The Rehabilitation for Multiemployer Pensions Act of 2019 (MPRA), also referred to as the "Butch-Lewis Act" proposes to establish a Pension Rehabilitation Administration (PRA) within the Department of Treasury that would administer a new trust fund to make loans to certain underfunded multiemployer defined benefit pension plans. The MPRA was reportedly included in the House version of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), but was omitted from the final version signed by President Trump on March 27, 2020.  

The key provisions of the MPRA  include the following:

• To be eligible for a loan, a plan must: (1) be in critical and declining status as defined in the Pension Protection Act of 2006 (PPA); (2) be in critical status under the PPA, be less than 40% funded, and have a ratio of active to inactive participants less than two to five; or (3) be insolvent, and become insolvent after December 16, 2014, and have not been terminated.
• As a condition of receiving a loan, a plan cannot increase benefits, allow participating employers to reduce their plan contributions or accept a collective bargaining agreement that would reduce contribution rates.
• Loans are to have “as low an interest rate as is feasible” and would consist of only interest for 29 years, with the full principal in year 30. If a plan were unable to make any payment on the loan, then the PRA would negotiate revised loan terms for repayment. The revised terms could include installment payments over a period of time and forgiveness of all or a portion of the loan principal.
• If an employer withdraws from a multiemployer plan before the end of the 30-year loan repayment period, the plan’s withdrawal liability would be calculated as if it were a mass withdrawal (which occurs when all or substantially all of the employers in a multiemployer defined benefit plan leave the plan).

Should the provisions of the MPRA be included in future COVID-19 relief legislation, employers participating in a plan receiving funds from the PRA will find it even more difficult to exit the plan due to the additional liability imposed on employers who withdraw during the 30-year loan repayment period.