Central States, Southeast and Southwest Areas Pension Plan

Item #39 

Does the application include the most recently updated rehabilitation plan. 

See section 7.09. 

The most recently updated rehabilitation plan is attached as document number 39.1. 

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APPENDIX M-6. REHABILITATION PLAN (INCLUDING 2014 UPDATE) 

Section 1. PREAMBLE AND DEFINITIONS. 

 Appendix M comprising the Rehabilitation Plan was added to the Pension Plan effective 

on and after March 26, 2008, and has been amended from time to time since then. 

 This Appendix M-6 is added to the Pension Plan effective on and after December 31, 

2014 in order to update the Rehabilitation Plan in compliance with the requirements of 

the Pension Protection Act of 2006 (“PPA”). 

 The Central States, Southeast and Southwest Areas Pension Fund (the “Fund”) was 

initially certified on March 24, 2008 by its actuary to be in “critical status” (sometimes 

referred to as the “red zone”) under the PPA: the Fund’s actuary has also certified the 

Fund to be in critical status in March of each subsequent year through March 201. The 

Fund’s Board of Trustees, as the plan sponsor of a “critical status” pension plan, is 

charged under the PPA with developing a “rehabilitation plan” designed to improve the 

financial condition of the Fund in accordance with the standards set forth in the PPA, 

and with annually updating the rehabilitation plan. Although for plan year 2009 the Fund 

was exempt from the update requirement, pursuant to an election under the Worker 

Retiree and Employer Recovery Act of 2008, for subsequent plan years the PPA 

provisions concerning the rehabilitation plan update process are applicable to the Fund. 

The purpose of this updated Rehabilitation Plan is to comply with those PPA provisions. 

 Under the PPA, a rehabilitation plan, including annual updates to the plan, must include 

one or more schedules showing revised benefit structures, revised contributions, or both, 

which, if adopted by the parties obligated under agreements participating in the pension 

plan, may reasonably be expected to enable the Fund to emerge from critical status in 

accordance with the rehabilitation plan. The PPA also provides that one of the 

rehabilitation plan schedules of benefits and contributions shall be designated the 

“default” schedule. The default schedule must assume that there are no increases in 

contributions under the plan other than the increases necessary to emerge from critical 

status after future benefit accruals and other benefits have been reduced to the 

maximum extent permitted by law. The PPA also creates certain categories of 

“adjustable benefits” which may be reduced or eliminated dependent upon the outcome 

of bargaining over the rehabilitation plan schedules and dependent on the exercise of 

certain flexibility and discretion conferred upon the Board of Trustees by the PPA. 

Adjustable benefits that may be affected in this manner include post-retirement death 

benefits, early retirement benefits or retirement-type subsidies, and generally any benefit 

that would be payable prior to normal retirement age (age 65 benefits under the Fund’s 

Plan Document - or, as discussed below, a Contribution Based Benefit actuarially 

reduced to be equivalent to an age 65 benefit). As noted, the PPA also requires annual 

updates of the rehabilitation plan. 

 Unless otherwise indicated, all capitalized terms herein shall have the definitions and 

meanings assigned to them in the Fund’s Pension Plan Document. 

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Section 2. SCHEDULES OF CONTRIBUTIONS AND BENEFITS. 

 With the PPA requirements outlined above in mind, the Fund’s Board of Trustees 

hereby provides the following PPA Schedules to the parties charged with bargaining 

over agreements requiring contributions to the Fund.

B. PRIMARY SCHEDULE (EXCEPT AS NOTED, PRESERVES 

ALL CURRENT BENEFITS).

1. Benefits

With regard to Bargaining Units (and any non-Bargaining Unit employee 

groups participating in the Fund) whose Contributing Employers are in 

compliance with this Primary Schedule, there will be no change in benefit 

formulas, levels or payment options in effect on January 1, 2008, except 

that as provided in Section 2(J) below, Participants who (i) have not 

submitted a retirement application on or before July 1, 2011 and (ii) do 

not have a benefit commencement date (within the meaning of ERISA § 

305(i)(10)) on or before July 1, 2011, will not be granted a Retirement 

Date prior to their 57th birthday and will not be eligible to receive 

retirement benefit payments of any type until after achieving age 57.

Further, subject to the notice requirements of the PPA and other 

applicable law, any Bargaining Units (and any non-Bargaining Unit 

employee groups participating in the Fund) whose Contributing 

Employers incur a Rehabilitation Plan Withdrawal on or after March 26, 

2008 shall have their Adjustable Benefits listed in Section 2(H) below 

eliminated or reduced to the extent indicated in Section 2(B)(1) below.

2. Contributions

Compliance with the Primary Schedule requires annually compounded 

contribution rate increases in accordance with Exhibit A effective 

immediately after the expiration of the Collective Bargaining Agreement 

(or other agreement requiring contributions to the Fund) and each 

agreement anniversary date (or reallocation anniversary, where 

applicable) during the term of the new bargaining agreement to the 

extent indicated in Exhibit A, depending on the year that the new 

agreement is effective. Note that all contribution rate increases are 

annually compounded on the total contribution rate (including any 

reallocations of employee benefit contributions or agreed mid-contract 

contribution increases) immediately prior to the increase.

