Page 13.0 

Automotive Industries Pension Plan 

Checklist Item #13 

Does the application include a demonstration that the proposed suspension is equitably 

distributed, including: 

 

 information on the effect of the suspension on the plan in the aggregate, 

 information on the effect of the suspension for different categories or groups, 

 a list of the factors taken into account, 

 an explanation of why none of the factors listed in section 432(e)(9)(D)(vi) 

were taken into account (if applicable), and 

 for each factor taken into account that is not one of the factors listed in 

section 432(e)(9)(D)(vi), an explanation of why the factor is relevant, and 

 how any difference in treatment among categories or groups of individuals 

results from a reasonable application of the relevant factors? 

See section 4.04. 

Yes. The demonstrations of the effect of the suspension on the Plan in the aggregate and for the 

different groups is attached as Document No. 13.2. The other information requested above is set 

forth in the attached Document No. 13.1.
Page 13.1.1 

Document No. 13.1 

The application filed on behalf of the Automotive Industries Pension Trust Fund includes a 

proposed benefit reduction which was designed by the Board of Trustees to be equitably 

distributed among the affected Participants and Beneficiaries. 

The plan provides a monthly accrued benefit for Future Service. Employees earn accruals for 

Future Service based on a percentage of contributions to the Fund on their behalf from a 

contributing employer. For those who retired before July 1, 2003, the accrual rate ranged from 

2.75% to 5.0% depending on the retirement date, with lower rates generally effective for earlier 

retirements (accrual rates lower than 4.5% were retroactively increased to 4.5%). The accrual 

rate is 3% for Future Service from July 1, 2003 through December 31, 2004. The accrual rate 

ranges between 0.5% and 2% depending on amount of contributions(0.5% for monthly 

contributions up to $250, 1% for monthly contributions greater than $250 but less than or equal 

to $500, 2% for monthly contributions greater than $500) for Future Service from January 1, 

2005 through June 30, 2008. The accrual rate is 1% for Future Service since July 1, 2008. 

Under the proposed benefit reduction, the Trustees will lower the accrual rate to 1.96% for all 

Future Service accruals prior to January 1, 2005. For the demonstrations requested by Revenue 

Procedure 2016-27, section 4.04(2)(A), the Board of Trustees, in consultation with the Plan’s 

actuary and legal counsel, relied on regulations at 26 C.F.R. § 1.432(e)(9)-1(d)(6)(iv) and (v) to 

guide in the Board’s determination of the relevant groups. Based on the Board of Trustees’ best 

interpretation of the most relevant factors, the demonstrations in Document No. 13.2 show 

results for the treatment of the following groups: 

1) participants who retired prior to January 1, 1997 with an effective accrual rate of 

4.5%; 

2) participants who retired during calendar year 1997 with an accrual rate of 4.73%;

3) participants who retired during calendar year 1998 with an accrual rate of 4.9%;

4) participants who retired from January 1, 1999 to June 30, 2003, and inactive 

vested participants who accrued all benefits prior to July 1, 2003, with an accrual 

rate of 5%; 

5) participants who some or all accrued benefits prior to January 1, 2005 at multiple 

accrual rates; 

6) participants who accrued all benefits from January 1, 2005 to the present. 

Such difference in treatment results from a reasonable application of the factors considered by 

the Trustees identified below. In general, those with Future Service prior to January 1, 2005 

have benefited from higher accrual rates. The reduction of the historical accrual rate will help 

even out the differences in accrual rates between participants with Future Service before and 

after January 1, 2005. 
Page 13.1.2 

Also, participants who have retired under the 2008 Rehabilitation Plan have not been eligible for 

any subsidized retirement benefits, which has further widened the gap in the benefit amount 

between those with Future Service before and after January 1, 2005. 

The Trustees considered a number of factors in designing the benefit suspension. The Trustees 

considered the history of prior benefit reductions, including the reductions in the accrual rate 

since 2003 along with the elimination of adjustable benefits under the 2008 Rehabilitation Plan. 

