Issues: Multiemployer Plans: Funding Reforms

• Most amortization periods for multiemployer plans are reduced from 30 years to 15 years.
• The maximum tax-deductible funding limit is increased from 100 percent of the full funding limit to 140 percent of current liability, thus encouraging increased pension contributions during profitable years.
• Triggers are used to identify financially troubled plans and to measure financial improvement.
  • Plans with a funding status between 65 and 80 percent are deemed to be endangered ("yellow zone"). The trustees must adopt a financial plan to improve funding by one-third within 10 years (or by one-fifth within 15 years, in some cases).
  • Plans that are less than 65 percent funded are deemed to be critical ("red zone"). Trustees must adopt a reorganization plan to exit the red zone within 10 years. The plan must include a combination of measures to reduce costs and increase contributions.
• Creates new notice and disclosure requirements for single and multiemployer pension plans to provide better and timelier information to workers, retirees and the PBGC about the financial condition of the plan.
  

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