The required annual rate increase may be provided through annual 

allocations to pension contributions of general and aggregate employee 

benefit contribution increases that were negotiated at the outset of an 

agreement, but were not specifically allocated to pension contributions 

until subsequent contract years. The Primary Schedule requires 8% per 

year contribution rate increases for the first 5 years, 6% per year 

contribution rate increases for the next 3 years and 4% per year 

contribution rate increases each year thereafter for 2008 agreements 

under the Primary Schedule and comparable rate increases over time for 

all other agreements under the Primary Schedule (see Exhibit A).

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Provided, however, that absent further amendment to this rehabilitation 

plan, as of June 1, 2011, any Collective Bargaining Agreement requiring 

contributions of (1) $348 per week for each full-time employee with 

respect to Participants covered by the National Master Automobile 

Transporter Agreement, and (2) $342 per week for each full-time 

employee with respect to all other Participants, will be deemed to be in 

compliance with the Primary Schedule without the need for additional 

annual rate increases. 

Provided further that any Employer that qualifies as a New Employer 

under § 2.2(b) of Appendix E of the Pension Plan will be deemed, as of 

the date it qualifies as a New Employer, to be in compliance with the 

Primary Schedule without the need for additional contribution rate 

increases. 

B. DEFAULT SCHEDULE.

1. Benefits

With regard to Bargaining Units (and any non-Bargaining Unit employee 

groups participating in the Fund) whose Contributing Employers agree to 

comply with this Default Schedule [or who become subject to the Default 

Schedule due to a failure to achieve an agreement to accept one of the 

Rehabilitation Plan Schedules within the time frame specified under 

ERISA § 305(e)(3)(C)], the benefit formulas, levels, and payment options 

in effect on January 1, 2008 will remain in effect except for the following, 

upon the effective date that the Default Schedule applies to the 

Bargaining Unit (or to any non-Bargaining Unit employee groups 

participating in the Fund):

• Adjustable Benefits listed in Section 2(H) below are 

eliminated or reduced to the maximum extent permitted by 

law, but the future benefit accrual rate of 1% of contributions 

(the Contribution-Based Pension) remains in effect, with the 

modification that the Contribution Based Pension monthly 

benefit payable at age 65 is reduced by 1/2% per month for 

each month prior to age 65 with a minimum retirement age of 

57, except that, for Participants who (i) have not submitted a 

retirement application on or before July 1, 2011 and (ii) do 

not have a benefit commencement date [within the meaning 

of ERISA § 305(i)(10)] on or before July 1, 2011, the 

Contribution Based Pension monthly benefit payable at age 

65 shall be reduced to an actuarially equivalent benefit in 

accordance with the Schedule attached as Exhibit B with a 

minimum retirement age of 57.

2. Contributions

 Compliance with the Default Schedule consists of annually compounded 

contribution rate increases of 4% effective immediately after the 

expiration of the Collective Bargaining Agreement (or other agreement 

requiring contributions to the Fund) and each anniversary thereof during 

the term of the agreement. 

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3. Effect of agreement to or imposition of Default Schedule.

(i) If a Contributing Employer agrees to the Default Schedule with 

respect to a particular Bargaining Unit, the Fund will not accept 

any subsequent Collective Bargaining Agreements covering that 

Bargaining Unit which are compliant with the Primary Schedule, 

except as determined by the Board of Trustees in their sole 

discretion.

(ii) If a Contributing Employer becomes subject to the Default 

Schedule by operation of ERISA Section 305(e)(3)(C), because 

the bargaining parties have failed to adopt either of the 

Schedules compliant with this Rehabilitation Plan within 180 days 

of the expiration of their prior Collective Bargaining Agreement, 

the Fund will then accept a Collective Bargaining Agreement that 

is compliant with the Primary Schedule described in this 

Rehabilitation Plan, provided that such new Collective Bargaining 

Agreement provides for Primary Schedule contribution rates that 

are retroactive to the expiration date of the last Collective 

Bargaining Agreement that covered the affected Bargaining Unit.

C. DISTRESSED EMPLOYER SCHEDULE.

1. Benefits

With regard to Bargaining Units (and any non-Bargaining Unit employee 

groups participating in the Fund) whose Contributing Employers and 

contribution rates have been specifically accepted and approved by the 

Board of Trustees as satisfying the Qualifications for the Distressed 

Employer Schedule (as set forth in Section 2(C)(2) below), the benefit 

formulas, levels, and payment options in effect on January 1, 2008 will 

remain in effect except for the following, upon the effective date that the 

Distressed Employer Schedule applies to the Bargaining Unit (or to any 

non-Bargaining Unit employee group participating in the Fund) that is 

accepted by the Board of Trustees as qualifying under the Distressed 

Employer Schedule:

• Adjustable Benefits listed in Section 2(H) below are 

eliminated or reduced to the maximum extent permitted by 

law, but the future benefit accrual rate of 1% of contributions 

(the Contribution-Based Pension) remains in effect, with the 

modification that the Contribution Based Pension monthly 

benefit payable at age 65 is reduced by 1⁄2% per month for 

each month prior to age 65 with a minimum retirement age of 

57, except that, for Participants who (i) have not submitted a 

retirement application on or before July 1, 2011 and (ii) have 

not achieved a Retirement Date on or before July 1, 2011, 

the Contribution Based Pension monthly benefit payable at 

age 65 shall be reduced to an actuarially equivalent benefit in 

accordance with the Schedule attached as Exhibit B with a 

minimum retirement age of 57, and except that any 

Participant who (i) has achieved a minimum age of 55 as of 

the date of the Distressed Employer’s termination of 

participation in the Fund (see Section 2(C)(2) below) and (ii) 

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has accrued a minimum of 25 years credit towards a 

Contributory Credit Pension or an And-Out Pension as of that 

date (see Pension Plan §§ 4.04, 4.05 and 4.06), shall be 

entitled to retain his eligibility for (but not gain further credit 

towards) any such Pension, provided that any such 

Participant has a minimum retirement age of 62.

