WESTERN PENNSYLVANIA 

TEAMSTERS AND EMPLOYERS 

PENSION FUND 

APPLICATION FOR APPROVAL OF SUSPENSION 

OF PENSION BENEFITS 

Submitted under the Multiemployer Pension Reform Act of 2014 

September 24, 2018 

 

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SECTION 1 BACKGROUND AND PURPOSE 

The Multiemployer Pension Reform Act of 2014 (“MPRA”) amended the Internal Revenue 

Code, 26 U.S.C. Section 432(e)(9) and Section 305(e)(9) of the Employee Retirement Income 

Security Act (“ERISA”), 29 U.S.C. Section 1085(e)(9), and authorizes any multiemployer 

pension fund which has been certified by its actuary to face insolvency in fifteen years or less to 

file an “Application for Approval of Pension Suspension of Benefits” (herein sometimes referred 

to as the “Proposed Benefit Reduction”) with the Secretary of Treasury of the United States 

Treasury Department proposing amending the Plan to suspend benefits in order to avoid 

insolvency. 

The Western Pennsylvania Teamsters and Employers Pension Fund (the “Plan” or “Pension 

Fund”) is eligible to apply for approval of this proposed benefit reduction because it has been 

certified by its actuary to be in “Critical and Declining Status”, meaning that based on the Plan 

actuary’s forecasts and assumptions, it would likely become insolvent in less than fifteen years. 

In order to avoid insolvency and to ensure continuation of the Plan for a prolonged period, the 

Board of Trustees has developed this proposed benefit reduction which is designed to avoid 

insolvency by reducing benefits as of a proposed effective date of August 1, 2019. Since the 

proposal involves a permanent suspension, subject to limitations described in further detail 

herein, this application refers to the benefit suspension as the proposed benefit reduction. 

Internal Revenue Code Section 432(e)(9)(G) requires that the Secretary of Treasury shall 

approve an application for suspension of benefits upon finding that a plan is eligible under 

MPRA, and that it has satisfied the criteria set forth in Code Section 432(e)(9)(C), (D),(E) and 

(F). Interested parties may review the entire application on the Treasury Department’s website 

www.treasury.gov/services/Pages/Benefit-Suspensions.aspx and can also file comments from 

links appearing on that website. The Secretary of Treasury’s decision whether to approve the 

application is required within 225 days. Notice of an application to suspend benefits which has 

been approved by the Secretary of Treasury must be issued to participants, together with ballots 

for voting to approve or reject the proposed benefit reduction. 

This application is submitted by the Board of Trustees of the Western Pennsylvania Teamsters 

and Employers Pension Fund pursuant to the Department of Treasury Final Regulations, 26 

C.F.R. 1.432.(e)(9)-1, published April 28, 2016, and Rev. Proc. 2017-43. The application 

proposes that this benefit suspension plan becomes effective August 1, 2019, provided the 

application is approved by the Secretary of the Treasury and suspension is authorized under law 

following satisfaction of the ballot and voting process. 

A suspension of benefits cannot be put into effect unless and until the procedure spelled out in 

the Final Regulations and under Revenue Procedure 2017-43 has been completed. 

 

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SECTION 2 APPLICATION PROCEDURES 

2.01 Plan Sponsor Submission

See, Exhibit 1, “Signatures”. This application for approval of a proposed benefit suspension 

under Section 432(e)(9) of the Internal Revenue Code and Section 305 (e)(9) of ERISA is 

submitted by the Board of Trustees of the Western Pennsylvania Teamsters and Employers 

Pension Fund, the plan sponsor, and is signed and dated by the Chairman and Secretary Trustees, 

who are authorized to execute documents under the terms of the Pension Fund’s Trust 

Agreement and who are current members of the Board of Trustees. 

2.02 Terms of the Plan’s Proposed Benefit Suspension 

(1) The effective date of the proposed suspension is August 1, 2019. 

(2) The suspension is permanent. 

(3) The proposed suspension calls for a 30% reduction in benefits accrued through 

December 31, 2017, but provides a different treatment of two groups or categories of 

participants and beneficiaries (other than as a result of application of the age-based, 

the PBGC guarantee-based, and the disability-based limitations of Section 

432(e)(9)(D)(i), (ii) and (iii) (“the individual limitations”). 

(A) The application proposes a 30% reduction in benefits accrued through 

December 31, 2017 for the largest group, which is comprised of retirees and 

beneficiaries in pay status as of January 1, 2018, participants who are not in active 

covered employment and beneficiaries not yet in pay status, and all active 

participants who are not covered at the “Top Tier” contribution level as of January 1, 

2018 (as described below). 

(B) The application proposes a 30% reduction in benefits accrued through 

December 31, 2017 for active participants in covered service as of January 1, 2018 at 

the Top Tier contribution level or higher, subject to the following limitation. The 

30% benefit reduction of a Top Tier participant will not result in a benefit below a 

floor level. If the benefit after the 30% reduction is less than the amount accrued 

under the age 55 and 30 year $3,500 monthly Special Benefit level (the “floor 

level”), the reduction is limited to the benefits accrued under the age 55 and 30 year 

$3,500 monthly Special Benefit level through December 31, 2017. Accrual at the 

rate under this $3,500 Special Benefit level, if greater than the contribution based 

unit multiplier continues into the future. (Notwithstanding this limitation, the 

portion of this benefit earned on and after August 1, 2008 will continue to be subject 

to reduction for early retirement and reduction for conversion to a form of annuity 

other than a Straight Life Annuity). 

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(C) Accruals under the 25 year $1,500/$2,000/$2,500 Monthly and the 30 year 

$2,000/$2,500/$3,000 Monthly Special Benefit levels are frozen at pro rata levels 

based on service as of December 31, 2017. 

Definition of the Top Tier contribution level group and Contribution Based 

Unit Multipliers 

The “Top Tier” contribution level group or category was created under the Pension 

Fund’s 2008 Funding Improvement Plan and defined as participants covered by 

employers who reached a contribution rate of $225 per week or higher by December 

31, 2008 and who increased contribution rates as required under the highest or 

preferred contribution structure through the Pension Fund’s 2010 Rehabilitation 

Plan. Since August 1, 2008, only the Top Tier groups have continued to accrue 

benefits under the greater of the contribution based unit multiplier accrual or under a 

Special Benefit Level accrual. The Top Tier contribution level as of January 1, 2018 

is $380 per week or higher. 

The “Contribution Based Unit Multiplier” benefit is a monthly amount to be paid at 

normal retirement age, which is determined for annual periods during which the 

participant is in active covered service with an employer contributing at a defined 

contribution rate. Prior to 1982, unit multiplier increases applied to past credited 

service. In 1982, unit multiplier increases were no longer applied for past credited 

service, but rather applied prospectively for service earned after the date a change in 

contribution rates was provided. Between 1991 and July 1, 2006, unit multipliers 

were determined under a 3 for 2 formula applied separately on increased 

contributions, which set the unit multiplier in proportion to annual contribution rate 

increases. Beginning on July 1, 2006, a “percentage of contributions” method was 

adopted for setting unit multipliers prospectively. Service earned on and after each 

prospective contribution based unit multiplier increase is added to the accrual earned 

prior to that increase. 

