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Compliance May 8, 2020
Lawmakers Urge Multiemployer Pensions Fix Be Included in Future Stimulus Package
There were discussions to include proposals for multiemployer pensions in previously passed coronavirus relief bills, but efforts fell apart.
Reported by Rebecca Moore
Senators Sherrod Brown, D-Ohio, and Gary Peters, D-Michigan, wrote to House Speaker Nancy Pelosi, D-California, urging her to include robust relief for multiemployer pension plans in any future stimulus package.
Brown’s office notes that the multiemployer pension crisis threatens the retirement of more than 1 million workers and retirees nationwide and could put small businesses across the country in jeopardy. “Numerous pension plans, including the Central States Pension Plan, the United Mine Workers Pension Plan, the Bakers and Confectioners Pension Plan and more are at risk of failure. Several other plans have already had to cut benefits. If nothing is done to help the plans, they will fail and retirees will face massive cuts to the benefits they earned over decades of work,” a press release says.
“If the plans are allowed to fail, not only will they no longer be able to pay promised benefits, but taxpayers and small businesses would be at risk of having to pay billions because the PBGC [Pension Benefit Guaranty Corporation] would be on the hook for billions of dollars it cannot pay,” the announcement continues.
Brown’s office says the economic collapse of 2008 was one factor in causing the multiemployer plan crisis. The current economic downturn may put some plans at increased risk for failure.
Attempts have been made over the past two years to address the multiemployer pension crisis.
Early last year, House Ways and Means Committee Chairman Richard Neal, D-Massachusetts, introduced the Rehabilitation for Multiemployer Pensions Act. The bill would establish a Pension Rehabilitation Administration (PRA)—an entirely new agency within the Department of the Treasury authorized to issue bonds to finance loans to “critical and declining” status multiemployer pension plans, plans that have suspended benefits and some recently insolvent plans currently receiving financial assistance from the PBGC.
Democratic lawmakers also started coalescing around two bills, including one previously put forward by Independent Vermont Senator Bernie Sanders and Representative Marcy Kaptur, D-Ohio, called the “Keep Our Pension Promises Act.” In short, the stand-alone bill would reverse a provision passed in 2014 that, as Democrats put it, “could result in deep pension cuts for millions of retirees and workers in multiemployer pension plans.” The other bill, the “Butch Lewis Act,” would establish a legacy fund within the PBGC “to ensure that multiemployer pension plans can continue to provide pension benefits to every eligible American for decades to come.” It would be paid for by closing “two tax loopholes that allow the wealthiest Americans to avoid paying their fair share of taxes.”
In November, Finance Committee Chairman Chuck Grassley, R-Iowa, and Senate HELP [Health, Education, Labor and Pensions] Committee Chairman Lamar Alexander, R-Tennessee, published a white paper outlining a proposed plan to address the multiemployer pension funding crisis. To help the “sickest plans” recover their financial footing, the proposal creates a special “partition” option. According to the senators, partitioning permits employers to maintain a financially healthy multiemployer plan by carving out pension benefit liabilities owed to participants who have been “orphaned” by employers that have exited the plan without paying their full share of those liabilities.
There were discussions to include proposals for multiemployer pensions in previously passed coronavirus relief bills, but efforts fell apart. In their letter, Brown and Peters say they specifically ask Pelosi to “include a proposal based on a policy framework that has bipartisan support and protects both plan solvency and benefits earned by retirees” in any new legislation.