Mitchel Whitehead Quoted in Pension and Benefits Daily
"Underfunded Multiemployer Plans Face Negotiation, Liability Withdrawal Issues"

Mitchel Whitehead was quoted August 3, 2009 in the Pension and Benefits Daily article, "Underfunded Multiemployer Plans Face Negotiation, Liability Withdrawal Issues." The article discussed how the financial crisis has made it difficult for employers to maintain their contribution obligations to multiemployer pension plans. According to the article, multiemployer plans have become significantly underfunded across all industries, thereby threatening the long-term viability of such plans. Mitch noted that the Pension Fund Protection Act's requirement for addressing funding deficiencies when they are identified serves to help multiemployer plans because it ensures that plans take steps to maintain their financial health. He further noted that the requirement also has drawbacks since it can require plans to react in very immediate ways to funding problems that result from stock market volatility.

According to Mitch, the current stock market volatility was one of the main reasons that the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA) freeze option was implemented. The article noted that at the end of 2008, Congress passed the law that permits multiemployer plan sponsors to temporarily freeze their plans' certified funding status at their 2008 levels, even if the actuarial certification of the plans' 2009 funding status shows the plans to be in critical status. The article also noted a recent arbitration that demonstrates some of the issues multiemployer plan trustees face when confronted with a decision to freeze their plans. Mitch explained that the arbitrator's decision depended on the specific financial circumstances of the plans and the timing of the expiration of the CBA. There is no “one size fits all” answer to the question of whether to elect the freeze. He further explained that the focus on the need to address financial considerations now instead of a year from now is a factor that is likely to be addressed by others considering whether to elect the freeze.