Congress Must Work to Stabilize Multiemployer Retirement Plans to Protect Beneficiaries & Taxpayers, House Panel Learns
WASHINGTON – Congress will need to work together to fix the nation’s multiemployer retirement pension system in order to ensure that the retirement benefits workers earned will be there when they need and expect them, a House retirement subcommittee learned today. An association of multiemployer pension plans represented by businesses and unions that operate these plans testified about their recent legislative proposals for Congress to consider.
“I think there is broad consensus that we want to protect our pensioners, so that their pensions are sound, that we want to help small businesses compete fairly in the marketplace so they can prosper, and we want to protect taxpayers, so that we can minimize risk to them,” said Rep. Rob Andrews (D-N.J.), said the ranking member of the Health, Employment, Labor and Pensions Subcommittee.
Currently, 10 million Americans in approximately 1,500 plans rely on a multiemployer pension plan as a component of their retirement security. However, while most pension plans are recovering from the recent downturn, a small number remain under stress as a result of the economy and industry-wide structural shifts.
“Generally speaking, the majority of plans have been slowly, but surely recovering from the back-to-back economic shocks of the past ten years, despite the continuing sluggish economic recovery, with more than 60 percent of plans having once again attained ‘green zone status,’” said Randy DeFrehn, the executive director of the National Coordinating Committee for Multiemployer Plans. “For the small, but significant minority of plans and participants whose plans are facing ultimate insolvency, these predictions only underscore the need for bold and decisive Congressional action sooner, rather than later.”
Multiemployer pension plans are backed by the federal government through the Pension Benefit Guaranty Corporation (PBGC) that is funded by insurance premiums paid by pension plans. If action is not taken, witnesses explained, a number of plans may become insolvent and turned over to the PBGC, which is already facing a funding deficit. The PBGC only insures benefits for retirees up to $12,870 a year.
“Congress should ensure that retiree protections are sufficiently protective. Insolvency hurts everyone, especially retirees who risk taking a large cut in current benefits to the PBGC maximum or, worse, obtaining nothing if the PBGC depletes its assets,” said Teresa Ghilarducci, a professor of economics at The New School for Social Research. “Cutting benefits for current workers are justified only when benefits will keep the plan solvent and maintain lifetime benefits and other protections are in place.”
Next Article