3. Contributions and Qualifications for the Distressed 

Employer Schedule.

The Board of Trustees may deem a Collective Bargaining Agreement 

with contribution rates not in compliance with either the Primary 

Schedule or the Default Schedule to be in compliance with and subject 

to the Distressed Employer Schedule, if in the Board of Trustees’ sole 

discretion, the Board determines that the Contributing Employer meets 

each of the following qualifications:

(i) the common stock of the Employer or its parent corporation (or 

other affiliate under 80% or more common control with the 

Employer) is publicly traded and registered pursuant to the 

securities laws of the United States; 

(ii) the Employer has previously incurred a termination of its 

participation in the Fund due to an inability to remain current in 

its Contribution obligations, and the Employer was in terminated 

status immediately prior to executing the Agreement sought to 

be qualified under the Distressed Employer Schedule; 

(iii) during the last ten years in which the Employer participated in 

the Fund prior to its termination, it had paid contributions to the 

Fund on behalf of at least 1,000 full-time employees per month 

(or had, including part-time employees, paid contributions on 

behalf of the equivalent of at least 1,000 full-time employees 

per month for the specified ten year period); 

(iv) the Employer submits to a review of its financial condition and 

operations by the Fund’s Staff and outside expert and 

consultants, and agrees to reimburse the Fund for all fees and 

expenses incurred by the Fund in this review (including, but not 

limited to, reimbursement to the Fund for the time devoted by the 

Fund’s Staff to any such review, with this reimbursement to be 

made at market rates for comparable services performed by 

Fund’s Staff);

(v) on the basis of this financial and operational review, it appears 

that the Employer is not able to contribute to the Fund at a higher 

rate than is indicated in the Collective Bargaining Agreement 

proposed for acceptance under the Distressed Employer 

Schedule, and that acceptance of the proposed Agreement is in 

the best interest of the Fund under all the circumstances and 

advances the goals of this Rehabilitation Plan; and

(vi) the Employer provides the Fund with first lien collateral in any 

and all unencumbered assets to the fullest extent it is able in 

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order to fully secure (i) any delinquent or deferred Contribution 

obligations owed to the Fund, (ii) the Employer’s obligation to 

make current and future pension contributions to the Fund, and 

(iii) any future withdrawal liability potentially incurred by the 

Employer (with the amount of such potential withdrawal liability to 

be determined based on estimates to be provided by the Fund).

3. Effect of agreement to or imposition of the Distressed 

Employer Schedule.

If a Contributing Employer becomes subject to the Distressed Employer 

Schedule with respect to a particular Bargaining Unit, the Fund will not 

accept any subsequent Collective Bargaining Agreements covering that 

Bargaining Unit which are compliant with the Primary Schedule, except 

as determined by the Board of Trustees in their sole discretion.

D. ADJUSTMENT OF BENEFITS OF CERTAIN PARTICIPANTS WHO 

HAVE EARNED CONTRIBUTORY SERVICE WITH AN EMPLOYER 

INCURRING A REHABILITATION PLAN WITHDRAWAL.

Subject to the provisos indicated in the final clauses of this Subsection D, 

effective March 26, 2008, all Adjustable Benefits (listed below in Section 2(H)) 

shall be eliminated or reduced (to the same extent indicated in Subsection B(1) 

above) with respect to Participants whose benefit commencement date [within 

the meaning of ERISA § 305(i)(10)] with the Fund is on or after April 8, 2008, 

and:

(1) whose last Hour of Service prior to January 1, 2008 was earned while 

employed by United Parcel Service, Inc. (“UPS”), or with any trades or 

businesses at any time under common control with UPS, within the 

meaning of ERISA § 4001(b)(1); or 

(2) who (i) has earned or earns an Hour of Service while employed with a 

Contributing Employer (or any predecessor or successor entity) that at 

any time on or after March 26, 2008 incurs a Rehabilitation Plan 

Withdrawal (see Section 2(I) below), and (ii) whose last year of 

Contributory Service Credit prior to the Rehabilitation Plan Withdrawal 

was earned while a member of a Bargaining Unit (or any predecessor or 

successor Bargaining Unit) ultimately incurring such Withdrawal.

Proviso 1: Provided, however, that any Pensioner otherwise subject to the 

elimination of Adjustable Benefits, due to a Rehabilitation Plan Withdrawal 

pursuant Section 2(D)(2) above, who has a benefit commencement date [within 

the meaning of ERISA § 305(i)(10)] one year or more prior to the earlier of: (i) 

the date of such Rehabilitation Plan Withdrawal or (ii) the date of the expiration 

of the last Collective Bargaining Agreement requiring Employer Contributions 

under the Primary Schedule prior to such Withdrawal, shall not be subject to the 

elimination of Adjustable Benefits provided that the Pensioner does not engage 

in Restricted Reemployment at any time subsequent to the benefit 

commencement date.

