Faced with insolvency or major benefit cuts, retirees and employee-members of the Alaska Ironworkers Pension Plan chose benefit cuts. Well, at least 175 of the 824 eligible voters did and that’s enough to effectuate the cuts. Majority of votes submitted wins, and since 507 people did not vote, the 175 who voted in favor of cuts beat the 142 who voted against cuts.
The process to cut benefits is not easy. A multi-employer plan can request the Treasury’s approval to cut benefits if the plan shows that doing so would avoid insolvency. More than 100 of these plans are heading towards insolvency within the next 20 years.
The Alaska Ironworkers plan is just the fifth, though, to get approval to cut benefits from both the Treasury and its members. Now, retirees under age 75 will have their benefits cut 26.5%. Retirees over 75 will see slightly less cuts. Retirees age 80 and over will not have cuts. Apparently, the mindset is anyone under 80 can go back to work to make up the difference so they’re not evicted and don’t starve. I wonder if the cafeteria workers at Facebook’s headquarters knew about this trend of union pension plans before recently agreeing to join UNITE HERE’s plan?
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers throughout the U.S.A. dealing with labor, employment, and OSHA matters. You can reach Matt at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.