Regulations, Taft-Hartley Funds—and MagnaCare

Regulations, Taft-Hartley Funds—and MagnaCare

As a TPA with 30 years’ experience, we’re committed to the highest standard of regulatory compliance and due diligence, which means we take rigorous care to be fully up to date on the complicated and ever-changing world of Taft-Hartley Fund administration.

The history of Taft-Hartley

On June 23, 1947, the U.S. House of Representatives and Senate overrode President Harry Truman’s veto and enacted the Labor Relations Management Act, more commonly known as the Taft-Hartley Act, into law. Named for its two sponsors—Sen. Robert A. Taft, R-Ohio, and Rep. Fred A. Hartley Jr., R-N.J.—the Act, in tandem with the Wagner Act of 1935, created what we know today as Taft-Hartley Plans or Labor Funds: collectively bargained labor union benefit plans maintained by more than one employer. Taft-Hartley was not a union-friendly piece of legislation, but it did state that such collectively bargained plans must be held in trust, not to be used either by employer or union for anything other than employee benefits.

These Labor Funds are run by a Board made up equally of union and management trustees, who have a fiduciary obligation to manage the trust responsibly according to the rule of the trust and federal regulations. To do so, they generally hire third party administrators like MagnaCare to assist in various areas of trust administration.

It might have been a relatively simple task had it not been for the various federal regulations layered on to Trust Administration over the years:

To name just a few:

In 1974, the Employer Retirement Income Security Act (ERISA) was passed to protect the interests of employees in private benefit funds, including Taft-Hartley Funds; it established standards of conduct by fiduciaries as well as penalties if they fail to uphold such standards.

In 1980, the Multiemployer Pension Plan Amendment Act (MPPAA) forced employers who paid into multi-employee plans to keep contributing to these plans; among other provisions, it made major changes in the way the federal government ensured and regulated pension plans covering employees of more than one employer.

2006 saw the passage of the Pension Protection Act (PPA), which changed pension funding rules in that Retirement Funds were required to project future funding shortfalls and take steps to cover future funding requirements, which created more oversight and more rules.

A third party administrator like MagnaCare has the experience to wade through this tangle of pension rules and regulations in order to provide the best service possible. We need to keep up with eligibility and pension benefit calculations, contract management, work hours, COBRA eligibility and much more. Some Retirement Funds are portable, for example, meaning participants can switch employment from one contributing employer to another and still retain benefits. Often Labor Funds allow union members in the same trade in one part of the country to transfer their credits to another plan in a different part of the country. And when employers go bankrupt (this was a serious problem during the 2008 recession), we need to understand the ramifications.

Working with Labor Funds behind the scenes

A lot of this work we do managing compliance—most all of it, really—goes on behind the scenes, but we are proud of the high level of expertise and commitment our administrative employees display. They’re really at the center of our service to Trust Administration, and they show up and get it right, day after day.