Proviso 2: And provided further that in the event of a Rehabilitation Plan 

Withdrawal resulting from an administrative termination of a Contributing 

Employer as referenced in Section 2(I)(3)(ii) below, the Board of Trustees shall 

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have full discretionary authority (A) to decline to apply the elimination of 

Adjustable Benefits to Participants otherwise affected by a Rehabilitation Plan 

Withdrawal of this type who have submitted a pension application naming a 

Retirement Date to the Fund on or before the date selected by the Trustees as 

the effective date of the administrative termination which ended the Employer’s 

obligation to contribute to the Pension Fund, and (B) to decline to apply the 

requirement of Section 2(G) below that a Participant incurring a benefit 

adjustment due to Rehabilitation Plan Withdrawal must cease employment with 

and the performance of services for the withdrawn Employer within 60 days of 

the Rehabilitation Plan Withdrawal in order to eventually qualify for a restoration 

of benefits; in exercising their discretionary authority under this Proviso 2, the 

Board of Trustees shall consider, weigh and balance the following factors:

(i) the extent to which any actively employed members of the 

affected Bargaining Unit or any members who submitted a 

retirement application prior to the effective date of the 

administrative termination were aware of, participated in or 

controlled, or could have controlled or prevented, through 

bargaining, grievance procedures, NLRB proceedings, litigation 

or other means, the circumstances that led to the administrative 

termination of the Employer;

(ii) the extent to which any actively employed members of the 

affected Bargaining Unit or any members who submitted a 

retirement application prior to the effective date of the 

administrative termination benefited, directly or indirectly from the 

cessation of Employer Contributions or from the circumstances 

that led to the administrative termination of the Employer;

(iii) the extent to which any actively employed members of the 

affected Bargaining Unit or any members who submitted a 

retirement application prior to the effective date of the 

administrative termination resisted or attempted to alter, or 

acquiesced in, the circumstances that led to the administrative 

termination of the Employer;

(iv) the extent to which any actively employed members of the 

affected Bargaining Unit or any members who submitted a 

retirement application prior to the effective date of the 

administrative termination have become engaged as employees 

or independent contractors in the service of operations that were 

or are in whole or in part a successor of the operations of the 

Employer that has undergone the administrative termination; and

(v) the extent of the hardship that might be incurred by any actively 

employed members of the affected Bargaining Unit or by any 

members who submitted a retirement application prior to the 

effective date of the administrative termination due to the 

elimination of Adjustable Benefits.

Proviso 3: And provided further that the spouse of any Participant otherwise 

subject to the elimination of Adjustable Benefits, due to a Rehabilitation Plan 

Withdrawal pursuant to Subsection D(2) above, shall not incur a loss of 

Adjustable Benefits with respect to any Surviving Spouse Benefits for which 

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such spouse has a benefit commencement date [within the meaning of ERISA 

Section 305(i)(10)] prior to the date of the Rehabilitation Plan Withdrawal.

E. ADJUSTMENT OF BENEFITS OF CERTAIN PARTICIPANTS WHO HAVE 

EARNED CONTRIBUTORY SERVICE WITH AN EMPLOYER WHO 

BECOMES SUBJECT TO THE DEFAULT SCHEDULE.

Subject to the provisos indicated in the final clauses of this Subsection E, 

effective March 26, 2008, all Adjustable Benefits (listed below in Section 2(H)) 

shall be eliminated or reduced (to the same extent indicated in Section B(1) 

above) with respect to any Participants whose benefit commencement date 

[within the meaning of ERISA § 305(i)(10)] is on or after April 8, 2008, and:

(1) who have earned any Contributory Service Credit with a Contributing 

Employer (or any predecessor or successor entity) that at any time 

becomes subject (by agreement or otherwise) to the Default Schedule 

described herein; and

(2) whose last year of Contributory Service Credit prior to the Employer’s 

becoming subject to the Default Schedule was earned while a member of 

a Bargaining Unit (or any predecessor or successor Bargaining Unit) that 

ultimately became subject to the Default Schedule.

Proviso 1: Provided, however. that any Pensioner otherwise subject to the 

elimination of Adjustable Benefits, due to his Contributing Employer becoming 

subject to the Default Schedule pursuant to this Subsection E, who has a benefit 

commencement date [within the meaning of ERISA § 305(i)(10)] one year or 

more prior to the Contributing Employer becoming subject to the Default 

Schedule, shall not be subject to the elimination of Adjustable Benefits provided 

that the Pensioner does not engage in Restricted Reemployment at any time 

subsequent to the benefit commencement date.

Proviso 2: And provided further that the spouse of any Participant otherwise 

subject to the elimination of Adjustable Benefits, due to his Contributing 

Employer becoming subject to the Default Schedule pursuant this Subsection E. 

shall not incur a loss of Adjustable Benefits with respect to any Surviving Spouse 

Benefits for which such spouse has a benefit commencement date [within the 

meaning of ERISA Section 305(i)(10)] prior to the date on which the Contributing 

Employer became subject to the Default Schedule.

