Detroit Carpenters’ Pension Plan Pension Recovery Program

Frequently Asked Questions

The federal government recently passed the American Rescue Plan Act (ARPA), which includes funding for some multi-employer pensions. This is an incredible victory for working people all over the United States. Below are answers to frequently asked questions about what this means for the Detroit Carpenters Pension Plan.

We will add to this list when we have new information and receive more questions from you. We hope you find this helpful.

If you have other questions or want more information, please call the Participant Support Line at (877) 631-MPRA (877-631-6772).

American Rescue Plan Act

Yes. There are several criteria to determine if plans are eligible. Our Plan is eligible because it has been certified as being in critical and declining status.

As soon as we can. The federal government has not yet written all of the final regulations for how this pension relief will be carried out. There will be several rounds of applications, and we are working diligently to apply as soon as possible, but most likely in early 2023 – the earliest application date under current rules.

The Trustees of the Detroit Carpenters Pension Plan withdrew the Plan’s MPRA application effective August 30, 2021. Based on published ARPA guidance, continuing forward with our MPRA application likely would not expedite our ability to apply for ARPA funds. Additionally, proceeding with MPRA would incur additional expenses and possibly require implementing benefit cuts that later would have to be restored once ARPA funds are awarded.

Withdrawing our MPRA application preserves our right to refile at a later date while avoiding unnecessary expenses and imposing cuts on members that may be unnecessary in the long run.

Withdrawing the Plan’s MPRA application effective August 30, 2021, meant that we could avoid the expense and anxiety that would have resulted by allowing the application’s approval and subsequent notice, election, and implementation of benefit cuts. Further, our ability to apply for ARPA would be delayed until after the MPRA benefit cuts go into effect. With the withdrawal of our application, our right to refile for MPRA in the future is preserved.

The ARPA program for pension plans is designed to provide sufficient funding so that eligible multi-employer pensions can avoid insolvency over at least the next 30 years without reducing benefit payments.

MPRA, on the other hand, avoids pension insolvency through benefit cuts, not with funding assistance.

Based on our preliminary calculations, pursuing ARPA is preferable to MPRA for three main reasons:

  1. ARPA avoids a reduction in pension benefits. Unnecessarily reducing pension benefits not only negatively impacts current retirees but could also impair our ability to organize and expand our membership. Adding new members and increasing work hours are crucial elements to help the Pension Plan stay solvent.
  2. Our actuarial analysis shows that pursuing ARPA funding increases our chances to attain long-term solvency versus the MPRA application because of the up-front relief it provides.

No. ARPA provides an infusion of money into the Pension Plan based on the current Plan design. It is intended to extend our solvency date, giving us the opportunity to reach full funding. Still, it does not change our current Plan design, including current contribution and benefit distribution formulas.

We believe we are in Priority Group 6, which will allow applications no later than February 11, 2023. Applications open to everyone by March 11, 2023. We will apply as soon as permitted by law.

Under the current guidelines, the Pension Plan will receive this relief as a lump sum payment.

We estimate that 1.5 to 1.7 million pension participants nationwide will be eligible for this relief. They participate in numerous underfunded pension plans. The ARPA does not specify a set amount of money to rescue these pensions, only what is sufficient to avoid insolvency. The Biden Administration has made it clear that it wants to support multi-employer pensions.

The federal government has not published the final regulations yet, but the legislation specifies that relief should make your plan solvent for at least the next 30 years without benefit reductions. The actual amount of relief funding will be established at the time of our application.

We do not know, but we suspect that it will be some time before we can consider Plan improvements. The PBGC and the Department of Treasury will ultimately determine if we can make any Plan changes.

We do not make recordings of our Tele Town Halls public to protect the privacy of participants who ask questions, but you can have your questions answered by calling the Participant Support Line at (877) 631-6772.

No, we do not believe the Michigan Carpenters Plan, which covers the greater Michigan area, is eligible. But, if there is an opportunity to strengthen the Michigan Carpenters Plan under this legislation, we’ll be the first ones to tell you about it.

The Plan's History, Finances & Investments

The Detroit Carpenters Pension Plan has been certified as Critical and Declining. We received this certification because, based on reasonable assumptions, the Pension Plan will be insolvent in 2035 and unable to pay benefits at that point. Because of this, the Trustees must look at every option available to preserve and protect the pensions of all participants.

There are three options available to the Trustees:

  • The Trustees could do nothing. If the Trustees do nothing, the Plan will probably become insolvent and unable to pay benefits in about 15 years. If the Plan becomes insolvent, it will be taken over by the Pension Benefit Guaranty Corporation. Retirees could experience 95% cuts to their pensions, getting pennies on the dollar.

  • The Trustees could apply for Special Financial Assistance under ARPA. This program is designed to provide assistance to multi-employer pensions like ours, without requiring cuts. Under ARPA, eligible pension plans will receive a lump sum payment of an amount designed to ensure plan solvency over the next 30 years. Our preliminary analysis suggests that with ARPA special financial assistance, the Detroit Pension Plan would remain solvent well beyond 2051, and would have the best shot to reach full funding for long-term sustainability.
  • The Trustees can file for a limited reduction of benefits through the Multiemployer Pension Relief Act or MPRA. This means that we could put a plan together that reduces benefits to retirees and active workers while still preserving and protecting the plan for the future. The law requires that the cuts address shortfalls in the Plan's funding in a way that the federal government deems fair to participants.

