need for additional actuarial analysis of the impact of expanding the 

existing limitations on suspensions built into MPRA and/or supplementing those protections 

with new limitations on suspensions that might be considered by the Trustees.

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V. March 4, 2015 Meeting

On March 4, 2015, an additional Meeting was held to discuss MPRA suspension 

options. The following individuals were in attendance at that meeting:

Employee Trustees Employer Trustees

Charles A. Whobrey Arthur Bunte, Jr.

George Westley Ronald DeStefano

Marvin Kropp Gary Caldwell 

 Greg May

Pension Fund Staff Segal Consulting Groom Law Group 

Thomas C. Nyhan Steve Rabinowitz Gary Ford

Mark Angerame Dan Ciner Lars Golumbic

James P. Condon

John J. Franczyk, Jr. Retiree Representative and Counsel

Peter Priede Sue Mauren (Retiree Representative)

Fernando Rodriguez Peter Rosene (Legal Counsel)

 Pamela Nissen (Legal Counsel) 

1. Thomas Nyhan began the Meeting by discussing Treasury’s recent request for 

comments concerning guidance and regulations to be issued under MPRA, and issues 

relating to the amount of time necessary to develop and receive approval of a plan of benefit 

suspensions. 

2. Gary Ford then reviewed a number of legal issues under MPRA that he had 

discussed in prior meetings, and also discussed the following topics:

a) Whether “critical and declining” plans would be required to seek approval of 

a suspension plan.

b) The requirements and conditions that must be met by a MPRA suspension 

plan, and the limitations on suspensions imposed by the statute.

c) Efforts that may be made to secure expedited review by Treasury of any 

application for approval of a MPRA suspension plan, as opposed to a review 

8.2.94
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that consumes the maximum time permitted under the statute to complete 

such a review.

3. Steve Rabinowitz of Segal Consulting then made a presentation during which 

he distributed and discussed schedules and related materials concerning the following topics:

a) New modeling of suspension plans that applied post-suspension benefits 

based on various percentages of the total contributions received on behalf of 

each affected participant; the percentage of contribution used to determine 

post-suspension benefits varied based upon the class of the participant, 

e.g., actives, retirees and terminated participant. 

b) The sensitivity of any “point-of-no-return” analysis (meaning a determination 

of the point in time at which, due to the statutory limitations of benefit 

suspensions, it is no longer possible to project that any MPRA suspension 

plan will avoid a projected insolvency) to a variety of assumptions, e.g.,

assumptions concerning the attrition of active participants, future 

contribution revenue and investment returns.

c) Modeling of hypothetical suspension plans with hypothetical contribution 

rate increases of 2.5% above those currently required under the 

rehabilitation plan and with future benefit accrual somewhat lower than 

provided under the current Plan Document and other hypothetical plan 

design changes applicable to future benefit accruals.

4. The March 4, 2015 Meeting concluded with a discussion among the Trustees 

and the Retiree Representative concerning (a) the paramount need for fairness in fashioning 

8.2.95
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any suspension plan, and (b) a recognition that in general exempting any class of participants 

in an effort to avoid undue hardship often tends to shift the hardship to other participants. The 

Trustees also noted the need to continue to further refine and narrow options relating to the 

structure of a potential suspension plan.

VI. April 14, 2015

On April 14, 2015 another Meeting to discuss MPRA suspension options was held. 

The following persons were in attendance at that Meeting:

Employee Trustees Employer Trustees

Charles A. Whobrey Arthur Bunte, Jr. - via phone link

George Westley Gary Caldwell

Marvin Kropp Ronald DeStefano

Bill Lichtenwald Greg May

Retiree Representative and Counsel Independent Special Counsel

Sue Mauren - via phone link Hon. David H. Coar 

Pamela Nissen

Pension Fund Staff Segal Consulting 

 Thomas C. Nyhan Steve Rabinowitz- via phone link 

 Mark Angerame Dan Ciner 

 James P. Condon

 John J. Franczyk, Jr. Groom Law Group

 Peter Priede Gary Ford

 Fernando Rodriguez Sarah Zumwalt - via phone link

1. Gary Ford began the Meeting by discussing the following topics:

a) Issues relating to the application of various hypothetical suspension 

formulas to each of the three MPRA Tiers that must be considered in any 

Central States suspension plan.

b) Issues relating to the timing of filing an application for approval of a 

suspension plan and to the procedure for review of the application. 