F. ADJUSTMENT OF BENEFITS OF CERTAIN PARTICIPANTS WHO HAVE 

EARNED CONTRIBUTORY SERVICE WITH AN EMPLOYER WHO 

BECOMES SUBJECT TO THE DISTRESSED EMPLOYER SCHEDULE.

Subject to the provisos indicated in the final clauses of this Subsection F, 

effective March 26, 2008, all Adjustable Benefits (listed below in Section 2(H)) 

shall be eliminated or reduced (with the exception indicated in Section 2(C)(1) 

above) with respect to any Participants whose benefit commencement date 

[within the meaning of ERISA § 305(i)(10)] is on or after April 8, 2008, and:

(1) who have earned any Contributory Service Credit with a Contributing 

Employer (or any predecessor or successor entity) that at any time 

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becomes subject (by agreement or otherwise) to the Distressed 

Employer Schedule described herein; and

(2) whose last year of Contributory Service Credit prior to the Employer’s 

becoming subject to the Distressed Employer Schedule was earned 

while a member of a Bargaining Unit (or any predecessor or successor 

Bargaining Unit) that ultimately became subject to the Distressed 

Employer Schedule.

Proviso 1: Provided, however, that any Pensioner otherwise subject to the 

reduction in Adjustable Benefits indicated in the Distressed Employer Schedule, 

due to his Contributing Employer becoming subject to that Schedule pursuant to 

this Subsection F, who has a benefit commencement date [within the meaning 

of ERISA Section 305(i)(10)] one year or more prior to the Contributing 

Employer becoming subject to the Distressed Employer Schedule, shall not be 

subject to the reduction of Adjustable Benefits otherwise mandated by the 

Distressed Employer Schedule provided that the Pensioner does not engage in 

Restricted Reemployment at any time subsequent to the benefit 

commencement date, and provided further that with respect to Bargaining Units 

that become subject to the Distressed Employer Schedule on or prior to June 1, 

2011, no Pensioners with Retirement Dates prior to September 24, 2010 shall 

be subject to such Distressed Employer Schedule benefit reduction.

Proviso 2: And provided further that the spouse of any Participant otherwise 

subject to the reduction of Adjustable Benefits. due to his Contributing Employer 

becoming subject to the Distressed Employer Schedule pursuant to this 

Subsection F, shall not incur a loss of Adjustable Benefits with respect to any 

Surviving Spouse Benefits for which such surviving spouse has a benefit 

commencement date [within the meaning of ERISA Section 305(i)(10)] prior to 

the date on which the Contributing Employer became subject to the Distressed 

Employer Schedule, and provided further in any event that with respect to 

Bargaining Units that become subject to the Distressed Employer Schedule on 

or prior to June 1, 2011, no spouse shall be subject to such Distressed 

Employer Schedule benefit reduction if the Participant’s death occurred prior to 

September 24, 2010.

G. RESTORATION OF ADJUSTED BENEFITS.

Any Participant who incurs a benefit adjustment or elimination under the terms 

of Sections 2(A), 2(B), 2(C), 2(D), 2(E) or 2(F) above may have those affected 

benefits restored if, subsequent to the event causing the benefit adjustment, the 

Participant:

(1) in the case of benefit adjustment caused by a Rehabilitation Plan 

Withdrawal (see Section 2(I) below), permanently ceases all employment 

with, and performance of services in any capacity for, the Contributing 

Employer (and any successors or trades or businesses under common 

control with such Employer within the meaning of ERISA § 4001(b)(1)) 

within 60 days of the occurrence of such Rehabilitation Plan Withdrawal; 

and

(2) in any case, subsequently earns one year of Contributory Service Credit 

with a Contributing Employer while that Employer is in compliance with 

the Primary Schedule described herein.

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H. ADJUSTABLE BENEFITS.

As used herein, Adjustable Benefits shall mean and include:

(1) Any right to receive a Retirement Pension Benefit (Pension Plan, Article 

IV) prior to age 65 [including without limitation any pre-age 65 benefits 

that would otherwise be payable as (i) a Twenty Year Service Pension 

(Pension Plan § 4.01); (ii) a Contributory Credit Pension (Pension Plan § 

4.04); (iii) a Vested Pension (Pension Plan § 4.07); (iv) a Deferred 

Pension (Pension Plan § 4.08); or (v) a Twenty-Year Deferred Pension 

(Pension Plan § 4.09)].

(2) Early retirement benefit or retirement-type subsidies [including without 

limitation (i) an Early Retirement Pension (Pension Plan § 4.02); (ii) a 25-

And-Out Pension (Pension Plan § 4.05); or a 30-And-Out Pension 

(Pension Plan § 4.06)].

(3) All Disability Benefits not yet in pay status (Pension Plan, Article V).

(4) Before Retirement Death Benefits (Pension Plan, Article VI) other than 

the 50% surviving spouse benefit.

(5) Post-retirement death benefits that are not part of the annuity form of 

payment.

(6) All Partial Pensions (Pension Plan, Appendix D), to the extent any such 

pension is tied to one or more of the Adjustable Benefits listed above.

