WASHINGTON, D.C. | September 22, 2016
The Subcommittee on Health, Employment, Labor, and Pensions, chaired by Rep. Phil Roe (R-TN), today held a hearing
to receive public feedback on a discussion draft
to modernize multiemployer pensions. Released by Rep. John Kline (R-MN), chairman of the House Committee on Education and the Workforce, the draft proposal would authorize "composite" multiemployer plans, an innovative retirement plan option for workers and employers. The proposal represents the next step in the committee’s ongoing efforts to strengthen retirement security and improve the multiemployer pension system.
"Our focus now turns toward modernizing the multiemployer pension system for today’s workers and tomorrow’s retirees,” Chairman Roe said
. “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."
Witnesses testified on the need to provide workers new retirement options that would combine the flexibility of a 401(k)-style defined contribution plan with the lifetime income of a defined benefit plan.
“[T]he composite plan provides the best of both worlds. If enacted, the structure and safeguards will provide greater long-term retirement security by creating a path for contributing employers to remain in and new employers to enter the multiemployer system without presenting existential risks, while providing the greatest possible benefit for covered participants,” testified Randy DeFrehn
, executive director of the National Coordinating Committee for Multiemployer Plans (NCCMP).
, the principal of a structural steel company, added, “Legislation that empowers a plan’s trustees to utilize all approaches to develop and implement their best solution are needed. Attracting employers and participants into existing and new multiemployer plans are critical to providing the resources and strength needed for the plan’s long-term success.”
The draft proposal reflects input from both employers and labor leaders, including provisions to ensure traditional defined benefit plans are adequately funded. As Rep. Roe said, “While we take steps to modernize the system for the future, we must also protect workers and retirees in traditional multiemployer pension plans.”
, executive vice president of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry, agreed, saying, “The United Association also applauds the provisions of the discussion draft that supports the funding of the ‘legacy’ defined benefit plans. We believe this is an important provision that will preserve some defined benefit plans that might otherwise have failed due to an eroding contribution base."
DeFrehn explained the proposal’s strict funding requirements
for traditional plans, saying it “strengthens the funding of the legacy plans by requiring that contributions to fund future accruals be subject to a higher funding standard than are required for the current defined benefit plans.”
The hearing also focused on the need to enact additional reforms to shore up the fiscal health of the Pension Benefit Guaranty Corporation (PBGC) and protect taxpayers from a multi-billion dollar bailout. “Although we took steps to address PBGC’s shortfalls in 2014, more work is desperately needed, including further premium increases … [K]icking the can down the road will only make the problem worse and unfairly threaten taxpayers with a bill they can’t afford,” Rep. Roe said.
“The PBGC is projected to run out of funds to pay almost all insured multiemployer benefits after 8 years and it currently faces a shortfall of $34 billion from 2017-2036. Congress must take steps to ensure the financial viability of the PBGC and protect the ten million workers and retirees who have earned a guaranteed pension,” warned David Certner
, legislative counsel and director of legislative policy for government affairs at the AARP.
The committee will continue to solicit feedback from the broader public while working toward a final legislative proposal to bring the multiemployer pension system into the 21st century. As Rep. Roe said in closing, this proposal “is a draft meant to spur a conversation … I hope we can continue what we started by advancing further reforms and modernizing the system for today’s workers and future generations.”
To learn more, click here
To read the discussion draft, click here
For answers to some basic questions, click here