WASHINGTON, D.C. | March 5, 2013
This is the latest in a series of hearings examining the multiemployer pension system, and each time we have assembled a distinguished panel of witnesses to offer their unique experience and expertise on this very important topic. I am pleased today is no different.
I would also note that throughout our oversight of multiemployer pensions, the committee has maintained a spirit of bipartisan cooperation. We are addressing difficult issues with no simple answers. As we continue examining the strengths and weaknesses of the nation’s pension system and begin discussing possible reforms, I hope we do so with a sincere commitment to working together and advancing reforms that best serve the American people.
Since we last met, a number of headlines have announced key developments involving multiemployer pensions. In late January, the PBGC released three long overdue reports that together offer a very detailed examination of the system. The facts they provide, however, are deeply troubling. Plans have $757 billion in benefit liabilities and a staggering $391 billion in unfunded obligations.
The reports also reveal roughly one out of every four plans is in “red zone” critical status, experiencing immediate and significant funding problems. Only 39 percent of participants are active employees, which confirms a disturbing demographic trend we’ve discussed during previous hearings. Additionally, there is a 90 percent chance the PBGC’s multiemployer insurance program will be insolvent in less than twenty years.
The second round of news to attract our attention was the release of a report by the National Coordinating Committee on Multiemployer Plans. For over a year, members of the NCCMP’s Retirement Security Review Commission worked diligently to try and craft reforms that tackle the structural problems plaguing the system and garner the support of both business and labor leaders.
Their report, entitled Solutions, Not Bailouts, is further proof that there is no easy way to address the challenges facing the multiemployer pension system. The report also serves as an important reminder that common ground can be found when stakeholders work together in good faith and make tough choices. We will continue to carefully review their recommendations in the weeks ahead.
Finally, today we will be making some news of our own. In 2011, Chairman Kline asked the nonpartisan Government Accountability Office to examine the multiemployer pension system, including the effects of legal changes enacted by Congress in recent years. While its report is not yet final, a representative from GAO is with us today to discuss their preliminary findings. The study provides an independent analysis of the PBGC’s financial challenges and an overview of various policy proposals intended to prevent the future insolvencies of severely underfunded plans.
The GAO report also outlines the difficult choices plan trustees must confront as they try desperately to steer clear of insolvency. Too often the only options available to plans, such as steep increases in contributions employers pay or reducing workers’ future benefits, can’t arrest the steady decline of many plans.
Armed with the facts, we must begin charting a new and better course. Thousands of employers who participate in multiemployer pension plans are counting on us. Men and women searching for work and hoping these employers create new jobs are counting on us. And millions of workers and retirees who rely upon the multiemployer pension system for their future income security are counting on us.
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