DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C. 

SECRETARY OF THE TREASURY 

The Honorable Orrin G. Hatch 

Chairman 

Committee on Finance 

United States Senate 

Washington, DC 20510 

The Honorable Lamar Alexander 

Chairman 

Committee on Health, Education, 

Labor, and Pensions 

United States Senate 

Washington, DC 20510 

Dear Chairmen and Ranking Members: 

May 6, 2016 

The Honorable Ron Wyden 

Ranking Member 

Committee on Finance 

United States Senate 

Washington, DC 20510 

The Honorable Patty Murray 

Ranking Member 

Committee on Health, Education, 

Labor, and Pensions 

United States Senate 

Washington, DC 20510 

Earlier today, we informed the Central States Pension Fund (Central States) that its application 

for benefit suspension was denied for failing to satisfy the requirements set out in the KlineMiller Multiemployer Pension Reform Act of2014 (Kline-Miller). The letter from Special 

Master Kenneth Feinberg informing Central States of our decision is attached. That letter 

explains the ways in which the Central States application failed to meet Kline-Miller's 

requirements. Specifically, the application failed to meet the requirement to demonstrate that the 

proposed benefit reductions are reasonably estimated to allow the plan to avoid insolvency, the 

requirement that reductions be equitably distributed, and the requirement to provide notices that 

are understandable to the average plan participant. 

Our decision on the Central States application means that approximately 270,000 Central States 

participants will not face reductions to their pension benefits this July. While we expect that this 

will come as a relief to these participants, our decision does not resolve the issues threatening 

their pension benefits. The Central States plan, like a number of other multiemployer plans, 

remains severely underfunded and is projected to become insolvent within the next 10 years. 

Moreover, absent congressional action, by the time the Central States plan becomes insolvent, 

the Pension Benefit Guaranty Corporation (PBGC) multiemployer insurance fund- which 

insures part of those benefits- may itself already be insolvent. 

Having concluded review of our first application, we must reflect on the lessons learned to date 

regarding the consequences of the benefit suspension process laid out in Kline-Miller. Special 

Master Feinberg's concerted efforts to listen to the views and concerns of affected individuals 

and families have helped us to better understand the potential impact and consequences of the 

law. 
Indeed, since Central States submitted its application, many stakeholders, including Members of 

Congress on both sides of the aisle, have recognized the harshness of the cuts needed to meet the 

terms required by the law. Some have suggested that Treasury take alternative approaches, such 

as requiring Central States to propose a smaller across-the-board benefit cut or impose smaller 

reductions for a set period of time before committing to deeper cuts. But Kline-Miller does not 

permit Treasury to take such actions. 

Other aspects of the law also have elicited criticism. The treatment of so-called "orphans"-

participants whose employers withdrew from the plan without paying their full withdrawal 

liability-under the Central States application and the lack of representation for the interests of 

retirees are built into the law and not subject to our discretion. The same is the case for the 

inequities associated with the voting process, especially for plans deemed to be "systemically 

important" under Kline-Miller, for which a participant vote on cuts will not prevent benefit 

reductions. 

Today's decision does not resolve these issues. Treasury has received several other applications 

and will continue to carry out our responsibilities under Kline-Miller, including approving other 

applications if they meet the requirements of the law. Importantly, Central States may choose to 

reapply and propose even larger cuts in order to meet the requirements of Kline-Miller. 

We urge Congress to consider carefully the issues that have emerged, even as we continue to 

carry out our assigned responsibilities to implement Kline-Miller. Finding a balanced solution 

will require painful choices, but we must work together to preserve the promise of retirement 

security that these workers have bargained for and earned. We stand ready to work together and 

look forward to engaging further on this important issue. 

Sincerely, 

Jacob J. Lew 

Enclosure 
DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C. 

SECRETARY OF THE TREASURY 

May 6, 2016 

The Honorable Kevin Brady 

Chairman 

Committee on Ways and Means 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable John Kline 

Chairman 

Committee on Education and the Workforce 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairmen and Ranking Members: 

The Honorable Sander M. Levin 

Ranking Member 

Committee on Ways and Means 

U.S. House of Representatives 

Washington, DC 20515 

The Honorable Robert C. "Bobby" Scott 

Ranking Member 

Committee on Education and the Workforce 

U.S. House of Representatives 

Washington, DC 20515 

Earlier today, we informed the Central States Pension Fund (Central States) that its application 

for benefit suspension was denied for failing to satisfy the requirements set out in the KlineMiller Multiemployer Pension Reform Act of2014 (Kline-Miller). The letter from Special 

Master Kenneth Feinberg informing Central States of our decision is attached. That letter 

explains the ways in which the Central States application failed to meet Kline-Miller's 

requirements. Specifically, the application failed to meet the requirement to demonstrate that the 

proposed benefit reductions are reasonably estimated to allow the plan to avoid insolvency, the 

requirement that reductions be equitably distributed, and the requirement to provide notices that 

are understandable to the average plan participant. 

Our decision on the Central States application means that approximately 270,000 Central States 

participants will not face reductions to their pension benefits this July. While we expect that this 

will come as a relief to these participants, our decision does not resolve the issues threatening 

their pension benefits. The Central States plan, like a number of other multiemployer plans, 

remains severely underfunded and is projected to become insolvent within the next 10 years. 

Moreover, absent congressional action, by the time the Central States plan becomes insolvent, 

the Pension Benefit Guaranty Corporation (PBGC) multiemployer insurance fund-which 

insures part of those benefits-may itself already be insolvent. 

Having concluded review of our first application, we must reflect on the lessons learned to date 

regarding the consequences of the benefit suspension process laid out in Kline-Miller. Special 

Master Feinberg's concerted efforts to listen to the views and concerns of affected individuals 

and families have helped us to better understand the potential impact and consequences of the 

law. 
Indeed, since Central States submitted its application, many stakeholders, including Members of 

Congress on both sides of the aisle, have recognized the harshness of the cuts needed to meet the 

terms required by the law. Some have suggested that Treasury take alternative approaches, such 

as requiring Central States to propose a smaller across-the-board benefit cut or impose smaller 

reductions for a set period of time before committing to deeper cuts. But Kline-Miller does not 

permit Treasury to take such actions. 

Other aspects of the law also have elicited criticism. The treatment of so-called '"orphans"-

participants whose employers withdrew from the plan without paying their full withdrawal 

liability-under the Central States application and the lack of representation for the interests of 

retirees are built into the law and not subject to our discretion. The same is the case for the 

inequities associated with the voting process, especially for plans deemed to be '"systemically 

important" under Kline-Miller, for which a participant vote on cuts will not prevent benefit 

reductions. 

Today's decision does not resolve these issues. Treasury has received several other applications 

and will continue to carry out our responsibilities under Kline-Miller, including approving other 

applications if they meet the requirements of the law. Importantly, Central States may choose to 

reapply and propose even larger cuts in order to meet the requirements of Kline-Miller. 

We urge Congress to consider carefully the issues that have emerged, even as we continue to 

carry out our assigned responsibilities to implement Kline-Miller. Finding a balanced solution 

will require painful choices, but we must work together to preserve the promise of retirement 

security that these workers have bargained for and earned. We stand ready to work together and 

look forward to engaging further on this important issue. 

Sincerely, 

Jacob J. Lew 

Enclosure