Yesterday, President Obama signed into law the most comprehensive legislation affecting multiemployer pension plans since the Multiemployer Pension Plan Amendments Act of 1980. The Multiemployer Pension Reform Act of 2014 (the "Act") is intended to shore up the finances of the multiemployer pension insurance program, which the Pension Benefit Guaranty Corporation ("PBGC") recently announced would become insolvent within the next 10 years. The Act makes a number of controversial changes for underfunded multiemployer plans, including the following:

• Certain multiemployer funds will be permitted to reduce the pension benefits of plan participants, including benefits for some retirees already receiving benefits. The benefit reductions are subject to a rejection vote by all plan participants (actives, retirees, and other participants). However, any participant vote that rejects the benefit reductions can be overridden by the Treasury Department if it concludes the pension plan is a "systemically important plan." A "systemically important plan" is any plan for which the PBGC projects the present value of its financial assistance needed to sustain the plan will exceed $1 billion if the reductions are not implemented.

• Both "yellow zone/endangered status" and "red zone/critical status" plans will have additional flexibility when making their annual funding determinations under the Pension Protection Act of 2006 ("PPA"). The Act also repeals the PPA "sunset date" of December 31, 2014.

• The annual PBGC insurance premiums for multiemployer plans will increase from $13 per participant to $26 starting in 2015 (with additional cost of living increases in future years).

• The PBGC will now have additional flexibility to order the partition of multiemployer plans with significant "orphan" liabilities (i.e., liabilities resulting from previously-withdrawn employers that were unable to pay the full amounts of their withdrawal liabilities and/or delinquent contributions). The PBGC will also have enhanced authority to facilitate mergers of two or more multiemployer plans to improve their aggregate funded status.

• Multiemployer funds must now disregard certain contribution surcharges when calculating an employer's withdrawal liability, which reduces the liability for an employer if it withdraws in the future.

• The required disclosures of a plan's documents and financial information to participants and participating employers will be expanded.

The changes for multiemployer plans will generally take effect for plan years beginning on or after December 31, 2014. Due to the enormity of these changes, employers who have collective bargaining agreements that require contributions to multiemployer pension funds should begin analyzing the potential impact now -- particularly if they make contributions to any "red zone/critical status" funds or "yellow zone/endangered status" funds. In particular, employers should consider the following action items in the near future:

• Review the terms of each collective bargaining agreement that requires contributions for union employees to a multiemployer pension fund, particularly any provisions that require minimum benefit levels for employees, and re-opener provisions due to changes in the laws relating to multiemployer plans (or due to any future actions that may be taken by a fund's trustees to implement any such changes).

• Review the current funded status of each multiemployer pension fund.

• Request an updated withdrawal liability estimate from each multiemployer pension fund and all supporting documentation that the company is entitled to receive under federal law.

• Consider making inquiries through the fund's employer trustees as to whether the fund will implement any of the changes under the Act.

• Consider retaining an independent actuary (through an attorney to retain privileged communications) who can analyze each plan's funded status and perform projections for future years, considering both the plan's current funded status and its funded status if it implements any of the changes under the Act.

• Review any public statements that union representatives have made regarding the changes under the Act, whether in support of or against such changes.

• Monitor the status of any future regulatory guidance from the PBGC, Internal Revenue Service, or Department of Labor regarding the changes made by the Act.

• Re-evaluate the company's risks of continuing to participate in the fund and adjust collective bargaining strategy accordingly.