News & Updates

Treasury Issues Too Much to Overcome

When the U.S. Treasury told us in December that our Rescue Plan was going to be denied, we knew there was a good chance that we would not be able to save Local 7's pension fund. That proved to be the case. With the treasury-induced delay in implementing our Rescue Plan and the new numbers the Treasury wanted us to use for predicted future hours and mortality rates, the cuts became so deep they were deemed unnacceptable by the Board of Trustees. The results are that there will be no rescue plan, no pensions will be cut and, in about a decade, the Pension Benefit Guarantee Corporation will have to step in to save the fund. What will that look like? The PBGC cuts today are deeper than our proposed cuts. But, ten years is a long way off and nobody knows what the end result will be of failing pension funds, an underfunded PBGC and calls for a Congressional bailout.

The Decision to Withdraw

We heard back from Treasury and had several conversations with their representatives over the past week about our application. Based on their input, we have withdrawn the application pending additional research that addresses concerns expressed by Treasury. The research and requested projections should be completed in a couple of weeks and, at that time, we’ll provide everyone with an update regarding our plan to resubmit the application.

Treasury Rejections and the PBGC Promise

The plan participants who spoke out against the Central States Rescue Plan won a hollow victory when the U.S. Treasury rejected the plan. The pension fund will certainly fail, and when the Pension Benefit Guaranty Corporation (PBGC) steps in, every participant’s benefit will be cut much worse than what was originally proposed.

The same holds true for Bricklayers & Allied Craftsmen Local No. 7. The proposed Pension Rescue Plan is our one and only shot at saving your benefits. It must gain approval of the Treasury and win your vote, or your Pension Plan will be insolvent in 10 years.

So far, the Treasury has rejected both rescue plans it reviewed for different reasons. Two more rulings are expected in October, and we expect a ruling on our plan in February 2017. We believe the Treasury will accept our plan because it saves your Pension Plan and provides the best solution for the most people.

If our Rescue Plan isn’t approved, having the PBGC step in to save your pension isn’t a sure thing. The cost of a Central States bailout could have a catastrophic effect on the agency. Insurance premiums that fund the PBGC have already more than doubled from $13 to $27 per participant in just two years. Some project premiums rising as much as $150 to $200 per participant. Few plans, including ours, could survive paying premiums that high. And if you’re counting on Congress to step in with funding, proposals to fund the PBGC with tax dollars have gone nowhere.

We know our Rescue Plan isn’t great for everyone, and some plan participants will speak against it and encourage others to vote against it. That’s their right, and we respect that. However, when it comes time to vote, we urge you to consider your own situation and vote based on what’s best for you and your family. If you have any questions about your benefits under the proposed Rescue Plan, please feel free to contact us and we’ll do our best to get you answers.

The False Hope of Koppa

In a perfect world, Senate Bill 1631, the Keep Our Pension Promises Act (KOPPA) sponsored by Bernie Sanders (I-VT), would make the need for a Pension Rescue Plan completely unnecessary. But a perfect world is one without politics. That’s the problem.

KOPPA is just one of nearly 500 bills currently referred to the Senate Committee on Finance. To put that in perspective, only 30 bills reached the next stage of being reported by the committee last year. Of those 30, just three were Democrat-sponsored bills.

That’s because the committee is run by a Republican majority that can decide which bills see the light of day. In today’s political climate, Senator Sanders has very few Republican allies. Some extraordinary things would have to happen in order for KOPPA to reach the Senate, where even more Republican barriers would confront it.

But, what if extraordinary things did happen and KOPPA managed to get out of committee, through both houses and signed by a future President? Depending on how long all of that took, Bricklayers & Allied Craftsmen Local No. 7’s Pension Plan would continue down the road toward insolvency.

KOPPA saves pensions by changing rules for something called a partition, where the PBGC takes over payments for part of a pension plan. However, the Bricklayers Local No. 7 Pension Plan does not qualify for current partition rules because the maximum benefit suspensions have not been made. Under KOPPA, new rules would be added for partitions but they would be based on special treatment of bankrupt and withdrawn employers. These are not issues that impact the Bricklayers Local No. 7 Pension Plan and it would not qualify.

Many of you are aware of the failure of the Central States Pension Fund due to its high profile. KOPPA exists in no small part because of Central States, and would help that fund stay solvent because many of its problems are related to special situations in that industry with bankruptcy and withdrawal liability.

While KOPPA may work for some pension funds like Central States, it is not a viable option for the Bricklayers Local No. 7 Pension Plan.

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