On Nov. 16, Rep. Marcia Fudge (D-OH), a member of the House Education and the Workforce Committee, joined with House and Senate Democrats to introduce the Rehabilitation for Multiemployer Pensions Act to help address the pension crisis affecting retirees nationwide. Led by House Ways and Means Committee Ranking Member Rep. Richard Neal (D-MA), the bill creates a Pension Rehabilitation Trust Fund within the Department of Treasury to make loans to multiemployer defined benefit plans. Sen. Sherrod Brown (D-OH) introduced a companion bill in the Senate that same day.
Beyond this legislation, there are four other proposals being considered to fix the multiemployer pension system. More than 100 pension funds covering workers in unionized industries face insolvency in the coming years.
- UPS Loan Proposal – UPS has a proposal that would provide up to three successive low interest long-term federal government loans to troubled pension plans to cover their cash flow shortage for 5 years each. Plan participants would see benefit cuts of up to 20 percent across the board. Plans would be obligated to begin interest-only repayments after 5 years. Loan repayments would be ensured through the creation of a risk reserve pool funded by employers, participants and unions. UPS could be responsible for up to $4 billion in plan contributions if the 400,000-member Central States, Southeast and Southwest Areas Pension Fund becomes insolvent. That fund is projected to be insolvent by late 2024.
- New Design from NCCMP – The National Coordinating Committee on Multiemployer Plans, a group made up of employers and unions, has circulated a proposal that would have the U.S. Treasury provide long-term, low-interest loans to plans that couldn’t clear the Multiemployer Pension Reform Act’s (MPRA) hurdles and are at substantial risk of insolvency. The NCCMP lobbied for passage of the MPRA. In general, the loan program would lend funds to qualifying “critical and declining” status plans at 1 percent interest for 30 years. The loans would be interest only for the first 15 years, and then require a level payment of principal and interest for the remaining 15 years. To be eligible for a loan, plans would need to show they can achieve solvency and repay their loans. The proposal would also require the loan account to be returned to the government in the event of insolvency or a mass withdrawal of employers.
- Funding from Credit Union Profits – The proposal from the American Families for Pension Security, based in Kingston, NY, would also have the U.S. Treasury issue low interest loans to plans in critical and declining status. The group wants to create a federally chartered special-purpose credit union for the more than 10 million members of multiemployer plans and their families. The credit union would use its profits from loans and credit card operations to build a reserve pool to help plans repay and secure the loans.
- KOPPA Bill (Not Advancing) – There’s one piece of legislation that’s been lingering for quite some time, and it does not include the loan proposals being tossed around by others. Sen. Bernie Sanders (I-VT) (S. 1076) and Rep. Marcy Kaptur (D-OH) (H.R. 2412) have a bill known as the Keep Our Pensions Promises Act (KOPPA). KOPPA would repeal provisions of the MPRA that allow for the reduction of retiree benefits and create a legacy fund for troubled plans and the PBGC. The legacy fund would be offset by modifying two types of tax shelters–one for investors in art works and real estate and the other for very large estates.