As explained in further detail at Section 4.04 of this application, the Trustees 

determined that the different treatment for Top Tier participants involving preserving 

the $3,500 Special Benefit was needed to maintain their support for continued 

participation in the Plan. The Trustees recognized that this group’s continued 

support is crucial to survival of the Plan. The weighted average contribution rate of 

all Top Tier groups as of January 1, 2018 was $524.62, compared to $128.16 for all 

other groups. The Top Tier is primarily populated by participants employed by 

United Parcel Service (“UPS”), the Plan’s largest contributing employer who pays at 

the highest contribution rate. The UPS group accounts for 1,117 active participants. 

The UPS contribution rate in early 2018 has been $532.60, and assuming the 

collective bargaining agreement renewal ratification vote on October 5, 2018 

succeeds, the rate will rise to $564.56. Annualizing the contribution rate and 

population of the UPS population based on January 2018, UPS accounts for 

approximately $31 million. 

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2.03 Penalties of Perjury 

See, Exhibit 1, “Signatures”. The Chairman and Secretary Trustees have signed and dated a 

verification stating that they are authorized by unanimous formal action of the Board of Trustees 

to submit this application on their behalf. They have further acknowledged to the best of their 

knowledge, information and belief the truthfulness of the information being submitted with this 

application. They further understand that this application, and the application’s supporting 

materials, will be publically disclosed through publication on the Treasury Department website. 

2.04 Public Disclosure 

See, Exhibit 1, “Signatures”. 

2.05 Submission 

The Plan Sponsor has electronically submitted this application to the Secretary of Treasury via 

the Treasury Department website www.treasury.gov/mpra. 

2.06 Signatures 

The Plan Sponsor has submitted the signatures required for this application electronically in PDF 

format. 

2.07 Duty to Correct 

If an error in the application is identified, the Plan will provide prompt notice to the Treasury 

Department and if the Treasury Department requests information to correct the error, the Plan 

will comply with the request. 

2.08 Resubmission Review

This is the Plan’s initial MPRA application and is not a resubmission. 

SECTION 3 DEMONSTRATION THAT PLAN IS ELIGIBLE FOR SUSPENSION 

MPRA (Internal Revenue Code Section 432(e)(9)) sets forth the criteria which the Plan Sponsor 

must meet to demonstrate it is eligible for suspension. Section 3 of Revenue Procedure 2017-43 

specifies what explanations or actuarial demonstrations and samples must be included with the 

applications. The following information is provided in support, together with references to 

application exhibits which set forth information pertinent to the criteria. 

 

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3.01 Plan Actuary’s Certification of Critical and Declining Status 

See Exhibit 2, “Critical & Declining Status”. This exhibit includes the Plan actuary’s original 

March 30, 2018 certification based on the January 1, 2017 Actuarial Valuation and assumptions 

under Section 432(b)(3)(A) demonstrating that the Plan is certified to be in critical and declining 

status for the 2018 Plan Year. In addition, the actuary has prepared Exhibit 2 a certification of 

Insolvency that is based on the January 1, 2018 Actuarial Valuation, assumptions identified in 

Exhibit 13 and assets available as of June 30, 2018. This exhibit includes a year-by-year 

projection of the available resources as defined in Section 418E(b)(3) and the benefits that are 

due under the Plan. The information includes a separate identification of the market value of 

assets as of the beginning and end of each plan year in the relevant period and the following 

cash-flow items for each of those years: (1) contributions; (2) withdrawal liability payments, 

separately identifying those payments that are attributable to prior withdrawals and those 

payments that are attributable to assumed future withdrawals; (3) benefit payments, separately 

identifying benefit payments with respect to current retirees and beneficiaries, terminated vested 

participants who are not currently receiving benefits, currently active participants, and future 

new entrants; (4) administrative expenses; and, (5) net investment returns. 

Note that for this purpose, the initial period begins on July 1, 2018 (the first day of the 

calendar quarter in which the application is submitted) and ends with December 31, 2018 

(the last day of the plan year that includes that first day). 

See Section 3.03 of this application for a discussion concerning the Plan Sponsor’s acceptance of 

insolvency projections. 

For a complete description of the actuarial assumptions and methods used for the projections in 

this application, and pursuant to the requirement of Section 6.03 of the revenue procedure, refer 

to Exhibit 11 “Actuarial Assumptions and Methods”.

3.02 Plan Actuary’s Certification that the Plan is Projected to Avoid Insolvency 

See Exhibit 3, “Avoidance of Insolvency”. This exhibit sets forth the Plan Actuary’s 

certification under Section 432(e)(9)(C)(i) that the Plan is projected to avoid insolvency within 

the meaning of Section 418E, taking into account the proposed benefit suspension and assuming 

that the proposed suspension continues indefinitely. The exhibit includes a demonstration that 

the Plan is projected to avoid insolvency and pay benefits due under the proposed suspension 

through the extended period of 30 plan years, which begins with the 2019 Plan Year and ends 

with the 2048 Plan Year. 

This exhibit includes documentation supporting the actuarial certification under Section 

432(e)(9)(C)(i) setting forth expected (1) contributions; (2) withdrawal liability payments, 

separately identifying those payments that are attributable to prior withdrawals and those 

payments that are attributable to assumed future withdrawals; (3) benefit payments, separately 

identifying benefit payments with respect to current retirees and beneficiaries, terminated vested 

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participants who are not currently receiving benefits, currently active participants, and future 

new entrants; (4) administrative expenses; and, (5) net investment returns. 

Note that for this purpose, the initial period begins on July 1, 2018 (the first day of the 

calendar quarter in which the application is submitted) and ends with December 31, 2018 

(the last day of the plan year that includes that first day). 

Refer to Exhibit 11 “Actuarial Assumptions and Methods” for a complete list of actuarial 

assumptions used for the projections. 

3.03 Plan Sponsor’s Determination of Projected Insolvency 

In 2010, the Trustees adopted a Rehabilitation Plan because the Plan was certified to be in 

critical status. The stated goal was to emerge from critical status after the end of the 

rehabilitation period or to forestall insolvency. Upon passage of MPRA in December, 2014, the 

Trustees began to study the measures previously taken to forestall insolvency. In May, 2016, the 

Trustees reviewed information concerning Treasury’s rejection of the benefit reduction 

application submitted by the Central States Southeast and Southwest Areas Pension Fund under 

MPRA and considered the need to have a forecast which was reasonable for the purpose of 

projecting insolvency in connection with use of the tools and with consideration of the criteria 

set forth under MPRA. After considering actuarial and investment manager input, the Trustees 

concluded that insolvency projections made after MPRA required reevaluation of the Plan’s 

forecasts to include the effect of negative cash flow, the sensitivity of its asset base to exceptions 

of low interest returns in the near future and an eventual reduction to the required 6% annual 

contribution requirement. At the Trustees Meeting of December 7, 2016, the Trustees accepted 

the actuary’s report that the Plan would be certified in critical and declining status for the 2017 

Plan Year and determined that since all reasonable measures to avoid insolvency had already 

been taken, no additional measures could be taken. At their meeting of March 30, 2017, the 

Trustees determined according to the actuary’s certification that the Plan would go insolvent in 

less than 20 years. 