8.2.96
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c) The methods for determining, with respect to the MPRA Tier analysis, 

whether an employer has failed to pay its withdrawal liability in full (either 

pursuant to the withdrawal liability statute or pursuant to an agreement with 

the Fund).

d) Interpretation of the statute with respect to the level of suspensions applied

to participants and benefits allocated to each Tier.

e) The method for determining a “year of credited service” as that term is used 

in ERISA § 4022A (relating to the calculation of the PBGC guarantee 

amount) and as applied to the Central States Plan.

f) The form of notice to participants and beneficiaries of the filing of an 

application for approval of a suspension plan.

g) The possibility of suspensions based upon future events, i.e., future 

contingent suspensions.

h) The point in time at which the age of a participant or beneficiary should be 

measured for purposes of the age-based protections under the MPRA 

suspension rules.

i) Procedures related to claims that an approved and implemented suspension 

plan has not been correctly applied to the facts and circumstances of a 

particular participant or beneficiary.

j) Efforts required obtaining correct addresses or other contact information for 

participants and beneficiaries so that notices can be delivered to them.

8.2.97
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2. Steve Rabinowitz and Dan Ciner then distributed and discussed schedules and 

documents concerning the modeling of suspension plans under various assumptions, and 

addressed the following topics:

a) A review of the prior modeling and analyses of hypothetical suspension 

plans previously presented to the Trustees. Mr. Rabinowitz noted that this 

prior modeling included a review of hypothetical applications of the 11 

factors referenced in the MPRA suspension rules [ERISA sec. 

305(e)(9)(D)(vi)(I-XI)] that the Trustees may consider as part of the 

requirement for equitable distribution of the suspensions, an analysis of the 

sensitivity of insolvency projections to investment returns and other factors, 

and the impact of possible changes to the Rehabilitation Plan schedules 

concerning contribution rates and future accrual rates.

b) Further analysis of the impact under various assumptions of a general rule 

that bases suspensions upon percentages of the total contributions paid into 

the Fund on behalf of each participant.

c) New (4/14/2015) modeling that is based on updated service history,

contributions etc. through December 31, 2014, updated the “Tier” analysis 

and other updated data concerning calculations of the maximum allowable 

suspensions for various participants (110% of the PBGC guarantee 

amount).

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d) New modeling that also provides illustrations of the impact of gradually 

changing the retirement age rules relating to early retirements to early 

retirement from age 62 with 20 years of Contributory Service to age 65. 

e) An analysis of the impact of expanding the age 75-80 protections mandated

under MPRA and limiting the suspensions that would otherwise be imposed 

on other categories of participants and beneficiaries (e.g., surviving 

spouses).

3. Peter Priede and Fernando Rodriquez then distributed and discussed various 

documents relating to the assembly of participant data necessary to develop and implement a 

suspension plan, including a two page document illustrating the complexity of calculations 

required to determine suspension amounts for each participant affected by a suspension plan 

[e.g., calculation of each participant’s (i) pre-suspension benefit amount; (ii) maximum 

allowable suspension (110% of the participant’s PBGC guaranteed benefit); (iii) total benefits 

to be allocated to the appropriate MPRA tier (where applicable); (iv) total participant 

contributions (under the assumption that any suspensions would in general be based upon a 

percent of contribution); and (v) the effect on the participant of any applicable statutory 

limitations (age and disability) and of other hypothetical factors and limitations that the 

Trustees may wish to build into the Funds’ suspension Plan.

