2.1

Bricklayers & Allied Craftsmen Local No. 7 Pension Plan

Checklist Item #02

Does the application include a description of the proposed benefit suspension – calculated as if no 

other limitations apply – that includes:

 the suspension’s effective date (and its expiration date, if applicable);

 whether the suspension provides for different treatment of participants and 

beneficiaries;

 a description of the different categories or groups of individuals affected; and

 how the suspension affects these individuals differently?

See section 2.02.

Document 2.1 provides a description of the proposed benefit suspension under the Pension Plan. 

Document 2.2 refers to other checklists in this application that illustrate the various categories of 

participants and beneficiaries affected by the proposed benefit suspension.
2.2

2.02 Terms of Proposed Benefit Suspension

Document 2.1

Description of the Proposed Benefit Suspension

The Board of Trustees of the Pension Plan proposed the following reduction of benefits, 

which will become effective on May 1, 2017, will remain in effect indefinitely, and will not expire 

by its own terms.

In deciding whether the proposed reduction would be distributed fairly under the Pension 

Plan, the Board of Trustees took into account the following five (5) factors: 

 The amount of benefits;

 The type of benefit: survivor, normal retirement, or early retirement;

 The history of benefit increases and reductions for participants and beneficiaries;

 Any discrepancies between active and retiree benefits; and

 The extent to which active participants are reasonably likely to withdraw support 

for the Pension Plan, accelerating employer withdrawals from the Pension Plan,

and increasing the risk of additional benefit reductions for participants in and out 

of pay status.

While the Board of Trustees considered all of the above factors, the design chosen does 

not have any explicit differences between different groups. The type of benefit, including early 

retirement and optional forms of benefit, is reflected by preserving current adjustments for those 

factors. The design chosen based on all contributions was selected to reverse some of the effects 

of differing plan formulas in the past. Without these reductions, the Pension Plan is projected to 

become insolvent by the 2024-2025 plan year.

Generally, the amount of a participant’s suspension of benefits is based on the following 

factors. First, a participant’s or beneficiary’s monthly benefit may not be reduced below 110% of 

the PBGC’s guaranteed level. Second, no reduction can apply to benefits based on disability under 

the terms of the Pension Plan. Third, an individual’s age affects the amount of the reduction that 

may apply to the monthly benefit. For instance, no reduction applies to the benefits of an individual 

who has reached age 80 or older as of the end of the month of the benefit reduction’s effective 

date. For an individual who is between ages 75 and 80 as of the end of the month of the effective 

date of the reduction, the maximum amount of the reduction that can apply to his or her benefit is 

reduced. The closer the individual is to age 80 as of that date, the smaller the reduction to the 

individual’s benefit can be. If the age-based limits on the amount of a reduction apply to a 

participant, then the same limits will continue to apply for any beneficiary of the participant after 

the participant’s death, regardless of the beneficiary’s age. These guarantee-based, disabilitybased, and age-based limitations are discussed in more detail in Checklist Item #9.

Based on the limitations mentioned above, the benefits of four (4) groups of participants 

and beneficiaries will not be cut or changed under the proposal:
2.3

1. Participants, retirees and beneficiaries who are age 80 or older at the time the cuts 

are made (only partial cuts would be made for participants between ages 75 and 

80).

2. Participants who are receiving disability benefits under the terms of the Pension 

Plan at their initial retirements.

3. Participants whose benefits are already less than 110% of the PBGC-guaranteed 

benefit level at the time the cuts are made. 

4. Participants whose benefits are less than the proposal’s targeted amount (i.e., less 

than 1.3% of total contributions made on each participant’s behalf).

In the first group, 77 retirees and beneficiaries will be age 80 or older by the end of May 

2017, if they are still alive (i.e., the end of the month of the benefit reduction’s effective date, 

which is expected to be May 1, 2017). Benefit levels for those age 80 or older vary widely, ranging 

from under $50 per month to a few recipients receiving over $3,000 per month. The average benefit 

level for the first group is about $750 per month.

In the second group, 2 participants are receiving disability benefits under the terms of the 

Pension Plan at their initial retirements, and are not already over age 80.

The third protected group is comprised of any member whose benefit is already less than 

110% of the PBGC-guaranteed benefit level. This group includes those members whose benefits 

are less than $17 per month for each year of service. There are approximately 68 members in that 

group, based on benefits accrued through April 30, 2016.

The fourth group includes members whose benefit levels are less than the targeted amount 

of 1.3% of their employers’ total contributions. This is generally a benefit level of less than about 

$39 per year of service, and the limit primarily impacts members who have worked under the plan 

provisions in effect since 2006. There are 82 participants in this group, based on benefits accrued 

through April 30, 2016.

Given that there are four member groups whose benefits will not be reduced or changed

under this proposal, there must be significant cuts in the groups of remaining participants and 

beneficiaries to avoid insolvency. Generally, the target amount of the benefit cut for each 

participant will be 1.3% of all credited and non-credited contributions made on his or her behalf, 

depending on if his or her current vested benefit is less than or greater than 110% of the PBGCguaranteed level, and whether that amount is less than or greater than the targeted amount of 1.3% 

of all contributions. See Checklist Item #13 for additional discussion and statistics on how 

members will be affected.

The Pension Plan’s proposed benefit suspension reduces all affected participants and 

beneficiaries to 1.3% of the total contributions made on their behalf. The proposed benefit 

suspension will treat all participants and beneficiaries under the Pension Plan, whether currently 

in pay status or not in pay status, equally. The suspension also will take into account the limitations 

on benefit suspensions under the 26 U.S.C. § 432(e)(9)(D)(i), (ii), and (iii). The proposed 

suspension will not treat categories or groups of participants and beneficiaries under the Pension 

Plan differently from one another.
2.4

The following examples illustrate the proposed calculations.