In April, 2017, prior to the issuance of the required Notice of Critical and Declining Status 

provided to participants, employers and unions, the Trustees appointed a Retiree Representative 

and organized an informational meeting for union representatives to outline the procedures and 

steps necessary in the development of a benefit reduction plan. An informational letter was 

mailed to participants and posted on the Plan website informing them that unless the Plan sought 

permission to reduce benefits, the Plan would go insolvent in 2028 or 2029. Throughout the 

process of developing a benefit reduction proposal, the Trustees, during informal weekly status 

teleconferences (the Retiree Representative and his consultants participated in these 

conferences), considered whether an ongoing 6% annual contribution increase continued to be a 

reasonable measure since their experience told them that the prospect of continuing contribution 

increases at this level was not sustainable and would only lead to an acceleration of employer 

withdrawals. In early-2017, the Trustees retained an independent labor economist to assist them 

in determining what level and duration of contribution increases was reasonable and sustainable. 

See Exhibit 9, Economist Report. The Economist presented the report and subsequently 

engaged in discussion with the Trustees and the Retiree Representative. After discussion, the 

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Economist Report and its recommendations were accepted and adopted by the Trustees at their 

meeting of November 8, 2017. 

The Trustees again reviewed the Rehabilitation Plan at their meeting of December 6, 2017 and 

determined that all reasonable measures to avoid insolvency had been taken and no changes were 

made at that time. At the Trustees Meeting of April 6, 2018, the actuary certified the Plan was 

still in critical and declining status and projected to go insolvent in less than 15 years. The 

Trustees determined that the Plan could not be projected to avoid insolvency by any means 

unless it pursued a benefit reduction as authorized under the Multiemployer Pension Reform Act 

of 2014. This determination was made because, despite all reasonable measures having been 

taken over the past 10 years, a benefit reduction was the only method available to avoid 

insolvency. Information set forth in Section 5 of this application further supports the Trustees’ 

determination that all reasonable measures have been taken to avoid insolvency. See Exhibit 4, 

“Record of Trustee Actions”.

SECTION 4. DEMONSTRATION THAT THE PROPOSED SUSPENSION SATISFIES 

THE STATUTORY REQUIREMENTS

4.01 Demonstration that Limitations on Individual Suspensions are Satisfied

Exhibit 5, “Demonstrations of Statutory Requirements” sets forth demonstrations of how the 

proposed suspension satisfies the individual limitations, including: 

(1) A sample calculation applying the 110% PBGC guarantee-based limitation under 

Section 432(e)(9)(D)(i) of the Code for an individual currently receiving benefits, a 

contingent beneficiary of an individual currently receiving benefits, and a future 

retiree. (The demonstration does not include personally identifiable information with 

respect to any individual, such as a name, address or Social Security number.); 

(2) A sample calculation applying the disability-based limitation under Section 

432(e)(9)(D)(iii) for a current retiree, a contingent beneficiary or a current retiree and 

a future retiree. 

It is noted that the 2010 Rehabilitation Plan eliminated the disability benefit for 

newly disabled participants who do not have a Social Security Administration 

Determination Letter finding the onset of disability was prior to February 1, 2011. 

The Plan provides a retirement benefit at normal retirement age that is greater 

than a disability benefit paid before normal retirement age. The sample 

calculation illustrates the extent to which the retirement benefit is, or is not, a 

benefit based on disability. The proposed benefit reduction does not reduce the 

amount awarded under the terms of Plan, which is a maximum $20 unit 

multiplier. When the participant is eligible for a larger normal retirement benefit, 

that portion awarded as a disability benefit is not reduced. 

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(3) A sample calculation applying the age-based limitation under Section 432(e)(9)(D) 

(ii) for a current retiree, a contingent beneficiary of a current retiree and a future 

retiree. 

4.02 Demonstration that the Proposed Suspension is Reasonably Estimated to Enable the 

Plan to Avoid Insolvency 

See Exhibit 3, “Demonstration that Proposed Suspension is Reasonably Estimated to 

Enable the Plan to Avoid Insolvency”. This exhibit sets forth the demonstration required 

under Section 432(e)(9)(D)(iv) showing that the proposed benefit suspension is reasonably 

estimated to enable the Plan to avoid insolvency. It includes demonstrations which include: 

(1) An illustration, prepared on a deterministic basis, showing: 

(a) For each plan year during the 30 year extended period, the plan’s solvency ratio – 

the ratio of the plan’s available resources to the scheduled benefit payments under the 

Plan for the plan year – is projected on a deterministic basis to be at least 1.0; and, 

(b) Since the Plan’s projected funded percentage at the end of the extended period is 

less than 100 percent, neither the Plan’s solvency ratio nor its available resources are 

projected to decrease in any of the last five plan years of the extended period. 

(2) An illustration, using stochastic projections that reflect variance in investment return, 

that the probability the plan will avoid insolvency throughout the extended period as a 

result of the proposed suspension is greater than 50 percent. 

Refer to Exhibit 11, “Actuarial Assumptions and Methods” for the actuarial assumptions used 

for the illustrations, as described in section 6.03 of this Revenue Procedure. 

4.03 Demonstration that the Proposed Suspension is Reasonably Estimated to not 

 Materially Exceed the Level Necessary to Avoid Insolvency

Exhibit 6, “Demonstration that Proposed Suspension does not Materially Exceed Level to 

Avoid Insolvency” sets forth a demonstration that, in accordance with Section 432(e)(9)(D)(iv), 

the proposed benefit suspension is reasonably estimated to not materially exceed the level 

necessary to enable the plan to avoid insolvency. 

The demonstration includes an illustration, prepared on a deterministic basis, of the Plan’s 

available resources and solvency ratio (and an illustration of the probability that the plan will 

avoid insolvency prepared using stochastic projections) showing that the proposed reduction in 

benefits would not reasonably be estimated to enable the Plan to avoid insolvency if the dollar 

amount of proposed benefit reduction for each participant and beneficiary were reduced (but not 

below zero) by the greater of: (1) five percent of the reduction in the periodic payment proposed 

for that participant or beneficiary; or, (2) two percent of the participant’s or beneficiary’s 

periodic payment determined without regard to the reduction proposed in the application. 

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4.04 Demonstration that the Proposed Benefit Suspension is Distributed Equitably 

Exhibit 7, “Equitable Distribution” sets forth a demonstration that, in accordance with Section 

432(e)(9)(D)(vi), the proposed benefit suspension is distributed in an equitable manner across the 

participant and beneficiary population. This exhibit shows the average monthly benefit before 

and after the suspension (determined taking into account the individual limitations) and the 

aggregate present value of the reduction in benefits for all individuals. This exhibit also charts 

the number of individuals whose benefits are not reduced, and those who would have a reduction 

of between 0% - 10%, 10%- 20%, 20% - 30% and 30%. 

The proposed suspension of benefits provides different treatment for two groups or categories of 

participants. The largest group – all participants not in the Top Tier - would be subject to a 30% 

benefit reduction. Different treatment is proposed for Top Tier participants - active participants 

who on January 1, 2018 were in the Top Tier contribution rate by virtue of their employer 

contributing $380 weekly or more. This exhibit, has three charts showing the distribution of 

reductions for the population in the aggregate, for the non-Top Tier group and for the Top Tier 

group. 