4. The Trustees then generally indicated continued support for a suspension plan 

that bases post-suspension benefits upon the total amount of the contributions paid into the 

Fund on behalf of each participant. However, the Trustees also indicated that the fairness of 

this methodology would be improved by placing an overall cap on the maximum suspension 

8.2.99
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that certain participants could receive, or through other mechanisms to smooth or distribute 

the impact of the benefit reductions.

VII. April 15, 2015 Meeting

On the April 15, 2015 there was a Meeting held to follow-up on some of the issues 

discussed at the April 14 Meeting. The following persons were in attendance at the April 15 

Meeting:

Employee Trustees Employer Trustees

Charles A. Whobrey Arthur Bunte, Jr. - via phone link

George Westley Gary Caldwell

Bill Lichtenwald Ronald DeStefano

 Greg May

Pension Fund Staff 

 Thomas C. Nyhan Independent Special Counsel

 Mark Angerame Hon. David H. Coar 

 James P. Condon

 John J. Franczyk, Jr. 

Peter Priede 

At the April 15 Meeting, the Trustees in attendance discussed whether, and to what 

degree, the age protections mandated by MPRA should be expanded under any suspension 

plan they may approve, and the issue of whether the “percent-of-contribution” suspension 

formula should be varied based upon the status of the participant (e.g., active versus 

terminated participant, or upon the amount of Contributory Service Credit accumulated by the 

participant).

VIII. May 20, 2015 Meeting

On May 20, 2015, an additional Meeting was held to consider options concerning a 

MPRA suspension plan. The following persons were in attendance at that Meeting:

8.2.100
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Employee Trustees Employer Trustees

Charles A. Whobrey Arthur Bunte, Jr. 

George Westley Gary Caldwell

Bill Lichtenwald Ronald DeStefano

 Greg May

Retiree Representative and Counsel Segal Consulting 

Sue Mauren Steve Rabinowitz

Pete Rosen Dan Ciner

Pamela Nissen

Pension Fund Staff Groom Law Group 

 Thomas C. Nyhan Gary Ford

 Mark Angerame 

 James P. Condon Also in attendance via phone-link 

 John J. Franczyk, Jr. for a portion of the meeting 

 Peter Priede Bill McInturff (Public Opinion Strategies, POS)

 Fernando Rodriguez Micah Roberts (POS)

 Pamela Burkhardt Rick Jasculca (Jasculca Terman)

1. The Meeting began with a presentation by the representatives of POS and 

Jasculca Terman, who explained their efforts, through participant interviews, to ascertain the 

best methods of communicating with the Fund’s participants and beneficiaries concerning 

MPRA and any suspension plan that the Trustees may approve. This presentation included a 

discussion of the Fund’s April 6, 2015 mailing to participants concerning MPRA options and 

of POS’s finding that the Fund’s participants and beneficiaries were best reached by direct 

mailings.

2. Pamela Burkhardt then discussed the most frequently asked questions posed 

by participants in response to the Fund’s April 6, mailing and the Fund’s efforts to respond to 

those questions through post-card acknowledgements and the special MPRA website it has 

established.

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3. Gary Ford then reviewed the Groom Law Group’s request for guidance recently 

submitted to Treasury.

4. Steve Rabinowitz and Dan Ciner then distributed and discussed additional 

suspension plan scenarios and covered the following tropics:

a) A review of the prior modeling of suspension scenarios, which included an 

analysis of (i) the impact of hypothetical applications of the 11 “equitable 

distribution factors” listed in MPRA as considerations that the Trustees may 

apply in fashioning an equitable distribution of suspensions, (ii) the impact of 

various assumptions (e.g., investment return assumptions) upon any

proposed suspension plan and the ability of the plan to avoid a projected 

insolvency, and (iii) illustrations of the impact of a general rule in which 

benefits would be suspended by providing post-suspension benefits based 

on 1.0% of contributions for active and retired participants and 0.5% of 

contributions for certain terminated participants. 

b) A review of new (5/20/2015) modeling that includes (i) updated Tier 

allocation data provided by the Fund’s Staff, (ii) updated assumptions 

concerning future contribution rate increases for certain employers whose 

contribution rates are presently capped or frozen under the Rehabilitation 

Plan, (iii) reduction of the future benefit accrual rate from 1.0% of 

contributions to 0.75%, and (iv) gradual changes (over a five year period) in 

the age at which the early retirement subsidy would be available (from age 

62 to 65).

