Two Pensions Withdraw Applications for MPRA Benefits Reduction

The Teamsters Local 805 Pension and Retirement Fund and the Southwest Ohio Regional Council of Carpenters (SWORCC) pension plan have withdrawn their applications with the US Department of the Treasury for a suspension of benefits under the Multiemployer Pension Reform Act of 2014 (MPRA).

The brief withdrawal letters did not provide reasons for rescinding the applications, however, the Local 805 fund said it reserved the right to resubmit the application with additional information “that may be advisable or recommended by the Department of Treasury.”

The Teamsters Local 805’s proposed benefit suspension plan, which was submitted on March 22, called for reducing all participants’ benefits by the maximum amount allowed under the MPRA. It would have treated all participants under the plan equally, and was expected to take effect April 1, 2018. Future benefits would have accrued at a rate of 1% of contributions, up to a maximum of $50 per year of service.

The benefits suspension proposal from the Southwest Ohio Regional Council, which was submitted on March 30, sought a uniform 17% reduction of the monthly benefit of every participant and beneficiary. It would also have applied a uniform series of steps to recalculate the participant or beneficiary’s accrued benefit. It called for the elimination of any subsidy for those individuals, or their beneficiaries, who retired prior to age 62; and beneficiaries receiving monthly benefits would have had their benefits recalculated to apply the same reduction factors for retirements prior to age 62.

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Tags: Pension, Southwest Ohio Regional Council of Carpenters, Teamsters Local 805, US Department of the Treasury

Britain’s retirees will receive a boost in their state income next spring as the UK’s Office for National Statistics (ONS) reported that the annual inflation rate was 3% at the end of September, its highest level in more than five years.

As a result of the increase in inflation, British pensioners will receive a 3% rise in the spring of 2018, when UK’s state pension will be uprated according to the so-called “triple lock” protection guarantee. The triple lock, introduced in 2011, guarantees that the basic state pension will rise by at least 2.5%, the rate of inflation, or average earnings growth, whichever is largest.

According to the BBC, the majority of public sector employees will see significant increases in their accrued pension benefits next year because September’s CPI data is used as the basis for the payments. Teachers will see a 4.6% increase, National Health Service employees will get a 4.5% increase, and police officers will receive a 4.25% raise. Recipients of the new state pension will have their weekly income increased to £164.38 from £159.60.

The maximum amount workers are allowed to save into a defined contribution pension plan, known as the Lifetime Allowance, will also rise by 3%. Those with pensions exceeding £1 million ($1.32 million) will pay a 55% tax charge on any withdrawals. However, in April 2018, they will be allowed to save an extra £30,000 without paying tax.

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Because of the triple lock, pensions have risen by at least 2.5% every year since 2010. However, the UK government has considered eliminating the triple lock feature, and a recent report from the Organization for Economic Cooperation and Development (OECD) recommended removing it.

“Indexing the state pension solely to average earnings would be fairer,” said the OECD, “while it would still allow pensioners to benefit from improvements in living standards.”

The rise in inflation also means that UK businesses will pay an additional £270 million in business rates next spring, according to the British Retail Consortium (BRC). The business rates are based on the retail prices index (RPI), which is linked to, and typically higher than, the CPI. According to the ONS, the RPI was 3.9% at the end of September.

“Without intervention to freeze business rates from government, retailers and other firms will face a [rate increase] twice as large as last year,” said the BRC in a statement. BRC CEO Helen Dickinson added, “The consequences of today’s RPI figures could be severe for many shops in a precarious position and struggling to survive. Consumers, already seeing household incomes eroded, will face further misery as the pound in their pocket buys them less at the checkout.”

Tags: Lifetime Allowance, Office for National Statistics, Pension, UK