Identification of Factors and Explanation of how Factors are Reasonably Applied 

The Trustees considered all of the factors listed in Section 432(e)(9)(D)(vi)(I) through (XI), but 

ultimately decided that to the greatest extent feasible, since all participants have equally relied 

upon benefit promises in planning their retirement, the reductions should be distributed equally, 

with some necessary limitations. The Trustees specifically choose not to base the reduction 

design on subpart (vi)(XI) (benefits attributed to service with an employer that failed to pay its 

full withdrawal liability)(also called “orphans”). Orphan participants, like all others, worked and 

had contributions paid on their behalf. They were not responsible for their employer’s inability 

to pay withdrawal liability. 

The different treatment for active Top Tier contribution rate participants was reasonable based 

upon consideration of factors in subparts (vi)(VII), (VIII) and (X). The vast majority of this 

group is employed by the Plan’s largest employer, UPS, who had withdrawn from the Central 

States Pension Fund in 2007. The Trustees were aware of UPS participants’ dissatisfaction with 

prior increases in normal retirement age (from age 60 to first age 62 and ultimately age 65), 

losses of early retirement subsidies and reduced unit multipliers. This was clearly apparent 

during the2018 renegotiation of the UPS collective bargaining agreement and upcoming 

ratification vote. This group’s expectation has been that the significantly greater contributions 

which had been bargained for out of their wage packages should preserve a benefit based on age 

55 and 30 years of service. Since continuation of this group’s participation in the Plan is crucial, 

the Trustees determined that different treatment was needed in order to maintain their support 

and to prevent them from seeking a voluntary withdrawal. The Trustees concluded that the 

additional cost of maintaining this benefit option was not significant when compared to the 

increased the risk of a future withdrawal. Withdrawal liability does not fully compensate the 

Plan for the loss of contributions because it is subject to the 20 year cap on payments and may be 

subject to possible further limitations arising from recent or potential changes in the law. 

Withdrawal of the Plan’s principal employer would very likely accelerate other employer 

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withdrawals which, even if paid as so limited under the law, would likely increase the risk of 

further benefit reductions. 

The Trustees have followed the development of the Multiemployer Pension Reform Act 

("MPRA") and studied all equitable distribution designs proposed by other pension plans in their 

applications. While recognizing that benefit accruals granted for periods prior to August, 2008 

were substantially greater than future benefit accruals since August, 2008, the Trustees rejected 

the concept that past benefit formulas be recalculated under new methods. Instead, they believed 

that to the maximum extent possible (subject to considerations explained below), the reasonable 

expectation of participants for benefits contemporaneously promised during their work were 

earned and paid for out of their collectively bargained wage packages. The Trustees also 

recognized that well over half of the Pension Fund's annual contribution income is attributable to 

groups participating at the top rate levels - generally, groups working for freight, express and 

package employers. Wage packages for these top rate groups are driven by national labor 

negotiations and provide the Pension Fund per participant annual contributions currently ranging 

from $21,000 to $27,000. 

Even though the age 55 and 30 year $3,500 monthly benefit is still subject to the early retirement 

and joint & survivor reductions on the portion earned after August 1, 2008, participants in the top 

rate groups who are currently eligible or near eligibility have long been accustomed to this 

benefit as a gold standard even though their unit multiplier accrued benefits might exceed that 

level. Top rate groups are aware that the accruals on their unit multiplier based benefits have 

been cut in 2006, 2008 and 2011 while contribution increases have forced them to concede 

elsewhere in their wage packages. 

Top Tier participants, UPS participants in particular, are very much aware that a much greater 

portion of their wage & benefit package is devoted to pension contributions than the non-Top 

Tier group. The UPS contribution rate as of January 1, 2018 was $532. Since 2008, Top Tier 

participants have seen more of their contribution dollars used for funding prior pension benefits 

than the non-Top Tier because 6% applied to a higher number means more cents per hour needs 

to be allocated in their labor agreement. Top Tier contribution rates are characterized as having 

contribution increases set under national contracts which allocate $1.00 between pension and 

health and welfare. Where the $1.00 was not enough to cover the annual increases, the result has 

been that the difference has been made up from lower welfare benefits or wages. 

The multiplier based future benefit accrual rate was reduced to 2.0% of contributions effective 

2006, later reduced to 1.0% in August, 2008 and on implementation of the Rehabilitation Plan on 

February 1, 2011, reduced to 0.5%. These reductions were prospective and did not affect 

benefits earned prior to that date, nor did they reduce the benefits of retirees or terminated vested 

participants. 

In addition to the reduction in future benefit accruals, the normal retirement age from which 

early retirement reductions are based was increased from age 60 (prior to August 1, 2008), to age 

62 for service between August 1, 2008 through February 1, 2011, and to age 65 for service after 

February 1, 2011. 

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By way of further explanation, the disproportionately high dollar amount of Top Tier 

contribution levels compared to groups which were not in the Top Tier was a compelling factor 

in the Trustees’ decision to provide that group with a floor below which benefits could not be 

reduced. The Top Tier group averaged a $524.62 weekly contribution rate as of January 1, 2018, 

compared to a $128.16 weekly average for the non-Top Tier active group. The Top Tier group, 

which is primarily composed of UPS participants, is well aware of its importance to survival of 

the Plan. During UPS’s 2013-2018 CBA, the UPS group was required to offset a portion of its 

general wage increase due to the increase the Plan required, causing a great deal of participant 

dissatisfaction. 

In 2008, the UPS hourly wage was $28.50 and the weekly contribution was equivalent to 

$7.25/Hr. (i.e., 25% of wages). However, by 2018, the hourly wage was $36.10 and the weekly 

contribution was equivalent to $13.71/Hr. (i.e. 38% of wages). 

The wage and other fringe benefit impact of required contribution increases has not had the same 

effect on non-Top Tier groups because even after almost a decade of increases under the Funding 

Improvement Plan and the Rehabilitation Plan, their average weekly contribution rate is much 

lower. This is evident when considering that on average, a non-Top Tier group participant might 

have $6,600 in annual contributions, whereas a UPS participant might have $27,000 contributed. 

4.05 Notice 

(1) Individual Notices. 

Exhibit 8 “Notices” includes a copy of each type of actual notice that will be distributed 

to participants, beneficiaries, employers and unions participating in the Plan. Aside from 

the four model notice types outlined in the revenue procedure, the Plan has a version for 

participants currently receiving a lower temporary disability benefit, but not yet eligible 

for, or in receipt of, a normal retirement benefit. As of February 1, 2011, the Plan’s 

Rehabilitation Plan eliminated the disability benefit for participants who did not qualify 

for the disability benefit based on the Social Security Administration’s determination of a 

disability onset date prior to February 1, 2011. The benefit was preserved for those 

meeting this standard, but the benefit was eliminated for all newly disabled participants. 

Since the disability benefit was available regardless of the participant’s age, but 

determined under a fixed $20 unit multiplier, it is almost always less than the 

participant’s accrued benefit. These participants remain eligible for normal retirement 

benefits and will “Step-Up” to that level, but their notice shows their earliest normal 

retirement date and calculates a benefit reduction on the accrued benefit earned up to the 

proposed reduction date while protecting the disability benefit. 

(2) Efforts to Contact Participants, Beneficiaries and Alternate Payees. 

The Plan has monitored the postal returns generated in connection with required 

participant notices and has requested updated addresses if notices are sent to a forwarding 

address. The Plan makes additional efforts to locate current addresses if the postal 

service indicates a notice is undeliverable. Upon discovery that a mailing is 

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undeliverable, reasonable efforts are made to obtain a good address. These efforts 

include: (1) routine upload of missing or incomplete addresses to LifeStatus 360, a 

commercial locator service; (2) contacting the last active employer and/or local union 

having information; (3) use of internet search tools; and, (4) by including “need to update 

address” reminders on general communication materials. 