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c) The fact that the new (5/20/2015) modeling includes several additional 

changes from the prior modeling:

• 0.5%-of-contributions suspension applies to terminated 

participants and fewer than 20 years of Contributory 

Service Credit as of the effective date of the 

suspensions; 

• Extended age protection phase-in only applies to 

participants with at least 20 years of Contributory Service 

Credit (not below age 70); and

• A cap on the maximum percentage of benefit suspension 

for non-Tier I benefits for participants with at least 20 

years of Contributory Service Credit. 

5. The Trustees then tentatively indicated their preference for a suspension plan 

that would generally base non-Tier 1 benefits upon a formula that would give each participant 

a mostly pension benefit equivalent to 1% of the total contributions paid to the Fund on his 

benefit, except that terminated participants with fewer than twenty years of Contributory 

Service Credit would receive a mostly benefit based up on 0.5% of contributions.

6. The Trustees also noted that some participants who are not impacted by the

Tier 1 statutory requirement for maximum benefit reductions currently have benefits that are

relatively high in comparison to the amount of contributions paid to the Fund on their behalf.

The Trustees noted that this usually occurs due to the historical existence of “cliff” benefits 

under the Fund’s Plan Document, and those of many other multiemployer plans. (Under a cliff 

benefit, a participant may be able to qualify for an improved benefit class even though he has 

had only a few weeks of contributions made at the rate required for the new and improved 

class.) The Trustees generally indicated that in order to reduce the potentially

8.2.103
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disproportionate impact of the “percent-of-contributions” suspension formula on recipients of 

“cliff” benefits (and on others who might be subjected to severe benefit reductions under the 

“percent-of-contribution” formula), they are inclined to include in the suspension plan a “cap” 

or limit on the maximum percentage by which any pension benefit would be reduced. The 

Trustees also discussed the possibility of making distinctions in the amount of protection 

afforded by the cap on benefit reductions based upon whether the benefits in questions have 

been assigned to Tier 2 or Tier 3.

IX. July 14, 2015 Meeting

On July 14, 2015 an additional Meeting was held to discuss MPRA suspension 

options. The following individuals were in attendance at the Meeting:

Employee Trustees Employer Trustees Independent Special Counsel

Charles A. Whobrey Arthur Bunte, Jr. Judge David Coar 

Marvin Kropp Gary F. Caldwell 

George Westley Greg R. May Retiree Representative & Advisors

William Lichtenwald Ronald DeStefano Sue Mauren (via Phone)

 Pamela Nissen

Pension Fund Staff Groom Law Group Peter Rosen

Thomas Nyhan Gary Ford Jay Egelberg (Actuary)

Mark Angerame Lars Golumbic 

James Condon 

John Franczyk Stout Risius Ross Segal Consulting

Fernando Rodriguez Scott Livine (via phone) Steve Rabinowitz

 Dan Ciner

1. Scott Levine of the financial consulting firm Stout Risius and Ross began the 

Meeting (as it relates to MPRA issues) by discussing a report that he had prepared 

concerning the reasonableness of the contribution rate increases that are either currently 

scheduled under the Fund’s rehabilitation plan, or have been proposed as potential future 

requirement under the rehabilitation plan schedules. Mr. Levine noted that all the Employers 

8.2.104
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selected for this study were publicly traded companies, for which a significant amount of 

financial data is readily available. 