Multiemployer Plans like ours rely on investments and contributions to pay for benefits. When the investment markets crash, like they did in 2000 and again in 2008, the Plan’s investments lose a lot of their value. Even though the markets eventually recover, it takes many years of very high investment returns to make up for the value lost in the crashes. As for contributions, the Plan needs to receive contributions for work hours from enough active employees to cover the benefits it will have to pay to retirees, future retirees and beneficiaries.

In addition to the investment markets crashes, there are other factors that caused the Plan to be where it is today, including:

  • Unfortunately, a decline in membership has led to a decline in contributions to the Plan. Since 2005, our active population has decreased over 40%.
  • Since 2009, retirees have outnumbered active participants. What’s more, retirees are living longer, resulting in larger total benefit payments that exceed the income the Plan gets from investments and contributions. This pattern has led to a decline in Plan assets.
  • Shortsighted government regulations prevented the Plan from saving for a rainy day when we had the resources to do so.
  • The stock market crash of 2000-2002 caused about a 10% drop in the Plan’s assets, and the 2008 crash—the worst since the Great Depression—resulted in a 26% loss in assets.
  • Additionally, recent legislation—including right to work laws, the elimination of project labor agreements, and the repeal of prevailing wage laws—will negatively impact our work hours and our market share moving forward.

The Trustees rely on experienced investment professionals to provide expert advice and recommendations to the Pension Fund on where to invest the Plan’s assets. These professionals attend each Trustee meeting, report on the performance of each investment manager and provide the most-updated market information. Because the Plan is governed by ERISA (the Employee Retirement Income Security Act of 1974), the investments are required by law to be diversified. This means the Plan's money must be invested in a number of different types of investments and it cannot be overly concentrated in one investment area. The Plan invests in a mix of stock, bond and real estate funds that were recommended by the Plan’s investment professionals which satisfy these legal requirements.

The Trustees have been working to protect the Plan’s assets by taking actions available under the law for as long as the Plan has been around. Throughout its history, the Plan has been managed well under some very difficult circumstances. The economic crashes, and the depression from 2008 to 2015, were not foreseeable. The Trustees have taken necessary actions to keep the Plan on course based on historical factors and legal regulations. We increased contribution rates, and cut the benefit multiplier, as well as the credited portion of the pension contributions—the amount put toward your pension from the total employer contribution. We also implemented a Rehabilitation Plan as early as 2009, as required by law. Even though the Trustees have tried all available options to address these problems, our Plan is still seriously underfunded and the situation is becoming worse.

The United Brotherhood of Carpenters cannot contribute money to our pension. The law prohibits those kinds of transactions. However, the UBC has experts who can help us navigate the federal government divisions and other pension-related agencies like the Pension Benefit Guaranty Corporation (PBGC).

We cannot legally do this. Political funds, union general funds, and pension funds are all separate entities and there are laws that govern how each can be used. We cannot take money from politics and give it to the pension. And we cannot take pension money and spend it on union family events, for example. By law, all those entities must be kept separate.

No, we cannot. Similarly, these are separate funds, with different participants and they cannot mix.

Pension Benefit Guarantee Corporation (PBGC)

The PBGC is a federal agency that was created to ensure pensions and cover payments in the event that a pension plan runs out of money—similar to the way that the FDIC insured bank deposits. When the PBGC takes over a pension plan, payments are automatically cut to levels mandated by law, as discussed earlier. With many pension plans currently in trouble and projected to become insolvent, the PBGC itself is projected to become insolvent by 2025—before our Plan is projected to run out money. If that happens, pension benefits for plans taken over by the PBGC would be reduced to almost nothing.

Miscellaneous Questions

The Trustees will comply with any future laws and regulations that govern our Plan, and we will review any future legislation that could potentially address the Plan’s solvency problems. In the meantime, we cannot wait for Congress to act. If we do not address our Plan’s issues now, the Plan will become insolvent in the near future.

The Pension Recovery Program only affects pension benefits. The Pension Recovery Program does not impact the health plan or any other aspect of your benefits (such as the Annuity Fund). If you have your healthcare self-pay premiums automatically deducted from your pension, you may want to evaluate that option, in the same way that you should review your tax withholdings.

On October 30, 2018, the Trustees voted to temporarily waive the Suspension of Benefits Rule, effective November 1, 2018, which was further modified recently. This allows retirees to work with their tools and collect their pension check. However, working retirees will not be credited for these additional pension contributions and his or her pension will not be recalculated. The Chairman and Secretary of the Pension Plan were given the authority to reinstate the Suspension of Benefits Rule, if necessary, to meet industry conditions.

We are devoting resources to helping you understand this process.

  • Pension Recovery Program Participant Support Line: (877) 631-MPRA (877-631-6772)
  • Tele-Town Hall Meeting: In order to communicate with participants safely, we are holding several Tele-Town Hall meetings in October to explain our plan and answer your questions. You may join any meeting that fits your schedule. You can join another Local Union meeting if that is more convenient. To join the Tele-Town Hall, answer the phone when it rings or call 800-460-1205. The schedule for the meetings is below.
    • All Participants: Sunday, October 4 at 7 pm
    • All Apprentices: Tuesday, October 6 at 7 pm
    • Local 1045: Sunday, October 11 at 7 pm
    • All Retirees: Wednesday, October 14 at 11 am
    • Local 687: Sunday, October 18 at 7 pm
    • Local 1234: Thursday, October 22 at 7 pm
    • Local 1102: Sunday, October 25 at 7 pm
  • Retiree Representative: Chuck Tindall, c/o Carpenters Pension Trust Fund, Detroit & Vicinity, 700 Tower Drive, Suite 300, Troy, MI 48098, (313) 570-1447,