Benefit Suspension

In Detail

Benefit suspension is the extraordinary measure of cutting benefits that have already been earned and are in pay status — meaning current retirees receive smaller checks. This was made possible by the Multiemployer Pension Reform Act of 2014 (MPRA), which allowed multiemployer plans in "critical and declining" status to apply to the Treasury Department for permission to suspend benefits. Before MPRA, accrued pension benefits were considered sacrosanct and could not be reduced except in the most extreme circumstances. The law requires that suspensions be equitable and that participants over age 80 and those receiving disability benefits be protected from cuts.

Participants vote on proposed suspensions, but the Treasury Department can override a rejection if it determines the suspension is necessary to avoid plan insolvency. The Central States Pension Fund, covering about 350,000 Teamsters, proposed cuts averaging 23% that were rejected by participants and ultimately blocked by Treasury. The American Rescue Plan Act of 2021 provided an alternative path by offering $94 billion in special financial assistance to troubled multiemployer plans, potentially making benefit suspensions unnecessary for many plans. However, the concept remains relevant for plans that did not qualify for or exhausted their special assistance.