2. Gary Ford then discussed the guidance concerning MPRA suspension plans 

issued by Treasury in mid-June 2015 and he reviewed the following topics concerning that 

guidance.

a) The consequence of filing or submitting an application for approval of a 

suspension plan (and accompanying notices) that complies with Treasury’s 

Temporary Regulations but which turns out to be inconsistent with the Final

Regulations issued by Treasury.

b) The types of certifications to be provided by the plan sponsor and/or by the 

plans actuary in support of MPRA application.

c) Factors to be considered by the Trustees in the process of certifying that 

they have taken all reasonable measures to avoid insolvency.

d) The extent to which the Trustees can create suspension plan rules that vary 

suspensions based on the occurrence or non-occurrence of future events.

e) The length of time or period over which the avoidance of insolvency should 

be measured.

f) The test or standard for determining whether a suspension plan has 

satisfied the requirement of avoiding insolvency, while not providing for 

benefit suspensions that are materially greater than necessary to meet that 

requirement. 

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g) The data that must be presented in a MPRA application relating to the issue 

of whether a plan sponsor has taken all reasonable measures to avoid 

insolvency.

h) The standards, methods, and factors to be considered in order to 

demonstrate that the benefit suspensions have been equitably distributed.

i) Information relating to each individual participant’s pre-suspension benefits 

and the estimated impact of the suspension plan on him that must be 

included in the notice to participants concerning the Fund’s filing of a MPRA 

suspension plan application with Treasury.

j) Information concerning the participant vote and the ballot relating to that 

vote that must be included in a MPRA notice.

k) Issues that Fund counsel would like to clarify in discussions with Treasury, 

or with special Master Feinberg who has been appointed to assist Treasury 

with the process of reviewing MPRA suspension plan applications.

3. Thomas Nyhan then addressed the time constraints the Fund is under, 

especially in consideration of the need to have a final MPRA notice to the printer well in 

advance of any targeted mailing date of the notice.

4. Fernando Rodriquez then discussed the results of his research concerning the 

differences in age and other factors between terminated participants with more than twenty 

years of Contributory Service Credit and those with fewer than twenty years of Contributory 

Service Credit. 

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5. Steve Rabinowitz of Segal Consulting then discussed issues related to the 

actuarial analysis of the proposed suspension plan being considered by the Trustees, and his 

presentation included a discussion of the following topics: 

a) A review of the factors considered by the Trustees in tentatively proposing a 

suspension plan including: 

i) additional hypothetical suspension models showing the impact of the 

“equitable distribution” factors listed in MPRA; 

ii) The impact of increased contribution rates from employers who are 

not currently subject to rate increases under the rehabilitation plan.

iii) differentiations in suspension levels to be made between terminated 

participants (both those already in that status and those who will 

become terminated participant in the future) with more than twenty 

years of Contributory Service Credit and those with fewer than twenty 

years of Contributory Service Credit.

b) The stochastic and deterministic projections prepared by Segal concerning 

the impact of the various proposed suspension plans on the Fund’s 

solvency/insolvency. 

c) The selection by the actuary of assumptions concerning rates of return on 

the Fund’s investments.

d) The impact and application of the “Goldilocks” rule under MPRA, which 

requires that a suspension plan must be sufficient to avoid an insolvency, 

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but must not require benefit suspensions that are materially greater than is 

necessary to achieve that goal.

e) The potential impact of the date used to determine the initial value of Fund’s

assets upon the amount or level of suspensions required under a 

suspension plan in order to satisfy the “Goldilocks” rule. 

f) Potential distinctions to be made between “Tier 2” benefits (earned with 

Contributing Employers that have paid their withdrawal liability in full) and 

“Tier3” benefits (earned by UPS participants whose Pension Fund benefits 

have been guaranteed by UPS). 