Example 1: Active member A has worked under the plan for 5 years. During that time, his 

employers have contributed about $40,000 to the Plan on his behalf. Some of his 

contributions were not “credited” for benefits, since only the first $2 per hour earned a 

credit. He has only earned a benefit of $170 per month payable at normal retirement age, 

which is about $34 for each year of service. Meanwhile, 110% of his PBGC-guaranteed 

benefit level would be about $155 per month ($31 x 5 years of service). In this example, 

the plan could cut member A’s benefit down to the 110% of the PBGC-guaranteed level 

($155/month), but the Board of Trustees chose not to do that out of a sense of fairness and 

equity. But member A’s benefit will not change even though his benefit is less than the 

targeted amount of 1.3% of total contributions (.013 x $40,000 = $520/month). The 

following equations explain this example:

 Targeted amount: 1.3% x $40,000 = $520/month

 Member A’s current benefit: $170/month

 110% of PBGC-guaranteed benefit level: $31 x 5 years of service = 

$155/month

Here, member A’s benefit will not change from its current level of $170/month for each 

year of service, even though it is less than the targeted amount under the proposal 

($520/month for each year of service), and even though it is more than 110% of the PBGCguaranteed amount ($155/month for each year of service).

Example 2: Member B retired in 2008 at age 60. He had worked 16 years and contributions 

of about $30,000 were made on his behalf. He had earned a benefit of about $1,050, payable 

at normal retirement age. His early retirement benefit was about $950. By the time the 

suspension takes effect on May 1, 2017, he will have already received over $100,000 in 

retirement benefits. His target benefit would only be about $360 (1.3% of $30,000 times 

the early retirement adjustment of 92%); 110% of his PBGC minimum is about $625. So, 

under the suspension design, his benefit will be reduced from $950 to $625 (110% of his 

PBGC minimum), a reduction of about 35%.

Example 3: Member C retired in 2008 at age 55. He had worked 30 years and contributions 

of about $130,000 were made on his behalf. He had earned a benefit of almost $4,600, 

payable at normal retirement age. His early retirement benefit was about $3,300. By the 

time the suspension takes effect on May 1, 2017, he will have already received over 

$350,000 in retirement benefits. His target benefit is about $1,200 (1.3% of $130,000 times 

the early retirement adjustment of 72%). This is approximately the same as his 110% of 

PBGC minimum benefit of about $1,200. Under the suspension design, his benefit will be 

reduced from $3,300 to $1,200, a reduction of about 64%.

Example 4: Active member D has worked under the plan for over 20 years and 

contributions of about $110,000 were made on his behalf. He has earned a benefit of about 

$2,400 payable at normal retirement age. His target benefit is about $1,450 per month 
2.5

payable at normal retirement age (1.3% of $110,000). His 110% of PBGC minimum 

benefit is about $800. Under the proposed suspension design, his benefit (payable at normal 

retirement age) will be reduced from $2,400 to $1,450, a reduction of about 39%.

Here are several hypothetical scenarios based on the current estimates:

Retiree: 63 years old

Years of Service 29

Current Benefit $1,574

PBGC $1,037

Rescue Plan $1,140

Widow: 71 years old

Years of Service 27

Current Benefit $854

PBGC $715

Rescue Plan $787

Inactive: 59 years old

Years of Service 6
2.6

Current Benefit $288

PBGC $215

Rescue Plan $236

Active A: 51 years old

Years of Service 11

Current Benefit $526

PBGC $393

Rescue Plan $526

+11 Years $800

Active B: 32 years old

Years of Service 7

Current Benefit $142

PBGC $126

Rescue Plan $142
2.7

+11 Years $800

The dollar amount of each proposed cut would depend in part on the total amount of 

contributions made on the recipient’s behalf and the various contribution rates used to calculate 

the employer’s contribution amount. For instance, at one point, the contribution rate was 4% of 

gross wages, while at another point it was 3.1% of gross wages. Needless the say, the total amount 

of contributions would be greater at 4% of gross wages than it would be if the contribution rate 

were 3.1% of gross wages (all other things being equal). However, under the proposed benefit 

suspension, the same 1.3% of total contributions made on behalf of each participant or beneficiary 

would be used to calculate his or her adjusted benefit. For more information about the various 

categories of contribution rates, see Checklist Item #13. 

The following chart shows the size of the proposed benefit cuts and the percentages of 

members in pay status whose benefits would be impacted if the proposal were adopted:

Size of Benefit Cuts Count Percentage of

Recipients Affected

None 94 42.7%

0.001% to 10% 35 15.9%

10.001% to 20% 10 4.5%

20.001% to 30% 15 6.8%

30.001% to 40% 11 5.0%

40.001% to 50% 18 8.2%

50.001% to 60% 21 9.5%

60.001% to 70% 16 7.3%

70.001% to 100% 0 0.0%

The following chart shows the size of the proposed benefit cuts and the percentages of 

members not in pay status whose benefits would be impacted if the proposal were adopted (47 

non-participants were excluded from these calculations):

Size of Benefit Cuts Count Percentage of

Recipients Affected

None 133 46.8%

0.001% to 10% 8 2.8%

10.001% to 20% 10 3.5%

20.001% to 30% 19 6.7%

30.001% to 40% 15 5.3%

40.001% to 50% 22 7.7%

50.001% to 60% 22 7.7%

60.001% to 70% 55 19.4%

70.001% to 100% 0 0.0%
2.8

Document 2.2

Categories and Examples of

Participants Affected by the Proposed Benefit Suspension

Checklist Item #13 provides additional information on how the proposed suspension 

impacts participants who earned benefits under different plan formulas. Checklist Item #9 provides 

additional illustrations of both the proposed suspension and the individual limits.