In an effort to update the last known addresses of participants, beneficiaries in pay status 

and alternate payees, the Pension Fund uses LifeStatus 360 to obtain complete, valid 

current addresses for individuals with one or more incomplete address fields. For 

example, a record with a missing house or apartment number might not prevent delivery, 

but since there is an empty data field, the record is searched with LifeStatus 360 in an 

effort to get a complete address. In the past year, 2,667 addresses have been updated or 

changed as the result of this method. 

The Plan routinely updates its records based on mailing sent via U.S. Postal Service First 

Class presorted because that service includes forwarding and address correction services. 

Generally, 75 – 100 addresses cannot be updated under these methods. In those cases, 

staff contacts the active participant’s current employer to obtain addresses, and with 

respect to terminated participants, staff contacts the terminated participant’s local union. 

Lastly, staff will continue to use all available methods and tools, such as further phone 

contacts with organizations and individuals, and internet searches to locate the remaining 

individuals for whom they were not able to obtain updated addresses. 

The Plan will monitor the MPRA Notices and diligently use the above methods to obtain 

a good address and will mail the MPRA Notices out within one week of locating them. 

(3) Electronic Notices

 The Plan will not be sending notices electronically. 

(4) List of Active Contributing Employers and Teamsters Local Unions

A. Duchini, Inc. 

Adams Petroleum Products, Inc. 

Adelman Lumber Company 

Bay Valley Foods 

BFI Waste Services of Pennsylvania, LLC 

Bluelinx Building Materials Distribution 

Borough of Glassport 

Borough of Leechburg 

Borough of Port Vue 

Borough of Speers 

Borough of Swissvale 

Brand Energy s 

Budget Rent A Car System, Inc 

Bunzl Pittsburgh 

C&C Concrete Company 

Cellone Bakery, Inc 

Central Blood Bank 

Central Counties Youth Center 

Central Parking System of PA 

(SP+Corporation) 

CGI International, LLC 

Clean Textile Systems, Inc. 

Conemaugh Township Municipal Authority 

Crossett, Inc. 

Crystal Springs 

Darling Ingredients 

DHL 

E&S Parking & Transportation, Inc. 

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Employers - Local 205 Welfare Fund 

Erie Concrete & Steel Supply Company 

Fox Chapel Authority 

Frank B. Fuhrer Holdings, Inc 

George W. Blank Supply Company 

George Weston Bakeries, Inc. (BIMBO 

Bakeries Sales, Inc.) 

Gilpin Township 

Gordon Terminal Service Company 

Goss, Inc. 

Grant Oliver Corporation 

Greensburg Concrete Block Co. 

Harmar Township Municipal Authority 

IBT Joint Council No. 40 

Interpark, LLC 

Jones Motor Company, 

Judson Wiley & Sons 

Lamar Advertising - Pittsburgh 

Lyons Industries, Inc. 

McGuire Memorial 

McKeesport Candy Company 

McKeesport Hospital (UPMC McKeesport) 

Miller Thomas Gyekis, Inc. 

Mong's Dairy 

New Enterprise Stone & Lime Co., Inc. 

Nick Strimbu, Inc. 

Nickles (Alfred) Bakery, Inc. 

Norma Pennsylvania 

North Franklin Township 

Omni William Penn Hotel 

Oxford Parking, Inc. 

Paper Products Company, Inc. 

Parkway Garage, Inc. Pittsburgh Operation 

Paul Lumber and Supply Company 

Penske Truck Leasing Co., L.P. 

Pittsburgh Associates 

Pittsburgh Flexicore Company, Inc. 

Pittsburgh Parking Authority 

Pittsburgh Transportation 

Plum Borough 

PSSI Stadium Corp. (PSSI) 

Quaker Sales Corporation 

R&L Development Company 

Schneider's Dairy 

Scholastic Technical Service Employees - 

Local Union No. 8 

Schwebel Baking Co. of PA 

ServAll Concrete (E.E. Austin & Son, Inc.) 

ServiceMaster Professional Building 

Maintenance Company 

Shenango Township 

Stone & Company 

T. Bruce Campbell Company 

Teamsters Local 250 

Teamsters Local 261 and Employers 

Welfare Fund 

Teamsters Local Union 261 

Teamsters Local Union No. 30 

Teamsters Local Union No. 110 

Teamsters Local Union No. 205 

Teamsters Local Union No. 211 

Teamsters Local Union No. 249 

Teamsters Local Union No. 397 

Teamsters Local Union No. 538 

Teamsters Local Union No. 585 

Teamsters Local Union No. 636 

Teamsters Local Union No. 926 

Titan Leasing Corporation - Drivers and 

Mechanics 

Titusville Dairy Company 

Township of Harmony, Beaver County 

Township of South Fayette 

Tri-State Industrial Solutions, Inc. 

Turner Dairy Farms, Inc. 

Union Township 

United Parcel Service 

United Refining Company 

Veritiv 

Wayne Crouse, Inc. 

Wayne W. Sell Corporation 

Welch Foods, Inc. 

Western PA Teamsters and Employers 

Pension Fund 

Western PA Teamsters and Employers 

Welfare Fund 

Wilson McGinley, Inc 

YRCW 

Zenith Supply Company 

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SECTION 5. PLAN SPONSOR DETERMINATION RELATING TO REASONABLE 

MEASURES TAKEN TO AVOID INSOLVENCY 

With respect to the Trustees’ determinations discussed in Section 3.03 of this application, the 

following additional supporting information is provided: 

5.01 Measures Taken to Avoid Insolvency 

In addition to the matters explained in Section 5.02 of the application, the following is a detailed 

description of measures taken to avoid insolvency over the 10 plan years immediately preceding 

the plan year in which the application is submitted. 

Efforts to address the Plan’s funding situation began long before it was forecast to decline 

towards insolvency. In consideration of market losses in 2000-2001-2002, when the Plan 

experienced flat or negative investment returns, the Trustees authorized the preparation of 

forecast valuations to project the impact on funding of the recent investment environment and the 

future funding status of the Plan. The results of those forecasts revealed that significant 

investment returns well above the former 8.0% investment assumption would have to be earned 

for a sustained period of time to prevent the Plan from running afoul of the minimum funding 

requirements of ERISA. Even though the Plan had realized well above the assumed 8.0% 

returns in 2003 and 2004, the Trustees concluded that future benefit accruals needed to be 

lowered under a new benefit formula. 

Effective July 1, 2006, the Trustees reduced future benefit accruals to no greater than a 2.0% of 

contributions unit multiplier. Following consideration of forecasts and evaluation of the impact 

of the Pension Protection Act of 2006, the Plan was certified as being in endangered status for 

2008. The Trustees adopted a Funding Improvement Plan which reduced the accrual rate for 

future benefits to between 0.4% and 1.0% of contributions depending upon a history of 

contribution increase percentages. The 1.0% unit multiplier (the most frequent selection chosen 

by bargaining parties) required annual contribution increases of 6 %. 