6. The Trustees then discussed the following issues and topics: 

a) Whether spousal survivor benefits should be protected, (if so, to what 

extent)?

b) Whether all terminated participants with fewer than twenty years of 

Contributory Service Credit should incur a complete elimination of all the 

adjustable benefits under PPA?

c) The potential impact upon the suspension plan of a withdrawal by Kroger 

Co. from the Fund. 

d) Whether, and to what extent, distinctions should be made between 

suspensions applicable to Tier 2 as opposed to Tier 3 benefits?

e) Whether and how to apply age reduction factors with respect to suspended 

participants who retire with 20 years or more of Service Credit (i.e., under 

the Plan Document at present, ordinarily a participant with twenty years or 

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more of Service Credit at retirement would be subject to a reduction of 0.5% 

for every month between his Retirement Date and his 62nd birthday; for 

participants with less than twenty years of Service Credit this reduction for 

age is measured from the date on which the participant would turn 65).

f) The nature of any changes in the prohibited reemployment rules that should 

be made in conjunction with a rescue/suspension plan.

7. Sue Mauren, MPRA Retiree Representative, then made a presentation to the 

Board in which she addressed the following topics: 

a) The volume of correspondence from participants she has received, reviewed 

(with the assistance of her advisors) and, where feasible responded to. [Ms. 

Mauren indicated that she has received approximately 2,400 such e-mails 

and 1,300 hard copy letters]

b) The difficulties involved in responding directly to each of these participant 

communications because many of them seek information about the contents 

of the Fund’s rescue plan, but Trustees have not yet resolved those plan 

design issues.

c) Sue Mauren’s effort to provide as much information as possible to the 

participants by establishing and issuing a website for correspondence 

explaining her role, her selection of independent legal and actuarial advisors 

to assist her and her participation in the Trustees’ study and discussions 

concerning MPRA options.

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d) The issues relating to a potential rescue plan about which the participants 

are most concerned. (Ms. Mauren indicated that these issued include

questions about the scope of the protection of disability-based pensions, the 

impact of any rescue plan on surviving spouse benefits, the possibility of 

liberalizing the Fund’s current restricted reemployment rules, and concerns 

about the ability of participants to pay for retiree health coverage.)

e) The lack of understanding among some participants concerning the causes 

of the Fund’s current financial condition and the reasons why the Trustees 

are now considering a MPRA rescue plan. 

f) Ms. Mauren’s own strong conviction that any rescue plan should be 

accompanied by a significant liberalization of the Fund’s restricted 

reemployment rules. 

X. August 18, 2015

On August 18, 2015, an additional meeting was held to discuss MPRA suspension 

options. The following individuals were in attendance at that meeting: 

Employee Trustees Employer Trustees Independent Special Counsel

Charles A. Whobrey Arthur Bunte, Jr. Judge David Coar 

Marvin Kropp Gary F. Caldwell 

George Westley Greg R. May Retiree Representative & Advisors

William Lichtenwald Sue Mauren (via Phone)

 Pamela Nissen

Pension Fund Staff Groom Law Group Peter Rosene

Thomas Nyhan Gary Ford 

Mark Angerame Lars Golumbic Segal Consulting 

James Condon Steve Rabinowitz 

John Franczyk Dan Ciner

Peter Priede 

Fernando Rodriguez 

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1. Thomas Nyhan began the August 18th Meeting with a discussion of the 

following topics:

a) The impact on the suspension plan of the issues relating to the timing of the 

suspension plan effective date and the treatment of terminated participants 

raised in the Groom Law Group’s recent letter to Treasury/Special Master 

Feinberg.

b) Timing and logistical issues related to finalization of a suspension plan, to 

the preparation of an application for approval of a suspension plan and the 

submission of notices concerning the application to participants, 

beneficiaries, employers and participating Local Unions.

c) Factors impacting the beginning value of the assets of the Fund to be used 

in actuarial projections supporting the application.

d) Measures to be taken to maintain the confidentiality of the form of 

suspension plan prior to formal filing the application approval of the plan.

