WASHINGTON, D.C. | September 22, 2016
We are here to discuss an issue that is vitally important to Americans from all walks of life: retirement security. This is a leading priority for millions of hardworking men and women, and that is why it’s a leading priority for Republicans and Democrats alike.
Strengthening retirement security has always been a difficult challenge with no easy answers. It’s one that demands thoughtful dialogue, bipartisan cooperation, and meaningful reforms. That’s exactly what our committee has been engaged in for several years now.
Since 2012, the committee has focused on examining and advancing bipartisan reforms to the multiemployer pension system. Over 10 million Americans rely on multiemployer pension plans. Unfortunately, many plans are severely underfunded due to an aging population, a weak economy, and fewer participating employers. To make matters worse, the federal agency insuring those plans—the Pension Benefit Guaranty Corporation or PBGC—is also headed for insolvency. As a result, workers, retirees, businesses, and taxpayers are at risk.
Fortunately, Congress has already taken action to help address this crisis. With the support of employers and labor leaders, Congress passed and President Obama signed into law important reforms to improve PBGC’s long-term stability, provide trustees with the tools they need to rescue failing plans, and prevent retirees from losing everything. These reforms represent significant progress, but there’s more work to be done.
Our focus now turns toward modernizing the multiemployer pension system for today’s workers and tomorrow’s retirees. A lot has changed since multiemployer pensions were developed decades ago. As union leaders, employers, and retiree and taxpayer advocates have expressed for years—it’s long past time to bring the system into the 21st century.
So, what does a modern multiemployer pension system look like? I hope we can dive deeper into this important question today. Before we begin, I’d like to explain a few guiding principles.
First and foremost, our goal is to strengthen retirement security. America’s workers deserve better than retirement plans based on empty promises and designed for yesterday’s workforce. In the 21st century, workers should have more retirement plan options that meet their needs.
While we take steps to modernize the system for the future, we must also protect workers and retirees in traditional multiemployer pension plans. We will continue to do everything possible to ensure those who have spent their lifetimes working hard and providing for their families can spend their retirement years with security and peace of mind. That means employers—even those who transition to modern retirement plans—should be required to sufficiently fund existing multiemployer pension commitments.
Second, a modern multiemployer pension system will improve the competitiveness of America’s businesses. In the 21st century, employers shouldn’t have to choose between growing their businesses or offering their employees secure and stable benefits. More flexibility through alternative plan options will empower employers to expand their businesses and create good-paying jobs—all while contributing toward their employees’ retirement.
Finally, we need to deliver greater protection for taxpayers. Unlike traditional defined benefit plans, these new multiemployer pension plans should not be covered by the PBGC. The last thing we need to do is to add more financial strain on an agency projected to go bankrupt in less than 10 years. And the last thing taxpayers need is to foot the bill for a multi-billion dollar bailout.
These are the overarching principles behind the discussion draft Chairman Kline recently released. His proposal would provide workers and employers a new retirement plan option known as “composite plans,” which combine the flexibility of 401(k)-style defined contribution plans with the lifetime income provided by defined benefit pension plans.
The draft proposal reflects input from employers, labor leaders, and retiree and taxpayer advocates. Still, we need more feedback. As its title suggests, this is a draft meant to spur a conversation. So, we want to hear from all of you and the broader public. How can we make this proposal best serve the interests of workers and employers?
We also welcome your views and ideas on reforms to improve PBGC’s fiscal health. Although we took steps to address PBGC’s shortfalls in 2014, more work is desperately needed, including further premium increases. The stakes couldn’t be higher: people’s retirement benefits—their livelihoods, their futures—are in jeopardy, and kicking the can down the road will only make the problem worse and unfairly threaten taxpayers with a bill they can’t afford.
We don’t always agree on everything. But I appreciate the bipartisan work this committee has done over the years to strengthen retirement security and tackle the challenges facing the multiemployer pension system. I hope we can continue what we started by advancing further reforms and modernizing the system for today’s workers and future generations.