The Trustees implemented a Funding Improvement Plan, effective August 1, 2008, which: (1) 

provided for contribution and benefit schedules forecast to enable the Plan to emerge from 

Endangered Status in 10 years; (2) increased the Normal Retirement Age from age 60 to age 62 

for future benefit accruals; (3) prospectively began applying early retirement reductions for 

service earned on and after August 1, 2008; and, (4) reduced future benefit accruals by 50% or 

more. 

Due to the worldwide economic collapse in September, 2008, which caused the Plan to 

experience a 29.1% investment loss for 2008. The Plan was no longer able to project emerging 

from Endangered Status. The Trustees elected to freeze the Plan’s Endangered Status for one 

year as permitted by the Worker, Retiree and Employer Relief Act of 2008 ("WRERA”). 

File 1_Checklist, Application,Signitures 0021
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The Plan was certified to be in Critical Status for 2010 and the Trustees developed and 

implemented the 2010 Rehabilitation Plan requiring 6% annual contribution increases, reducing 

by 50% the previously reduced unit multiplier based future benefit accrual to 0.5% of 

contributions (in other words the 2% unit multiplier applicable pre-August, 2008 was reduced to 

0.4% - 1.0% post-August, 2008 and was again cut in half in 2011). 

The impact of the reduced contribution based unit multiplier under the Rehabilitation Plan’s 

preferred schedule can be seen by observing that prior to August 1, 2008 when an employer 

contributed $10,000 under the 2% unit multiplier, the participant would have accrued a $200 

monthly benefit for contributions made that year. Between August 1, 2008 and February 1, 

2011, under the 1% unit multiplier, the participant would have accrued a $100 monthly benefit 

for contributions made that year. After February 1, 2011, under the 0.5% unit multiplier the 

accrual was $50 monthly. 

In 2009, the global recession caused the Plan’s second largest employer, YRC Worldwide 

(“YRCW”), to default on its obligations to lenders, employees and pension funds across the 

country. This led to a four year temporary cessation of its $5 million annual contribution to the 

Plan. When YRCW resumed active employer status in 2013, it did so under the Rehabilitation 

Plan’s Distressed Employer Schedule. The contribution obligation under the Teamsters National 

Master Freight Agreement Memorandum of Understanding set the reentry contribution level at 

25% of its 2009 contribution rate. Although the YRCW contributions accepted by the Plan were 

substantially less than otherwise needed, it was not feasible for the Trustees to attempt an 

assessment of withdrawal liability because it was determined that such assessments by this Plan, 

and other plans which might follow, would lead to a liquidation under the Bankruptcy Code 

which was likely to cause the liability to be uncollectible. 

In 2013, the Trustees began consideration of alternative methods for the allocation of withdrawal 

liability (also called a “Two Pool Method” or a “Hybrid Allocation Method”), similar to 

alternative methods adopted by the Central States Pension Fund, the New York Conference of 

Teamsters Pension Fund and the New England Teamsters Pension Fund. The Two Pool Method 

was thought to be a tool to attract new employers by virtually insulating them from withdrawal 

liability and to incentivize existing employers to pay their full withdrawal liability and reenter 

the Plan with a similar assurance that they would be virtually insulated from future withdrawal 

liability. These methods had been approved by the PBGC for use by other plans. In 2014, the 

Plan adopted a conditional amendment to the Plan Document and applied to PBGC for 

permission to implement a Two Pool Method, as an alternative to the Presumption Method, for 

employer withdrawal liability. Subsequently, MPRA was enacted and the Plan was certified to 

be in critical and declining status with a projection of insolvency. Initial employer interest in the 

Plan’s proposed Two Pool Method evaporated. Upon consider of this and other factors, the 

Trustees withdrew the application. 

In 2016, the Plan’s then second largest employer, Giant Eagle, Inc., withdrew from the Plan in 

citing, among other reasons, the cumulative effect of required 6% annual increases. The 

Trustees understood that the 6% contribution increase requirement might no longer be a 

reasonable measure of avoiding insolvency, but rather could be a counterproductive factor 

leading employers to withdraw. See Section 7.09 of this application for an explanation of factors 

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leading the Trustees to reduce the Rehabilitation Plan’s required schedule of contribution 

increases from 6% to 3.5% annually. 

5.02 Plan Factors

In accordance with Section 432(e)(9)(C)(ii), for the 10 plan years immediately preceding the 

plan year in which the application is submitted, the following explanations are provided. 

(1) Contribution levels during this period were set by collective bargaining, subject to a 

contribution maintenance requirement which prohibited reductions in a contribution 

rate. In 2008, the Plan’s Funding Improvement Plan required 6% annual contribution 

increases for a 1% of contributions unit multiplier, but allowed for contribution 

increases of 0% - 5% with unit multipliers grading down to 0.4% of contributions. 

(2) Levels of benefit accruals have been steadily reduced. Prior to 2006, the Plan 

determined future benefit accruals under a 3 for 2. In July, 2006, future accruals were 

reduced to 2% of contributions. In August, 2008, the highest future benefit accrual 

was reduced to 1% of contributions. When the Rehabilitation Plan was implemented 

in February, 2011, future benefit accruals were reduced to 0.5% of contributions. 

(3) Prior reductions of adjustable benefits. See, the 2010 Rehabilitation Plan, as 

updated September, 2018, Exhibit 17. The pre-August 1, 2008 portion of the 25-

And-Out accrued benefit was changed so it was only available upon attainment of age 

55. Participants who are under the default schedule as the result of their employer’s 

voluntary withdrawal and participants who were not covered under the preferred 

schedule when they left covered employment are no longer eligible for early 

retirement subsidies. 

(4) Measures undertaken to retain or attract contributing employers – See Section 

5.01 of this application. 

(5) Compensation levels relative to that offered by non-union competitors. See 

Exhibit 9, Economist Report.

The impact on Plan solvency of remaining subsidies and ancillary benefits available for active 

participants (such as early retirement subsidies for pre-August, 2008 service, a pop-up benefit, a 

10 year certain benefit) was considered and quantified, but ultimately it was seen that their total 

elimination would not materially change the projection of insolvency. Ultimately, certain 

ancillary benefits for active participants were retained it order to avoid causing more 

dissatisfaction with the Plan. 

The Economist Report, Exhibit 9, also summarizes information during the years prior to the 

applications and is information considered in the projections. The Trustees accepted the 

conclusion of the Economist that it was imperative that future contribution rates do not erode the 

competitive posture of current Plan employers in the marketplace. 

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For a description of the 10-year history of total contributions, see Exhibit 12, “Ten Year 

History”. 

5.03 How Plan Factors were Taken into Account

In the Trustees’ determination that all reasonable measures had been taken to avoid insolvency, 

they gave consideration to their experience in observing the general dissatisfaction expressed by 

employers and participants concerning contribution increase requirements, lower benefit 

accruals, loss of early retirement subsidies, as well as the fact that despite these required 

measures, the funding status of the Plan continued to deteriorate. In particular, the Trustees 

understood that the recent history of 2% general wage increases, as confirmed in the Economist 

Report, caused a 4% differential over recent contribution requirements. Whereas wage increases 

were modest, the 6% annual contribution increase requirement doubled the contribution rate 

every 12 years. These factors convinced the Trustees that future benefit reduction and/or future 

contribution increase requirements would be counterproductive and lead to voluntary 

withdrawals which often have limited collectibility and frequently do not fully compensate the 

Plan. 