5. Gary Ford and James Condon then described the form of the suspension plan 

that Staff believed, based on prior meetings and discussions, the Trustees wished to 

approve. A document (substantially in the form indicated in Section II of the Findings and 

Determinations to which this Summary of Trustees’ Study and Deliberations is attached as 

Tab A) describing the proposed suspension plan was distributed to the Trustees at the 

8/18/2015 meeting. 

7. Steve Rabinowitz then presented a report dated 8/18/2015 entitled Potential

Benefit Suspension Scenarios and Other Considerations. This report was based upon the 

8.2.111
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proposed suspension plan as outlined and described by Messrs. Ford and Condon at the 

August 18th Meeting. Mr. Rabinowitz’s 8/18 report described the updated modeling as follows:

Results of Updating Modeling

The following table summarizes variations on a suspension to 1.0% 

of total contributions made on a participant’s behalf (0.05% for 

terminated participants with less than 20 years of service), reduced 

for early retirement and joint and survivor benefits. Each 

suspension scenario shown in the table is projected to enable the 

Plan to avoid insolvency based on the test included in the proposed 

regulations.

 

# 

Suspension Scenario

(Maximum Suspension for Tier 1)

Potential Caps on Suspension for 

Participants with 20 Years of Service

 (Tier 2 Cap / Tier 3 Cap)

6/1/16

Effective Date

7/1/16

Effective Date

1 

1.0% of contributions; 0.50% of 

contributions for current terminated 

participants with less than 20 years of 

service 

48% / 39% 50% / 40%

2 

1.0% of contributions; 0.50% of 

contributions for all current and future 

terminated participants with less than 20 

years of service at retirement

48% / 38% 49% / 39%

Approximately 32,000 participants with Tier 2 Benefits would have 

their suspension limited by a 50% cap. Approximately 7,500 

participants with Tier 3 benefits would have their suspension limited 

by a 40% cap.

8. The Trustees then discussed the proposed suspension plan, and tentatively 

approved that suspension plan as described by Counsel and Staff at the 8/18/15 Meeting,

and to authorize Staff, Fund counsel and advisors to seek approval of that plan from the 

8.2.112
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Department of the Treasury, subject to further review of the document describing the plan 

which was distributed at the Meeting.

9. Gary Ford then discussed the type of information that must be included in any 

application for approval of a suspension plan, including the requirement that the application 

provide a description of the various categories of participants impacted by the plan, the extent 

of the impact of the plan upon each such category, and a description of the measures (short 

of benefit suspensions) that the Trustees have taken to avoid insolvency.

10. Fernando Rodriguez then described the measures that have been taken by the 

Pension Fund’s Staff, in conjunction with the Fund’s actuary, to verify (through testing and 

audits) (a) the accuracy of the calculation of the pre-suspension benefit for each participant 

and beneficiary, and (b) the accuracy of the calculation of the impact of the proposed 

suspension plan upon these same individuals. 

11. James Condon then discussed a proposed amendment to the Fund’s restricted 

reemployment that would narrow the scope of the job classifications that would be deemed 

restricted for participants who are subject to suspensions under the proposed suspension 

plan. The Trustees also reviewed a document (substantially in the form indicated in Section II 

of the Findings and Determinations to which this Summary of Trustees’ Study and 

Deliberations is attached as Tab A) provided to them by Staff at the meeting describing the 

proposed amendment to the restricted reemployment rules. The Trustees tentatively 

approved those revised rules, subject to possible modification of the amendment after the 

Trustees have completed a more thorough review of the written description of the 

amendment provided to them at the 8/18 meeting.

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12. Thomas Nyhan then discussed additional factors bearing upon the timing of the 

filing of an application for approval of a suspension plan, including additional issues relating 

to asset valuation and to the logistics of preparing, printing and mailing the required notices 

and finalizing the application. 

8.2.114
Tab B 

8.2.115

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8.2.154
 

8.2.155
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8.2.162
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8.2.170

8.2.172

8.2.174
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8.2.178