WASHINGTON, D.C. | June 12, 2013 -
As the title of the hearing suggests, today we will begin to review possible reforms to the nation’s multiemployer pension system. In 2014 provisions in the Pension Protection Act affecting multiemployer pensions are set to expire. For more than a year the committee has looked closely at the challenges facing this pension system, which is relied upon by more than 10 million individuals.
Academics, employers, trustees, government officials, and union representatives have helped us identify the strengths and weaknesses in current federal policies. We have learned an aging workforce, fewer contributing employers, and a persistently weak economy are significant challenges plaguing the system. We have also learned that if these pensions are not placed on more sound financial footing, workers, retirees, and taxpayers nationwide will be harmed. Two graphics illustrate this point.
The first graphic shows the deficit the Pension Benefit Guaranty Corporation expects its multiemployer insurance program will accumulate in less than 10 years – a deficit that is projected to climb from $5.2 billion to more than $26 billion. I don’t believe anyone can look at this chart and deny a serious problem exists. While PBGC is not funded by the U.S. Treasury, insolvency of this program would raise tremendous public pressure for a taxpayer bailout of the agency. We cannot allow this to happen.
The second graphic illustrates the stakes in this debate. Nearly five million individuals participate in a multiemployer pension plan that, because of its funding condition, is in either yellow, orange, or red zone status. This means nearly half of all individuals in the multiemployer pension system are in a plan without a clean financial bill of health. The insecurity this creates for workers, retirees, and families and the risk posed to the entire system cannot be ignored.
Broad, structural changes are needed to address this crisis, which leads us to today’s hearing and the focus of our future efforts. Congress and the administration have a responsibility to enact reforms that will benefit workers and retirees, while protecting American taxpayers. Our witnesses today will help us begin that process by providing an overview of proposed reforms.
We will also have an opportunity to discuss ideas recently released by the Retirement Security Review Commission of the National Coordinating Committee for Multiemployer Plans. We are fortunate to have the executive director of NCCMP with us today to outline his organization’s reform plan. I will leave the details to Mr. DeFrehn, however, I’d like to offer two observations about NCCMP’s proposal.
First, it is abundantly clear that solving this problem will require tough choices and sacrifice. Second, NCCMP has demonstrated that common ground can be found when all sides work together in good faith and on behalf of the greater good. Congress has a window of opportunity to improve the multiemployer pension system. I know there will be differences, but I hope in the weeks and months ahead we can mirror the same spirit of cooperation demonstrated by this organization. I look forward to today’s discussion and the vital work that lies ahead.
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