(7) All Contribution-Based Pensions (Pension Plan § 4.03) except that, 

assuming the Participant meets all other requirements for receiving a 

Contribution-Based Pension, the Contribution-Based Pension is payable 

at age 65 reduced by 1/2% per month for each month prior to age 65 at 

the time of retirement with a minimum retirement age of 57. Such 

minimum retirement age shall not apply if the Participant retired prior to 

age 57 before the Participant’s Adjustable Benefits were eliminated or 

reduced. In such circumstance, the Participant shall be entitled to receive 

the Contribution-Based Pension reduced by 1/2% per month for each 

month prior to age 65 at the time of retirement. Provided, however, for 

Participants who (i) have not submitted a retirement application on or 

before July 1, 2011 and (ii) do not have a benefit commencement date 

[within the meaning of ERISA § 305(i)(10)] on or before July 1, 2011, the 

reductions in the Contribution-Based Pensions payable at age 65 

referenced in this subparagraph (7) shall be based on actuarial 

equivalence in accordance with the Schedule attached as Exhibit B 

hereto.

(8) To the extent not already included in paragraphs (1) - (7) above, the 

following categories of benefits listed and defined as “adjustable 

benefits” under ERISA§ 305(e)(8)(iv): 

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(i) benefits, rights, and features under the plan, including postretirement death benefits, 60-month guarantees, disability 

benefits not yet in pay status, and similar benefits, 

(ii) any early retirement benefit or retirement-type subsidy (within the 

meaning of ERISA Section 204(g)(2)(A)) and any benefit payment 

option (other than the qualified joint and survivor annuity), and

(iii) benefit increases that would not be eligible for a guarantee under 

ERISA Section 4022A on the first day of the Fund’s initial critical 

year under the PPA because the increases were adopted (or, if 

later, took effect) less than 60 months before such first day.

Provided, however, that except as provided in subparagraph (8)(iii) above, nothing in 

this paragraph shall be construed to reduce the level of a Participant’s accrued benefit 

payable at normal retirement.

I. REHABILITATION PLAN WITHDRAWAL

Subject to the discretionary authority of the Board of Trustees indicated in the 

final clause of this Subsection I, a “Rehabilitation Plan Withdrawal” occurs on 

the date a Contributing Employer (a) is no longer required to make Employer 

Contributions to the Pension Fund under one or more of its Collective 

Bargaining Agreements, or (b) undergoes a significant reduction in its obligation 

to make Employer Contributions resulting from outsourcing or subcontracting 

work covered by the applicable Collective Bargaining Agreement(s), as a result 

of actions by members of a Bargaining Unit (or its representatives) or the 

Contributing Employer, which actions include, but are not limited to the 

following:

(1) decertification or other removal of the Union as a bargaining agent;

(2) ratification or other acceptance of a Collective Bargaining Agreement 

which permits withdrawal of the Bargaining Unit, in whole or in part, from 

the Pension Plan;

(3) administrative termination of the Contributing Employer with respect to 

any or all of its Collective Bargaining Agreements due to: (i) a violation of 

the Fund’s rules with respect to the terms of a Collective Bargaining 

Agreement (including, without limitation, a provision providing for a split 

bargaining unit); or (ii) a violation of any other Fund rule or policy 

(including, without limitation, practices or arrangements that result in 

adverse selection);

(4) any transaction or other event (including, without limitation, a merger, 

consolidation, division, asset sale (other than an asset sale complying 

with ERISA § 4204), liquidation, dissolution, joint venture, outsourcing, 

subcontracting) whereby all or a portion of the operations for which the 

Contributing Employer has an obligation to contribute are continued 

(whether by the Contributing Employer or by another party) in whole or in 

part without maintaining the obligation to contribute to the Fund under 

the same or better terms (including, for example, as to number of 

participants and contribution rate) as existed before the transaction;

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Provided, however, that with respect to the circumstances described in 

Subparagraphs. (3)(ii) or (4) above, the Board of Trustees shall have full 

discretionary authority to consider, weigh and balance the following factors in 

determining whether a Rehabilitation Plan Withdrawal has occurred:

(i) the extent to which the affected Bargaining Unit or its bargaining 

representative participated in or controlled, or could have 

controlled or prevented, through bargaining, grievance 

procedures, NLRB proceedings, litigation or other means, the 

cessation of Employer Contributions;

(ii) the extent to which the affected Bargaining Unit benefited, 

directly or indirectly, from the cessation of Employer 

Contributions;

(iii) the extent to which the affected Bargaining Unit, or its bargaining 

representative, resisted or attempted to resist, or acquiesced in, 

the cessation of Employer Contributions;

(iv) the extent to which the affected Bargaining Unit, or any of its 

members, become engaged as employees or independent 

contractors in the service of operations that were or are in whole 

or in part a successor of the operations of the Contributing 

Employer who incurred the cessation of Employer Contributions; 

and

(v) the extent of the hardship that might be incurred by members of 

the affected Bargaining Unit by the elimination of Adjustable 

Benefits.

J. BENEFIT ADJUSTMENTS APPLICABLE TO ALL PARTICIPANTS 

(INCLUDING INACTIVE VESTED PARTICIPANTS) WHO HAVE NOT 

SUBMITTED A RETIREMENT APPLICATION ON OR BEFORE JULY 1, 

2011 AND DO NOT HAVE A BENEFIT COMMENCEMENT ON OR 

BEFORE THAT DATE.

