The 7.5 percent assumed investment returns on plan assets was “based on flawed assumptions” and “too optimistic,” said Feinberg.

The proposal also failed to meet the law’s requirement that benefit reductions be equitable amongst participants.

A third requirement—that trustees provide communications to participants that are readily understandable to the average participant—was also not met by Central States’ application. What they did communicate was “technical and overly complex,” said Feinberg.

Central States proposed benefit cuts were met with extensive blowback from union members and consumer and retirement advocates across the country.

Treasury reviewed thousands of comment letters and participated in eight town hall meetings, said Feinberg, but ultimately the decision to deny the application was based on a “careful reading of the law,” and the fact that Central States’ proposal would not assure the plan’s future solvency.

Had the plan been approved, about 270,000 plan participants would have seen some portion of benefits cut beginning in July this year.

Central States’ presumed ROI—7.5 percent—did not “adequately take into account relevant current economic data,” Feinberg said in a letter to the plan’s trustees.

He cited a Horizon Survey of 29 investment professionals that put expected long-term returns to be 6.43 percent.

In its application, Central States trustees proposed reducing some Untied Parcel Service participants’ benefits more than other UPS participants, leading Treasury to conclude that the cuts were not equitable, as required under MPRA.

In one section of a notice to participants explaining the benefits cuts, trustees used a 98-word sentence with four critical terms that did not include definitions, one of the reasons Feinberg cited as evidence of trustees’ failure to provide readily understandable communications.

In a statement, Thomas Nyhan, executive director of the Central States Pension Fund, said the proposal and application “provided the only realistic solution to avoiding solvency.”

Nyhan said trustees are weighing their next move, as the plan is expected to run out of money in the next ten years, or less.

“Today’s decision means that, absent legislative action or an approved rescue plan, Central States participants could see their pension benefits reduced to virtually nothing,” added Nyhan.

He called on lawmakers to pass legislation to bail out the fund, and called out the International Brotherhood of Teamsters, AARP, and the Pension Rights Center—all of which were against the proposal—to “move beyond talk and take action” to secure the funding needed to make the plan solvent.