Plans Group Offers Input on Benefit Suspension Regs

The National Coordinating Committee for Multiemployer Plans (NCCMP) appreciates the opportunity to provide comments in response to above-referenced request for information issued by the Internal Revenue Service, Department of the Treasury ("IRS") as published in the Federal Register on February 18, 2015 (the "RFI").

The NCCMP is the only national organization devoted exclusively to protecting the interests of the over 20 million active and retired American workers and their families who rely on multiemployer plans for retirement, health and other benefits. The NCCMP"s purpose is to assure an environment in which multiemployer plans can continue their vital role in providing benefits to working men and women.

The NCCMP is a nonprofit, non-partisan organization, with members, plans and contributing employers in every major segment of the multiemployer plan universe, including in the airline, agriculture, building and construction, bakery and confectionery, entertainment, health care, hospitality, longshore, manufacturing, mining, retail food, service, steel and trucking industries.

We have responded to the questions posed in the RFI by stating each question and responding. We understand that as the IRS and plans work through these issues and begin implementing the provisions of the Multiemployer Pension Reform Act of 2014 ("MPRA") additional questions may arise. We will follow up these responses with any others of significance presented to us by affiliates or encourage affiliates to discuss these issues directly with IRS.

Concurrence with Other Comments

We emphasize that in all aspects of implementing MPRA the central focus should be the fundamental purpose of the law to save multiemployer plans so that those plans may continue to provide benefits in excess of the PBGC guarantee. Accordingly, NCCMP concurs with the proposal made by the Groom Law Group ("Groom") that prior to and for a reasonable period after issuance of regulations by Treasury, multiemployer plans should be permitted to file applications for suspension based on a reasonable and good faith interpretation of MPRA's requirements. Adopting such a proposal will enable plans to proceed expeditiously and avoid potentially deeper reductions in participant benefits. NCCMP also concurs with the proposal of Groom that given the critical importance of timing on the size of benefit suspensions that may be necessary for a plan to remain solvent, Treasury should expedite its review of benefit suspension applications so that a determination may be made well before the end of the maximum 225 day period. NCCMP believes this can be accomplished without sacrificing thoroughness by careful design of the application and instructions and by explanations of Treasury's expectations for the submission by the plan. Other suggestions for expediting the process made by Groom in its response to the RFI are also helpful.

Finally, NCCMP concurs with the "Background" and particularly the "Principles for Forthcoming Guidance" submitted by Segal Consulting ("Segal"). All of these comments underscore that time is of the essence for plans moving toward insolvency. Delay in the process will mean at best deeper benefit suspensions for participants and beneficiaries and at worst plans that can no longer remain solvent by use of the tools provided by MPRA.

Request for Information

Comments are requested on matters that may be addressed in future guidance implementing section 432(e)(9), and in particular on the following:

1. How should future guidance address actuarial and other issues, including duration, related to the following certifications and determinations:

2. For purposes of the section 432(e)(9)(D)(iii) limitation that a suspension is not permitted to apply to benefits based on disability (as defined under the plan), how can a plan sponsor identify which benefits are based on disability?

Ancillary disability benefits (non-retirement benefits based on disability) could be eliminated at any time prior to MPRA. MPRA protects retirement benefits and does not restrict the ability of plans to eliminate such an ancillary benefit. An ancillary disability benefit is not pension but a temporary disability benefit paid until the participant attains normal retirement age, at which point the participant may elect an optional form of payment with spousal consent, if applicable. If the participant dies before attaining normal retirement age, the spouse of a married participant would receive a pre-retirement surviving spouse benefit. NCCMP concurs with Groom and Segal that if a participant has been receiving an ancillary disability benefit and subsequently attains normal retirement age and transitions to a pension, the pension, whatever it is called, should be considered "based on disability" to the extent of the amount of the pre-retirement disability benefits.

Sponsors of plans that consider disability benefits to be ancillary may not keep records of whether a participant who has attained normal retirement age was previously receiving a disability benefit.

Many plans offer a disability pension that is typically a subsidized early retirement benefit payable upon documentation of disability. A variety of definitions may be used by plans to' establish disability ranging from a Social Security disability award to a determination by a plan committee based on medical evidence. The disability pension is an adjustable benefit under the Pension Protection Act ("PPA") that may be eliminated for participants not yet in pay status. This was not changed by MPRA. Once such a benefit is in pay status it is protected by MPRA.

MPRA refers to the definition of disability under the plan so we do not believe that such a definition is necessary.

NCCMP recommends that Treasury guidance should allow the plan sponsor flexibility to determine whether benefits in pay status are based on disability for purposes of applying section 432(e)(9)(D)(iii).

3. For participants who have not yet retired:

Alternatively, plans should be permitted, but not required, to provide estimates based on other reasonable dates.

4. For participants who have retired, what practical issues should be considered regarding the section 432(e)(9)(D)(ii) age limitations on suspensions, the application of the section 432(e)(9)(E) rules on benefit improvements, or other provisions?

NCCMP concurs with the comments of Segal and Groom in response to Item 4.

5. With respect to the section 432(e)(9)(F) requirement to provide notice of the proposed suspension to plan participants and beneficiaries concurrently with the submission of the application for approval:

6. With respect to item 5, please provide any examples of notices of proposed suspension that commenters would like to be considered in the development of a model notice.

7. What issues arise in connection with the section 432(e)(9)(G)(ii) requirement to solicit comments on an application for suspension of benefits?

8. With respect to the section 432(e)(9)(H) participant vote, what issues arise in connection with:

It should also be noted that, with respect to (a) both plan sponsors and regulators should be concerned with providing clear communications to participants and beneficiaries so that they have the means to understand the process, the alternatives and how their benefits may be affected. This can best be accomplished through such a summary which will also reduce the possibility that, in preparing opposing statements, those without fiduciary or statutory responsibilities are granted a platform to use this process to advance what may be their own narrow political interests by injecting invective or innuendo, or by making general statements that are intended to elicit an emotional response rather than a factual analysis and rebuttal in response to these carefully conceived proposals.

9. What other practical issues do commenters anticipate will arise in the course of implementing these provisions?

The NCCMP is in agreement with other commentators who have cited: the need for timely action on applications to ensure the process is handled expeditiously; that such guidance should inform plans as to any additional information beyond that specified in the statute and the form in which it needs to be submitted; that participant and contributing employer specific information submitted in conjunction with the application process be treated as confidential; that the use of plan assets to pay for any aspect of the benefit suspension and ratification process is appropriate; and, in recognition of the wide variance of plans, industries, availability of plan records and the history of plan changes in response to changing economic realities, broad discretion should be granted to plans regarding the form of any information requested provided that the answers to the questions posed can be reasonably inferred from the response provided.

We appreciate the opportunity to comment on the concerns raised by the Department of the Treasury in the development of the regulations under the Multiemployer Pension Reform Act of 2014 and would be happy to answer any questions that may arise in the review of such comments.