5.04 Other Factors Considered 

The Trustees have monitored PPA funding plans of other large multiemployer plans covering 

Teamster groups. So have the Plan’s participants. Experience has shown that although the Plan 

adopted future benefit accruals below the rate of neighboring plans and required higher 

contribution increases than others, there has been an acceleration in the rate of voluntary 

withdrawals. These factors convinced that Trustees that low accruals coupled with high required 

contribution increases were counterproductive. The Trustees have encouraged withdrawn 

employers to prepay their payment schedules at comparable market rates in order to avoid the 

risk of default during payment schedules of up to 20 years. In addition, prepayment of 

withdrawal liability improves the Plan’s cash flow and funding. Also, a concept to improve cash 

flow by encouraging employers to pay their withdrawal liability in a lump sum, while 

transitioning to an allocation pool designed to insulate them from further withdrawal liability, 

was explored. Finally, the Trustees have encouraged participants to educate their elected federal 

officials about the need for enactment of assistance, beginning with the Create Jobs and Save 

Benefits Act of 2010 (the “Casey-Pomeroy Bill”) and continuing with the actions currently under 

consideration by the Joint Select Committee on Solvency of Multiemployer Pension Plans. 

SECTION 6. OTHER REQUIRED INFORMATION 

6.01 Ballot 

See Exhibit 10, “Proposed Ballot”. This exhibit is a proposed ballot intended to satisfy the 

requirements of Section 432(e)(9)(H)(iii). 

6.02 Partition 

The Plan is not requesting approval from PBGC for partition. 

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6.03 Actuarial Assumptions Used for Projections 

Exhibit 11, “Actuarial Assumptions and Methods”. The application includes information in 

the form set forth in the template provided in Appendix B of the revenue procedure, including: 

(1) a description of each of the assumptions used in the projections; (2) supporting evidence for 

the selection of those assumptions; and, (3) a description and explanation of any different 

assumptions used for different purposes within the application. 

6.04 Ten-Year Experience for Certain Critical Assumptions 

Exhibit 12, “10-Year Experience”. This exhibit discloses and separately identifies for the 10 

plan years immediately preceding the plan year in which the application is submitted: (1) total 

contributions; (2) total contribution base units; (3) average contribution rates; (4) withdrawal 

liability payments; and, (5) rates of return on plan assets. Data relating to UPS is separately 

identified. 

6.05 Demonstration of Sensitivity of Projections 

See Exhibit 13, “Sensitivity” which sets forth deterministic projections of the sensitivity of the 

plan’s solvency ratio throughout the extended period to certain key assumptions. This sensitivity 

information varies: (1) the assumed rate of return is reduced by 1 percentage point; (2) the 

assumed rate of return is reduced by 2 percentage points; (3) future contribution base units 

increase or decrease at a rate equal to the average annual rate of increase or decrease that the 

Plan experienced over the last ten years; and, (4) future contribution base units increase or 

decrease at a rate equal to the average annual rate of increase or decrease that the Plan 

experienced over the last ten years reduced by 1 percentage point. 

6.06 Projection of Funded Percentage

See Exhibit 13. This exhibit includes an illustration, prepared on a deterministic basis, of the 

projected value of plan assets, the accrued liability of the plan (calculated using the unit credit 

funding method), and the funded percentage for each year in the extended period. 

6.07 Plan Sponsor Certifications Relating to Plan Amendments 

If the Plan receives final authorization to implement the suspension and chooses to implement 

the authorized suspension, then, in addition to amendments to the Plan Document implementing 

the suspension, the following amendments will be timely adopted and not modified at any time 

thereafter before the suspension of benefits expires: 

(1) An amendment to the Plan Document providing that in accordance with Section 

432(e)(9)(C)(ii) the benefit suspension will cease as of the first day of the first plan 

year following the plan year in which the Plan Sponsor fails to maintain a written 

record of its determination that both: 

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(a) All reasonable measures to avoid insolvency continue to be taken during the 

period of the benefit suspension; 

(b) The Plan would not be projected to avoid insolvency if no suspension of benefits 

were applied under the Plan; 

(2) An amendment to the Plan Document providing that any future benefit improvements 

must satisfy the requirements of Section 432(e)(9)(E); and, 

(3) An amendment to Section 4.6 of the Plan Document “Suspension of Pension”,

implementing a proposed increase in permitted suspendible employment from less 

than 50 hours per month to less than 100 hours per month. This amendment would 

only be applied prospectively as of the date this proposed benefit suspension is 

implemented. 

6.08 The Plan is not Classified as a Plan Described in Section 432(e)(9)(D)(vii)

The Plan is not considered to be a plan described in Section 432(e)(9)(D)(vii) – it has not had 

any employer withdraw prior to enactment of MRPA, pay its full withdrawal liability and 

assume liability for benefits in an amount equal to the amount of benefits reduced as the result of 

the financial status of the Plan. 

6.09 Narrative Statement 

See Sections 3.01 and 5.01 of this application for a narrative statement of the reasons the Plan is 

in critical and declining status. 

SECTION 7 IDENTIFICATION AND BACKGROUND INFORMATION ON THE 

PLAN 

7.01 Plan Sponsor 

The Plan Sponsor is the Board of Trustees of the Western Pennsylvania Teamsters and 

Employers Pension Fund. Contact information for the Board of Trustees is in care of the Fund 

Office: 

Western Pennsylvania Teamsters and Employers Pension Fund 

900 Parish Street, Suite 101 

Pittsburgh, PA 15220 

(412) 362-4200 Phone 

(800) 362-4201 Toll Free 

(412) 362-3133 Fax 

Website: www.wpapensionfund.com 

E-Mail: ContactUs@wpapensionfund.com 

Employer Identification Number: 25-6029946 

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7.02 Plan Identification 

The formal name of the Plan is: Western Pennsylvania Teamsters and Employers Pension Fund. 

See Section 7.01 for the Employer Identification Number. The three digit plan number is 001. 

7.03 Retiree Representative. 

Following issuance of a Notice of Critical and Declining Status in April, 2017, the Trustees 

authorized development of a benefit suspension plan and appointed a Retiree Representative. An 

informational cover letter was mailed with the Notice and posted on the Plan’s website, stating 

that unless the Plan sought permission to reduce benefits under MPRA, the Plan would go 

insolvent in 2028. A retiree was appointed as the Retiree Representative in April, 2017 and has 

since served as an unpaid advocate to represent the interests of retirees, deferred vested 

participants and beneficiaries. In late-April, 2017, the Plan organized an informational meeting 

for union representatives and the Retiree Representative to outline the procedures and steps 

necessary in development of a benefit reduction plan. The Retiree Representative hired legal and 

actuarial consultants and established communications with his constituency. The Plan has 

reimbursed these expenses. Since his appointment, the Retiree Representative, together with his 

legal and actuarial consultant, has attended all Trustees meetings which included consideration 

of a MPRA benefit reduction plan and has provided input. 

Retiree Representative - Bill Lickert: 

724-382-4956 Phone 

E-mail: Bill@wpatrr.com 

Website: www.wpatrr.com 

7.04 Plan’s Enrolled Actuary 

The Plan’s enrolled actuary is: Randee W. Sekol, EA #1703192, Beyer-Barber Company, 1136 

Hamilton Street, Suite 103, Allentown, PA 18101. E-Mail randee@beyerbarber.com, Phone 

610-435-9577, Fax 610-435-2663. 

