September 27, 2021

Volume XI, Number 270

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September 24, 2021

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Rescue for Union Pension Plans – and Maybe Union Employers

On March 11, President Joe Biden signed into law the Butch Lewis Emergency Pension Plan Relief Act of 2021, which was buried in the American Rescue Plan of 2021, on the one year anniversary of COVID-19 being declared a pandemic by the World Health Organization. The EPPRA allows eligible multiemployer plans to receive financial assistance that is not subject to any repayment obligations.

This union pension bailout is a single lump sum payment, and multiemployer plans may use the assistance to make benefits payments and to pay plan expenses. To qualify for assistance, the multiemployer plan must either: 

  1.  Be in critical and declining status 

  2.  Have previously imposed a benefits suspension under the Multiemployer Pension Reform Act of 2014

  3.  Be in critical status, have a modified funded percentage of less than 40% on a current liability basis, and have a ratio of active to inactive participants of less than 2 to 3

  4.  Be insolvent

The Congressional Budget Office estimated that 185 plans were likely to receive assistance, but as many as 336 might under certain circumstances.

The legislation requires the troubled multiemployer plans to keep their grant money in investment-grade bonds and bars them from commingling it with their other resources. But beyond that, the bill does not change the funds’ investment strategies, which are widely seen as a cause of their financial woes.

Notably, the law says nothing about how the financial assistance will impact a contributing employer’s withdrawal liability. The House bill specifically stated that employer withdrawal liability would not take into account any special financial assistance for 15 years after a plan received assistance, but this provision was removed by the Senate to avoid a procedural violation under the reconciliation process. It remains to be seen how withdrawal liability will be handled with those plans that receive assistance.

This could be the “silver bullet” union pension plans have been praying for – and could let hundreds of companies out of withdrawal liability.

© 2021 BARNES & THORNBURG LLPNational Law Review, Volume XI, Number 76
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About this Author

Frank T. Mamat Labor Relations Lawyer Barnes and Thornburg
Attorney in Charge

A range of entities, from the United Nations to small, two-person businesses, along with construction companies, and trade and business associations – come to Frank because of his nearly 45 years of deep experience helping companies, contractors and employers with their complex labor and union matters.

Through the years, Frank has successfully counseled clients on virtually every type of labor matter. He also helped the Michigan Senate in 2012 prepare Michigan's "Right to Work" law.

In particular, he provides counsel...

947-215-1320
Associate

Alex focuses his practice on assisting employers facing various employment litigation issues in federal and state courts. Specifically, he counsels and represents employers in a range of actions involving harassment, retaliation, discrimination, wrongful termination, and wage and hour claims.

He understands the nuances of helping clients document and present a strong case. His litigation experience includes serving as, while with a Michigan law firm, a special assistant attorney general representing the Michigan Department of Transportation in various litigation proceedings. For...

947-215-1322
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