Ten million hard-working Americans participate in multiemployer plans. Approximately, 10% or one million of these plan holders belong to troubled plans that will not be able to pay the promised benefits. There are 130 beleaguered plans projected to run out of money or become insolvent over the next two decades. The coronavirus pandemic has accelerated this problem and threatens to push that number even higher.
It is essential to understand that pension contributions are part of the collective bargaining process. The union negotiates this benefit on behalf of the union members. Often, the pension contribution is given in place of a pay increase. These plans are critical to many union members as they create their retirement plans. Despite having paid into these plans for decades, workers could see their benefits drastically cut or lose them entirely if nothing is done. Meanwhile, pension reform has languished in Congress since 2017.
One pension reform proposal on the table is the Butch Lewis Act. It establishes the Pension Rehabilitation Administration under the Department of the Treasury and provides low interest loans to critical and declining plans. Butch Lewis was a decorated Army Ranger who served in the Vietnam War and later became a Teamster truck driver. He rose through union ranks and became president of Teamsters Local 100 where he spent his career fighting against massive cuts to the Central States Pension Fund until his death in 2016.
In 2019, the Butch Lewis Act passed the Democratically-controlled House of Representatives with a bipartisan vote of 264-169. All 235 House Democrats voted in favor along with 29 Republicans. The bill was sent to the Senate where it promptly died in committee because no Republican senator would vote for it.
In this audio clip from Pension Reform and the New Congress only on The World of Multiemployer Benefit Funds Podcast, Traci asks Jack Marco if the Butch Lewis Act is enough for pension reform:
Is the Butch Lewis Act Enough?
Besides the Butch Lewis Act, a second proposal, a Republican-backed plan, has emerged as another possible contender for pension reform. This proposal would create a new premium structure and allow declining plans to “partition” their liabilities to the Penson Benefit Guaranty Corporation (PBGC). The PBGC is a federally chartered corporation designed as an insurance program to protect and administer failing plans.
This idea of partitioning troubled plans is not new. The PBGC currently has this authority, but this legislation would expand the PBGC’s existing authority. Under the Republican-backed plan, the new premium structure would be shared by employers, active workers, and retirees. On November 20, 2019, Senate Republicans drew up a white paper outlining details of their partitioning plan called Multiemployer Pension Recapitalization and Reform Plan. Click HERE to go to the government website for the Senate if you would like to read the white paper.
As of January 21, 2021, House Democrats have introduced EPPRA, the Emergency Pension Plan Relief Act of 2021. According to Pensions & Investments, EPPRA does not include the loan program of the Butch Lewis Act, but it allows for the partitioning of these troubled plans, raises the PGBC premium rate, and calls for direct cash payments through the PBGC.
I appreciate that both parties have ideas to help these workers, but the time for ideas is over. It’s time both parties put aside their differences and work together for the common good of pension reform and the American worker.
I hope that you’ll join me on the podcast for Pension Reform and the New Congress with Jack Marco, the retired chairman of Marco Consulting, as we start the conversation on pension reform.
About the World of Multiemployer Benefit Funds Podcast
Listen to the full podcast with Jack Marco on Pension Reform and the New Congress, click HERE
Full podcast episodes of The World of Multiemployer Benefit Funds with union and client advocate, Traci Dority-Shanklin, are available on Apple Podcasts, or check out our full library on our website.
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