Two weeks ago the Treasury released proposed and temporary regulations in support of the Kline-Miller Reform Act. This could amount to be a huge blow to retirees who are counting on pension benefits to fund their retirement. These regulations allow for:
– Reduction of benefits for current retirees
– Increased Sponsor and participant contributions
– Reducing early retirement subsidies
The most glaring impact may be the ability of plans facing insolvency the right to immediately reduce benefits to no less than 110% of the PBGC guarantee, the maximum is currently $13,000 per year. This means that pension benefits of current retirees could be reduced to no less than $14,300 in 2015.
Participants who are 80 or older or those who are on disability are exempt from these benefit adjustments. For participants who are 75 or older at the time of implementation there will be a phase out applied.