Minimum Retirement Age 57.

Participants who (i) have not submitted a retirement application on or before 

July 1, 2011 and (ii) do not have a benefit commencement date [within the 

meaning of ERISA § 305(i)(10)] on or before July 1, 2011, will not be granted a 

Retirement Date prior to their 57th birthday and will not be eligible to receive 

retirement benefit payments of any type until after achieving age 57. 

Section 3. REHABILITATION PLAN STANDARDS AND OBJECTIVES.

The Schedules of Contributions and Benefits discussed above have been 

formulated by the Fund’s Board of Trustees as reasonable measures which, under 

reasonable actuarial assumptions, are designed and projected to forestall the 

possible insolvency of the Fund prior to 2026. Projections of insolvency may vary 

from year to year as actual experience may differ from assumptions.

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 TM:538126 / 01096280 / 01/01/2015 Appendix M-6 (Page 13 of 17)

The Trustees recognize the possibility that actual experience could be less 

favorable than the reasonable assumptions used for the Rehabilitation Plan on an 

annual basis. Consequently, the annual standards for meeting the requirements of 

the Rehabilitation Plan are as follows:

• Actuarial projections updated for each year show, based on reasonable 

assumptions, that under the Rehabilitation Plan and its schedules (as 

amended and updated from time to time) the Fund will forestall its possible 

insolvency prior to 2023.

Section 4. ALTERNATIVES CONSIDERED BY THE TRUSTEES.

The Board of Trustees considered numerous alternatives [including combinations 

of contribution rate increases (and other updates to the schedules of contribution 

rates in light of the experience of the Fund) and benefit adjustments] that might 

enable the Fund to emerge from Critical Status either by the end of ten year PPA 

Rehabilitation Period (which began on January 1, 2011 and ends on December 31, 

2020), or to forestall possible insolvency indefinitely (beyond the date referenced 

above under the “Standards and Objectives” heading). Some of the alternatives 

considered were determined to be unreasonable measures. The various default 

and alternative schedules considered included the following:

Schedules considered by the Board of Trustees in formulating an initial 2008 

rehabilitation plan that might permit the Fund to emerge by the end of the 

Rehabilitation Period on December 31. 2020:

Schedule Benefit Reductions Contribution Rate Increases

Default Immediate maximum Critical Status benefit cuts 

for all participants to the extent permitted by law

15% per year until emergence 

in 2021 (plus an additional 

1.6% annual increase for 

Benefit Classes 14 and below) 

Alternative 1 Maintain current benefits 17% per year until emergence 

in 2021

Alternative 2 On the second anniversary of the new bargaining 

agreement, reduce the future benefit accrual rate 

from 1% of contributions payable at age 62 to 1% 

of contributions at payable at age 65

16% per year until emergence in 

2021

In formulating the Fund’s initial rehabilitation plan in 2008, the Board of Trustees 

concluded that utilizing any and all possible measures to emerge from Critical Status by 

the end of the 10-year presumptive Rehabilitation Period described in ERISA Section 

305(e)(4), would be unreasonable and would involve considerable risk to the Fund and 

Fund participants. In particular, the Board of Trustees concluded that the continued 

existence of the Fund and the Trustees’ ability to maintain and improve the Fund’s 

funded status in accordance with the terms of the IRS approved amortization extension 

would be jeopardized by any attempt to emerge from critical status by the end of the 

presumptive 10-year Rehabilitation Period.

39.13
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 TM:538126 / 01096280 / 01/01/2015 Appendix M-6 (Page 14 of 17)

As shown above, based on January 1, 2008 valuation data, the emergence by the end 

of the presumptive 10 year Rehabilitation Period would require double-digit annual 

contribution rate increases. For example, the daily contribution rate would generally 

have to grow from $52 to over $300. Therefore, the Trustees concluded in 2008 that 

annual contribution rate increases above the 8%/6%/4% level in the Primary Schedule 

were not reasonable and could trigger mass withdrawals and significant losses to the 

Fund and the participants.

During the process of updating the Rehabilitation Plan in through the Trustees 

concluded that in light of current valuation data available in each of those years, the 

experience of the Fund and projections, the option available to the Fund under ERISA 

Section 305(e)(3)(ii) was to pursue reasonable measures to forestall a possible 

insolvency. The Trustees also concluded during the 2010 - 2014 update processes that 

requiring annual contribution increases above the level described in the Primary 

Schedule would not be reasonable and would likely accelerate a possible insolvency of 

the Fund rather than forestall it. 

