	Background

CSPF is a defined benefit multiemployer pension plan. 1). The Central States, Southeast and Southwest Areas Pension Fund (CSPF)

CSPF was established in 1955 to provide pension benefits to  International Brotherhood of Teamsters union members (Teamsters) in  the trucking industry and it is one of the largest multiemployer plans. 2). In 2016,  16 percent of about 385,000 participants were active, i.e., still working in  covered employment that resulted in employer contributions to the plan. 3.). In September 2015, CSPF  filed an application with Treasury seeking approval to reduce benefits  pursuant to provisions in the Multiemployer Pension Reform Act of 2014  (MPRA), which is fully discussed later in this section. The consent decree  provides measures intended to ensure that the plan complies with the  requirements of ERISA, including providing for oversight by the court and  DOL, and prescribes roles for multiple parties in its administration. Among other  things, ERISA requires plans to meet certain requirements and minimum  standards. CSPF’s Critical Financial Condition Is a Result of Factors That Reflect Challenges Experienced by the Multiemployer System

		CSPF Has Been Underfunded Since the Consent Decree Was Established

At the time the consent decree was established in 1982, CSPF had less  than half the estimated funds needed to cover plan liabilities (and to pay  associated benefits over the lifetime of participants) and it has not  attained 100 percent of its estimated funding need since then, according  to regulatory filings. Over the next two decades, the plan generally made  progress toward achieving its targeted level of funding but was never  more than 75 percent funded, and funding has generally deteriorated  since its 2002 filing (see fig. Stakeholders Described Multiple Factors That Contributed to CSPF’s Critical Financial Condition, Many of Which Have Been Experienced by Other Multiemployer Plans

CSPF officials and other stakeholders identified several factors that  contributed to CSPF’s critical financial condition and reflect the  challenges faced by many multiemployer plans. In addition to being underfunded prior to the consent decree going into  effect, stakeholders identified other specific factors that contributed to  CSPF’s critical financial condition, such as trends within the national  trucking industry and its workforce, funding challenges and common  investment practices of multiemployer plans, and the impact of market  downturns on long-term investment performance. For example, stakeholders noted the  impact that the Motor Carrier Act of 1980 had on the trucking industry. 7). Additionally, stakeholders noted that although each of the factors that  contributed to CSPF’s critical financial condition individually is important,  their interrelated nature also had a cumulative effect on the plan. Industry  deregulation, declines in collective bargaining, and the plan’s significantly  underfunded financial condition all impaired CSPF’s ability to maintain a  population of active workers sufficient to supply its need for contributions  when investment shortfalls developed. Our review of communication between CSPF and DOL showed the plan  also provided updates and allowed for DOL’s input on other actions. DOL Conducted Investigations of CSPF in Accordance with Its Role under ERISA

		DOL Has Primary Responsibility for Enforcing ERISA’s Fiduciary Provisions

Separate from its role under the consent decree, DOL has a primary  oversight role over plans under ERISA, which it carries out through  investigations and other activities. DOL is responsible for enforcing the  reporting, disclosure, and fiduciary responsibility provisions of ERISA. The guide further notes that, if a plan  appoints an investment manager that is a bank, insurance company, or  registered investment advisor, the plan is responsible for selecting and  monitoring the manager, but is not liable for the individual investments of  that manager. Two Completed DOL Investigations Resulted in No Action Against CSPF

DOL has completed at least two investigations of the plan since the  consent decree was established; neither of which resulted in adverse  findings or action against CSPF. Investigations  based on enforcement projects or triggered by participant complaints are  conducted by regional offices—DOL officials also stated that the Chicago  Regional Office is primarily responsible for oversight of CSPF at the  regional level. The U.S. Department  of the Treasury provided no comments. Appendix II: Key Provisions of the Central States, Southeast and Southwest Areas Pension Fund’s Consent Decree

	Brief History and Current Status of Consent Decree

On September 22, 1982, the Department of Labor (DOL) entered into a  court-enforceable consent decree with the Central States Southeast and  Southwest Areas Pension Fund (CSPF) to help ensure the plan’s assets  were managed for the sole benefit of the plan’s participants and  beneficiaries as required by the Employee Retirement Income Security  Act of 1974 (ERISA). Specifically, the  independent special counsel: has full authority to examine the plan’s activities and oversee and  report on the plan’s performance of the undertakings of the consent  decree; may, with court approval, employ attorneys, accountants,  investigators, and others reasonably necessary and appropriate to aid  him in the exercise of his responsibilities; has full access to all documents, books, records, personnel, files, and  information of whatever type or description in the possession,  custody, or control of the plan; may attend meetings of the plan, including meetings of the board of  trustees and any meetings at which plan-related matters are  discussed or considered;  can petition the court to compel the plan to cooperate with the  independent special counsel in the performance of his duties and  responsibilities; may consult with DOL, the Internal Revenue Service, and other  agencies, as appropriate, but must provide access to DOL upon its  request to any documents prepared by the independent special  counsel within the exercise of his power;  is required to file quarterly reports, as well as any other reports the  independent special counsel deems necessary or appropriate, with  the court, and provide copies to DOL and the plan; may have other powers, duties, and responsibilities that the court may  later determine are appropriate; and  cannot be discharged or terminated during the duration of the consent  decree except for leave of court, and upon the termination, discharge,  death, incapacity, or resignation of an independent special counsel,  the court will appoint a successor. Specifically, DOL: may request and review certain reports provided by the plan and any  documents prepared by the independent special counsel in the  exercise of his authority; may object to the appointment of proposed trustees, named  fiduciaries, investment managers of the passively-managed accounts,  and asset custodians;  receives notice of proposed changes to the plan’s investment policy  statements from the plan; and may object to the dissolution of the consent decree.
Why GAO Did This Study