Because of these prior benefit reductions, the Trustees also recognized that retirees would 

generally be impacted to a greater degree by the proposed benefit suspension than would active 

participants. The Trustees were also concerned that further reducing the accrual rate of active 

participants would cause a loss of support for the Plan and may lead to further employer 

withdrawals. These are all relevant factors that may be reasonably selected by the plan sponsor. 

The Trustees considered the following factors listed in section 432(e)(9)(D)(vi) and discussed 

below: 

 Age and life expectancy 

As required by law, benefits for participants age 80 and over are not affected by the proposed 

suspension, and benefits for participants age 75 and over, but that have not yet reached age 80, 

are affected to a lesser extent. There are no additional benefit reductions specific to age or life 

expectancy for participants under age 75. However, participants who accrued more of their 

benefit from service prior to 2005 will be affected to a greater degree by the proposed 

suspension, since the accrual rate is being reduced for that period. These participants may be, in 

general, older and with a shorter life expectancy. 

 Length of time in pay status 

Participants who have been in pay status for an extended period may be exempt from any benefit 

suspensions due to age. There are no additional benefit reductions specific to the amount of time 

they have been in pay status. However, participants who accrued more of their benefit from 

service prior to 2005 and may have retired earlier will be affected to a greater degree by the 

proposed suspension, since the accrual rate is being reduced for that period. 

 Amount of benefit 

Please see response under “History of benefit increases and reductions,” below.

 Type of benefit: survivor, normal retirement, early retirement. 

The proposed benefit reduction does not specifically target certain types of benefits. However, 

subsidized early retirements and survivor benefits will generally be impacted to a greater degree 

by the reduction in accrual rate than unsubsidized benefits. Participants with subsidized benefits 
Page 13.1.3 

will exhibit a greater decline in the actual value of their retirement benefit than would a 

similarly-situated participant with unsubsidized benefits. 

Here is an example. Assume participants A and B both earned a $1,000 accrued benefit for 

service before January 1, 2005 and both retired at age 55. Participant A retires under the Rule of 

85 and Participant B retires under the 2008 Rehabilitation Plan schedule without a subsidy. 

Participant A’s monthly benefit is $1,000 and Participant B’s monthly benefit is $377 after 

applying the early retirement factor at age 55. If the accrual rate were reduced by 40%, 

Participant A would receive $600 and B would get $227. Therefore, Participant A’s benefit 

would be reduced by $400 and B’s benefit would be reduced by $150 under the proposed 

suspension. 

 Extent to which participant or beneficiary is receiving a subsidized benefit 

Upon the enactment of the Rehabilitation Plan, new Collective Bargaining Agreements 

negotiated after April 27, 2008 eliminated the Rule of Unreduced Early Retirement Benefit and 

eliminated subsidies for Early Retirement and the Joint and Survivor benefit. Participants and 

their surviving spouses who retired after implementation of the Rehabilitation Plan schedule 

were not eligible for subsidized benefits. Participants who accumulated more benefits prior to 

January 1, 2005 were also more likely to retire prior to the Rehabilitation Plan with a subsidized 

benefit. Although the proposed benefit reduction does not target subsidies, participants with 

subsidized benefits will exhibit a greater decline in the actual value of their retirement benefit 

than would a similarly-situated participant with unsubsidized benefits, as shown by the example 

in the section above. 

 History of benefit increases and reductions 

The Trustees considered that the Rehabilitation Plan eliminated adjustable benefits (including 

early retirement subsidies, joint and survivor subsidies, optional payment forms, guaranteed 

payments and disability retirements) and reduced the accrual rate to 1% for all Future Service 

since January 1, 2005. 

The accrual rate rose steadily over time, increasing from 2.75% and peaking in the period from 

January 1, 1999 through June 30, 2003 at 5% (accrual rates lower than 4.5% were retroactively 

increased to 4.5%). The accrual rate was decreased to 3% effective July 1, 2003. The accrual 

rate ranges between 0.5% and 2% (depending on amount of contributions) for Future Service 

from January 1, 2005 through June 30, 2008. Effective July 1, 2008, the accrual rate has been 

1%. 