In recent years, prior to Plan/calendar year 2014, the Trustees have implemented (and, 

where applicable, have continued to implement) numerous measures to improve the 

Fund’s funding. These have included:

• Reducing the benefit accrual rate from 2% of contributions to 1% of 

contributions;

• Protecting the “and-out” and early retirement benefits while freezing them at 

their year-end 2003 levels;

• Obtaining agreements from the major bargaining parties to reallocate significant 

amounts of annual benefit contributions to the Pension Fund;

• Obtaining an amortization extension from the Internal Revenue Service in 2005, 

and seeking a waiver of the conditions of that extension in 2009 in light of 

investment losses resulting from the weakness in financial markets in recent 

years;

• Requiring as a condition of continued participation in the Fund that new 

bargaining agreements in the last several years include significant annual 

contribution rate increases; 

• Providing information to Congress and federal agencies with respect to 

legislative or regulatory proposals that appear to assist in addressing the funding 

challenges confronting the Fund;

• Approving a Distressed Employer Schedule as part of the Fund’s Rehabilitation 

Plan under which YRC, Inc. and its affiliate USF Holland, Inc., two distressed 

(but historically significant) Contributing Employers, resumed Contributions in 

June 2011 at rates lower than would have been permitted under previous (pre2011) Rehabilitation Plan Schedules; this Distressed Employer Schedule 

significantly adjusted the benefits of the affected Bargaining Unit members, and 

helped assure that despite the lower Contribution rates, the continued 

participation of these Employers would tend to improve overall pension funding; 

and

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 TM:538126 / 01096280 / 01/01/2015 Appendix M-6 (Page 15 of 17)

• Adopting a new withdrawal liability method, and obtaining approval of that 

method by the Pension Benefit Guaranty Corporation, under which new 

Contributing Employers, and existing Contributing Employers who satisfy their 

withdrawal liability under the Fund’s historic (pre-2011) withdrawal liability 

method (i.e., the “modified presumptive method”), will have any future 

withdrawal liability determined under the “direct attribution” method; the Trustees 

believe that this “hybrid” method will be attractive to some Contributing 

Employers who wish to continue to participate in the Fund, but may be 

concerned about the potential for future growth of their estimated withdrawal 

liability as calculated under the Fund’s prior (pre-2011) withdrawal liability 

method, and that this, in turn, will encourage continued participation in the Fund 

and tend to improve overall pension funding.

• Amending the Primary Schedule of the Rehabilitation Plan to permit Contributing 

Employers, who satisfy their existing withdrawal liability and qualify as New 

Employers eligible for the direct attribution method under the hybrid method, to 

comply with the Primary Schedule without the need for the contribution rate 

increases otherwise required under the Primary Schedule. The Trustees 

determined that this amendment to the Rehabilitation Plan will encourage 

existing Contributing Employers to satisfy their existing withdrawal liability and to 

continue their participation in the Fund as New Employers under the hybrid 

method; the Trustees determined that the New Employers’ participation on these 

terms would tend to improve overall pension funding.

As part of their responsibility to consider updates to the Rehabilitation Plan for Plan 

Year 2014, the Board of Trustees also determined that mandating additional significant 

benefit cuts (beyond those provided in this updated Rehabilitation Plan), or (as noted) 

mandating contribution rate increases at levels beyond those required in recent years, 

would substantially accelerate the rate at which employers would withdraw from the 

Fund, in large part because the Union could conclude that it would be in its members’ 

best interest to agree to withdrawals. The Board of Trustees also determined that this 

acceleration of employer withdrawals would, in turn, be counterproductive to the 

Trustees’ effort to forestall possible insolvency.

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 TM:538126 / 01096280 / 01/01/2015 Appendix M-6 (Page 16 of 17)

Exhibit A 

Primary Schedule: Contribution Rate Increases By Bargaining Agreement Year 

(all rate increases are to be compounded annually) 

Calendar 

Year of 

Contribution 

Rate 

 

Year of initial Bargaining Agreement Conforming to Primary Schedule 

2006 

& 

Earlier

2007 2008 2009 2010 2011 2012 2013 2014 2015 

2006 7% 

2007 7% 8% 

2008 7% 8% 8% 

2009 7% 8% 8% 8% 

2010 7% 8% 8% 8% 8% 

2011 6% 8% 8% 8% 8% 8% 

2012 5% 6% 8% 8% 8% 8% 8% 

2013 4% 4% 6% 8% 8% 8% 8% 8% 

2014 4% 4% 6% 8% 8% 8% 8% 8% 8% 

2015 4% 4% 6% 8% 8% 8% 8% 8% 8% 8% 

2016 4% 4% 4% 6% 8% 8% 8% 8% 8% 8% 

2017 4% 4% 4% 4% 6% 8% 8% 8% 8% 8% 

2018 4% 4% 4% 4% 4% 6% 8% 8% 8% 8% 

2019 4% 4% 4% 4% 4% 4% 6% 8% 8% 8% 

2020 4% 4% 4% 4% 4% 4% 4% 6% 8% 8% 

2021 4% 4% 4% 4% 4% 4% 4% 4% 6% 8% 

2022 4% 4% 4% 4% 4% 4% 4% 4% 4% 6% 

2023 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 

2024 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 

2025 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 

2026 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 

2027 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 

39.16
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 TM:538126 / 01096280 / 01/01/2015 Appendix M-6 (Page 17 of 17)

EXHIBIT B

Schedule for Actuarial Reduction of Age 65 Benefits

(Applicable to Default Schedule and Rehabilitation Plan 

Withdrawal benefit adjustments for Participants who 

(i) have not submitted a retirement application on or

before July 1, 2011 and (ii) do not have a benefit commencement 

date [within the meaning of ERISA§ 305(i)(10)] on or before July 1, 2011)

 Percent of Age 65 Benefit Based on

 Age Actuarial Equivalence

65 100%

64 90%

63 81%

62 74%

61 67%

60 61%

59 55%

58 50%

57 46%

39.17