A: The notice that the Local 707 Pension Fund provided to you in December 2016, is known as a "Notice of Insolvency Benefit Level." The notice describes your monthly benefit payment under the plan benefit formula and it shows the monthly benefit payment that is guaranteed under federal pension insurance. Now that the Local 707 Pension Fund is insolvent you will receive only the guaranteed benefit amount.
PBGC is the federal pension insurer that guarantees basic pension benefits. The amount of PBGC's guarantee is set by law under the Employee Retirement Income Security Act (ERISA). Because there are legal limits to what PBGC can pay, your benefit level has been reduced if it exceeds the limit.
PBGC has information on the guarantee limit for insolvent multiemployer plans. (See Multiemployer Insurance Program FAQs.) .
A: For questions about individual calculations, contact the 707 Fund at:
Kevin McCaffrey, Fund Manager
Road Carriers - Local 707 Pension Fund
14 Front Street, Suite 301
Hempstead, NY 11550
Phone: (516) 560-8500
A: You will continue receiving a pension from the Local 707 Pension Fund, but at the reduced level that began in February 2017.
When a troubled multiemployer plan like the 707 Fund runs out of money, PBGC pays to keep the plan going so that guaranteed pension amounts are paid. PBGC will provide financial assistance to the 707 Fund, but the 707 Fund can only pay participants' guaranteed benefit levels. (See Multiemployer Benefit Guarantees.).
Your pension will decrease further only if the PBGC's multiemployer insurance program runs out of money, which, without a change in law, is projected to occur by 2025. (See "How reliable are PBGC's payments...")
A: No. The Local 707 Pension Fund is a multiemployer pension plan. PBGC does not take over administration of insolvent multiemployer pension plans. The 707 Fund will continue to maintain the 707 Fund's records, answer questions, process all the paperwork, and pay benefits.
A: You will continue to receive payments from the Local 707 Pension Fund, but at the PBGC guaranteed benefit amount.
If you are receiving monthly benefit checks, you will no longer receive a 13th benefit check around the end of the year from the 707 Fund. However, the 13th check amount you received in the past is reflected in the determination of your PBGC-guaranteed benefit amount. Your guaranteed benefit amount will now be paid in 12 monthly payments each year.
If you have any questions, contact the 707 Fund office (See 707 Fund Manager contact information.)
A: When PBGC provides financial assistance to multiemployer plans that have run out of money, ERISA does not allow PBGC to make exceptions to cuts to guaranteed benefits that the plans must make, even for retirees are 80 or over or are disabled.
Under the Multiemployer Pension Reform Act of 2014 (MPRA), some plans can apply to cut benefits before the plan runs out of money, if that leaves enough money to protect the benefits of disabled and elderly individuals. The law requires the plan to be able to remain solvent for the long term and the law limits the amount of early financial assistance PBGC can provide.
The Local 707 Pension Fund applied to cut benefits early under MPRA and sent notices to participants about how their benefits would change if the application was approved. Unfortunately, the 707 Fund did not meet the law's requirements and the application was denied.
A: The Local 707 Pension Fund participants are primarily retired and current truck drivers and their beneficiaries. The participans were or are represented by the Teamsters Local Union 707. The pension fund currently has two major contributing employers (YRC and ABF) and a few smaller companies.
A: Yes. In December 2014, the Multiemployer Pension Reform Act of 2014 (MPRA) became law. A troubled plan may apply to use certain options under this law if the plan can use them to remain solvent, that is, avoid running out of money.
In early 2016, the Local 707 Pension Fund trustees applied to the Department of the Treasury to suspend certain benefits, and applied to the PBGC to partition certain benefits into another plan. But it was too late for the options under MPRA to save the 707 Fund from running out of money.
A: Now that the Local 707 Pension Fund is insolvent your benefit will be paid at the level guaranteed by PBGC insurance.
Rather than losing all of your pension when the 707 Fund ran out of money, PBGC is providing financial assistance to the 707 Fund to enable the 707 Fund to pay participants' guaranteed benefit levels.
In mid-2016, PBGC denied the 707 Fund's partition application because it failed to satisfy the legal requirements for partition; specifically that partition would not prevent the 707 Fund from running out of money. The Treasury Department also denied the 707 Fund's application to suspend benefits.
A: PBGC's obligations to provide financial assistance to insolvent multiemployer plans will increase dramatically in the coming years, when more and larger multiemployer plans run out of money and require PBGC financial assistance to provide benefits at the guarantee level set by law.
In PBGC's most recent Projections Report, PBGC estimated that its multiemployer program needs more resources than are provided under current law and is likely to run out of money by the end of 2025, with considerable risk that it could run out before then. If the multiemployer insurance program becomes insolvent, PBGC will only be able to provide enough financial assistance to pay a small fraction of guaranteed benefits in insolvent plans.
PBGC continues to work with the Administration, Congress and others to develop a financially sound multiemployer insurance program that participants can rely on long into the future.
The future financial condition of PBGC's insurance programs is described more completely in our annual Projections Report.
A: Various factors have contributed to the serious underfunding in troubled multiemployer pension plans. For example, the funding levels and demographics of these plans have deteriorated dramatically over the past decade. Many plans adopted benefit increases in years when investment performance was strong; however, subsequent collective bargaining agreements did not increase contributions sufficiently to pay for the benefit increases in later years.
Plans lost assets in the financial market downturns in the early 2000s and in the economic crisis of 2008 - 2009. Further, many plans suffered decreases in employer contributions because of industry decline, de-regulation, or non-union competition.