7.05 Power of Attorney

See Exhibit 1, “Signatures”. The application includes designations of a power of attorney for 

each authorized representative, Vincent P. Szeligo, Esq., Fund Counsel, and Randee W. Sekol, 

EA, Plan Actuary. Both will represent the Plan Sponsor in connection with the application and 

each have provided a signed statement of good standing. 

7.06 Plan Documents 

See, Exhibit 14, “Plan Documents”. This exhibit sets forth the most recent Plan Document, the 

“Amended and Restated Pension Plan as of January 1, 2014”. No amendments have been 

adopted since the last restatement. The latest IRS Determination Letter relating to the last 

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restatement is included. Also included are the Summary Plan Description and relevant 

reciprocity agreements which relate to the Plan Document, Article VI – “Partial Pension 

Benefits”. 

7.07 Collective Bargaining and Side Agreements 

Exhibits 15.1 and 15.2 “CBAs” set forth relevant excerpts from collective bargaining 

agreements and participation agreements. A list of active employers is at Section 4.6 of this 

application. Reciprocity Agreements are reproduced under Section 7.06. 

7.08 Annual Return 

See Exhibit 16, “Annual Return”. This exhibit sets forth excerpts from the Plan Year Ending 

December 31, 2016 Form 5500, Annual Return/Report of Employee Benefit Plan (which is the 

most recently filed Form 5500). Specifically, the excerpts include: (1) Form 5500 Pages 1 and 2, 

without attachments or schedules; (2) Schedule MB, including attachments; (3) Schedule R, 

including attachments; and (4) the Accountant’s Report under section 103(a)(3) of ERISA. 

As of the submission date of this application, the most recently filed Form 5500 was for the Plan 

Year ending December 31, 2016 (filed October 16, 2017). The deadline for filing Form 5500 for 

the Plan Year ending December 31, 2017 has been extended to October 15, 2018. The 

Accountant’s Report corresponding to the Form 5500 for the Plan Year ending December 31, 

2016, as well as the accountant’s report for the Plan Year ending December 31, 2017 are both 

included. 

7.09 Rehabilitation Plan 

See Exhibit 17, “Rehabilitation Plan”. This exhibit sets forth the most recent update to the 

Rehabilitation Plan, adopted September 5, 2018. In the years following the Plan’s adoption of its 

2010 Rehabilitation Plan, all employers have eventually complied with the preferred schedule. 

The required “Default Contribution Schedule” is not followed by or imposed upon any active 

contributing employer, but the loss of adjustable benefits under the Default Benefit Schedule is 

applied to participants who have not commenced benefits and were not covered under the 

Rehabilitation Plan’s preferred schedule at the time they left covered service, particularly in the 

case of a voluntary withdrawal. A voluntary withdrawal is one in which the formerly covered 

group continues employment with the withdrawn employer. 

There have been changes reflected in updates to the Rehabilitation Plan. In 2009, as the result of 

the global recession beginning in 2008, the Plan’s second largest employer, YRC Worldwide, 

Inc., expired a severe financial crisis which nearly forced it to shut down and liquidate in 

bankruptcy. The Company ceased contributing to both this Plan, as well as approximately 30 

other multiemployer pension plans throughout the country. The International Brotherhood of 

Teamsters, in conjunction with the affected multiemployer pension funds, conducted an 

independent financial review of YRC Worldwide’s operations, financial commitments and debt 

structure. The review confirmed that the Company was in default of credit facilities and that it 

File 1_Checklist, Application,Signitures 0028
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would be compelled to pursue liquidation in bankruptcy if it continued contributing to the 

multiemployer pension fund, or if it triggered withdrawal liability. The Company’s participating 

employer status with this Plan (as well as with other plans nationwide) was temporarily 

terminated, pending completion of the Company’s restructuring of financial obligations. 

Following a restructuring of its labor agreements and loans, the Company was able to repay 

delinquent contributions incurred prior to the Plan’s temporary termination of its participation. 

In 2013, the Rehabilitation Plan was amended to include a “Distressed Employer Schedule” and 

YRC Worldwide’s participation was accepted. Under the distressed employer schedule, the 

Company’s maximum contribution provided under a Memorandum of Understanding to the 

Teamsters National Master Freight Agreement was 25% ($69.50 = $278 x 0.25) of the 

contribution in effect in July, 2009. The Company’s participants were subject to the loss of 

adjustable benefits as provided under the default schedule and have earned future benefit 

accruals based on the reduced contributions paid on their behalf. 

For the Plan Year ending December 31, 2016, the most recent year in which information is 

available, of $54,167,554 in total contributions, preferred schedule employers contributed 

$53,424,704, or 98.96% of total contributions. The balance was contributed by YRC Worldwide 

under the distressed employer schedule. 

Following enactment of MPRA, the Plan was certified as being in critical and declining status. 

The continuation of the Rehabilitation Plan’s required 6% annual contribution increases, coupled 

with wage and fringe benefit reductions imposed on employees, led to an increase in voluntary 

withdrawals resulting from an opinion among employer and participant groups that the required 

annual 6% increases were not sustainable. The Trustees were aware that neighboring pension 

funds covering Teamsters have also reduced their required contribution increases to between 3% 

or 4%, and in the case of the neighboring Central States Pension Fund, had deemed frozen 

contribution rates of $348 or above to comply with their rehabilitation plan requirements. In 

order to properly evaluate the question of whether the 6% increases were or were not sustainable 

and might be counter-productive by leading to an accelerated rate of withdrawals, the Trustees 

commissioned an independent study by a regional labor economist. 

The report of Dr. Elizabeth A. Paulin, Professor of Labor Economics, LaSalle University, 

Exhibit 9, “Economist Report”, notes that contributing employers face competition from 

employers who have lower costs under defined contribution plans, and increases which follow 

wage increases of 2% - 3%. The Economist thoroughly researched industry and occupational 

trends and forecasts and concluded it was imperative that future contributions rates do not erode 

the competitive posture of covered Plan employers in the marketplace. 

In particular, the Economist discussed the competitive disadvantage felt by the Plan’s largest 

employer, UPS. Dr. Paulin observes a substantial disparity between wages and pension 

contributions for UPS participants as compared to the competitive environment and citing labor 

statistics from the Bureau of Labor Statics, concludes that an ongoing requirement that 

contributions be increased 6% annually was not sustainable. 

The Trustees considered the Economist Report, together with their knowledge of wage and 

benefit trends. They concluded that 6% contribution increases were not sustainable and that the 

File 1_Checklist, Application,Signitures 0029
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Rehabilitation Plan’s contribution requirement needed to more closed track forecasts of expected 

increases in wages. The Rehabilitation Plan has been updated to replace the former 6% annual 

contribution requirement with required 3.5% annual contribution increases effective with annual 

contribution increase effective January 1, 2019. 

7.10 Valuation Reports 

See Exhibit 18, “Valuation Reports”. This exhibit sets forth the two most recent actuarial 

valuation reports for the Plan. 

7.11 Completed Checklist 

A checklist of 43 elements required by the revenue proceeding is attached on top of this 

application. 

SECTION 8. RESUBMISSION REVIEW 

This is an original application and is not being resubmitted for review pursuant to Section 

1.432(e)(9)-1(g)(3) 

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