The Multiemployer Pension Reform Act (MPRA) allows multiemployer plans facing insolvency to apply for approval from the Treasury to cut accrued benefits of plan members to prolong plan solvency—a departure from the benefit protections of Employee Retirement Income Security Act. To assess the law's impact, this paper models Central States Teamsters – by far the largest – plan to have applied under the new law to reduce benefits. Using a stochastic model of future investment returns, the probability of insolvency within 10 years drops from 50% (without cuts) to 6% (with cuts). While benefit cuts increase the overall welfare of participants by extending the plan's life, the welfare of younger retirees (under age 75) worsens and welfare of workers improves.