Participants retiring prior to the Rehabilitation Plan remained eligible for the subsidized benefits 

and accrued more of their benefits during the years in which the Plan’s accrual rate ranged from 

2.75% to 5%. 
Page 13.1.4 

Participants received adjustable benefits and a higher accrual rate when the Plan was in good 

financial shape. Once the Plan encountered financial difficulties and sustaining those benefits 

was no longer feasible, the Trustees implemented accrual rate reductions in 2003 and 2005, and 

eliminated adjustable benefits and fixed the accrual rate at 1% in the 2008 Rehabilitation Plan. 

Participants who retired prior to the Rehabilitation Plan’s implementation were not subject to 

these benefit reductions and have maintained pensions with the higher accrual rates. The 

Trustees determined that reducing the historically high accrual rates to a capped accrual rate serves 

to even out the differences in benefits between participants due to the more 

generous accrual rates prior to January 1, 2005. 

 Any discrepancies between active and retiree benefits 

The Trustees considered that active participants have been subject to greater benefit reductions 

due to the decrease in accrual rates since January 1, 2005 and the elimination of subsidized benefits 

in the 2008 Rehabilitation Plan. The proposed benefit suspension which reduces the highest 

historical accrual rates to a flat capped rate will generally impact retiree benefits to a larger 

degree than active benefits. The Trustees determined that this will even out the differences in 

benefits between actives and retirees due to the more generous accrual rates prior to 2005. 

 Extent to which active participants are reasonably likely to withdraw support for the plan, 

accelerating employer withdrawals from the plan and increasing the risk of additional benefit 

reductions for participants in and out of pay status 

The Trustees considered that further benefit reductions to active participants beyond those 

imposed by the 2008 Rehabilitation Plan and the updated 2012 Rehabilitation Plan would cause 

employers and participants to consider withdrawing from the Plan. The current low accrual rate 

already makes it difficult to retain existing employers, attract new employers and retain the 

support of Plan participants. In fact, no new contributing employers have joined the Plan since 

2008. See Declaration of Donald Crosatto, Document No. 19.2, ¶ 11. 

If a prospective reduction in the current 1% accrual rate for active participants were adopted, the 

Trustees believed that this would lead to a loss of contributing employers whose employees 

would consider leaving the Plan to participate in other pension plans (such as the IAM National 

Pension Fund) which have richer benefits. A loss of contributions from active participants will 

affect all participants (active, retired and inactive vested) as the funding of plan benefits depends 

on contributions received. See Declaration of Donald Crosatto, Document No. 19.2, ¶ 13. 
Participant 

Groups

Total 

Participants* Beneficiaries QDRO/APs

Average PreSuspension Average Post- Suspension Averag

Reductio

1 2,893 1,141 51 $530 $522 -22 342 62 13 $813 $734 -10

3 360 62 14 $1,041 $859 -174 11,962 655 218 $716 $449 -37

5 7,784 113 88 $1,759 $961 -45

6 2,215 1 1 $203 $203 0Total 25,556 2,034 385 $974 $601 -38

* Includes beneficiaries and QDRO/APsReduction 12345No Cuts 2,617 240 219 1,949 431 2,21

0-10% 229 65 80 3,568 797 

10-20% 24 13 13 1,146 504 

20-30% 14 7 7 762 620 30-40% 5 7 13 855 931 40-50% 2 3 9 834 1,559 

50-60% 2 7 18 1,011 2,748 60-61% 1 1,837 194 

Total 2,893 342 360 11,962 7,784 2,21

Automotive Industries Pension Plan

Demonstration of Distribution of Benefit Suspensions

Exhibit for Rev. Proc. 4.04(1)(a) and 4.04(2)(A)

Exhibit for Rev. Proc. 4.04(1)(b) and 4.04(2)(A)

Participant Groups

M:\AUTO.CLI\val2016\MPRA\results\MPRA_Benefits.xlsx Summary