Multiemployer plans are collectively bargained pension agreements often between labor unions and two or more employers. CSPF is one of the nation's largest multiemployer defined benefit pension plans, covering about 385,000 participants. Since 1982, the plan has operated under a court-enforceable consent decree which, among other things, requires that the plan's assets be managed by independent parties. Within 7 years, CSPF estimates that the plan's financial condition will require severe benefit cuts. GAO was asked to review the events and factors that led to the plan's critical financial status and the oversight DOL provides under the consent decree and under other federal laws.
GAO reviewed (1) what is known about the factors that contributed to CSPF's critical financial condition, (2) DOL's role in the administration of the 1982 CSPF consent decree and what actions the agency has taken under that role, and (3) what actions, if any, DOL has taken to oversee CSPF, beyond those required under the consent decree. GAO reviewed the consent decree and its amendments, relevant federal laws and regulations, agency guidance on plan management, and DOL protocols for investigating plans; interviewed CSPF representatives, International Brotherhood of Teamsters officials and members, federal officials, and industry stakeholders; and reviewed correspondence between DOL and CSPF and documents related to DOL investigations.

What GAO Found

The Central States, Southeast and Southwest Areas Pension Fund (CSPF) was established in 1955 to provide pension benefits to trucking industry workers and is one of the largest multiemployer plans. According to its regulatory filings, CSPF had less than half the estimated funds needed to cover plan liabilities in 1982 at the time it entered into a court-enforceable consent decree that provides for oversight of certain plan activities. Since then, CSPF has made some progress toward achieving its targeted level of funding; however, CSPF has never been more than 75 percent funded and its funding level has weakened since 2002, as shown in the figure below.
Stakeholders GAO interviewed identified numerous factors that contributed to CSPF's financial condition. For example, stakeholders stated that changes within the trucking industry, as well as a decline in union membership, contributed to CSPF's inability to maintain a healthy contribution base. CSPF's active participants made up about 69 percent of all participants in 1982, but accounted for only 16 percent in 2016. The most dramatic change in active participants occurred in 2007 when the United Parcel Service, Inc. (UPS) withdrew from the plan. At that time, UPS accounted for about 30 percent of the plan's active participants (i.e. workers). In addition, the market declines of 2001 to 2002 and 2008 had a significant negative impact on the plan's long-term investment performance. Stakeholders noted that, while each individual factor contributed to CSPF's critical financial condition, the interrelated nature of the factors also had a cumulative effect on the plan's financial condition.
The 1982 consent decree between the U.S. Department of Labor (DOL) and CSPF came about as a result of an investigation of alleged breaches of fiduciary duty and mismanagement of plan assets, and is intended to prevent their reoccurrence. In addition to reiterating the requirement that the plan comply with the Employee Retirement Income Security Act of 1974 (ERISA)—the primary law governing the treatment of private-sector pensions in the United States—the consent decree further outlines requirements for the plan to help ensure fiduciary controls and plan management, including seeking court approvals for the appointment of new trustees and changes to the plan's investment policy. The consent decree also delineates roles for DOL and other stakeholders. For example, it allows DOL to object to or comment on certain proposed plan actions, but does not require the agency to do so. GAO's review of plan documents found that the agency provided oversight and technical assistance in the areas specifically identified for its involvement under the consent decree, such as vetting proposed trustees prior to the court's approval.
DOL is primarily responsible for enforcing the reporting, disclosure, and fiduciary provisions of ERISA for all tax-qualified pension plans, including CSPF. ERISA sets forth a “prudent man standard of care” in the execution of fiduciary duties that, according to DOL, focuses on the process for making proper fiduciary decisions. Plan fiduciaries are responsible for selecting and monitoring investment managers, but are generally not liable for the individual investment decisions of those managers. To enforce ERISA, DOL conducts examinations and investigations. Since the consent decree was established, DOL officials reported that the agency has completed two investigations of CSPF. The two investigations—completed in 1998 and 2004—were closed without adverse findings against the plan. Beyond the agencies' oversight role, DOL collaborated with CSPF and others on steps intended to improve the plan's financial position, including contributing to discussions on proposed legislation and working with CSPF on its application to reduce benefits under the Multiemployer Pension Reform Act of 2014. The application was not approved by the U.S. Department of the Treasury.

What GAO Recommends

GAO is not making recommendations in this report.