Although a late-2018 deadline passed without a formal proposal, members of the U.S. Senate Joint Select Committee on the Solvency of Multiemployer Pension Plans vowed to continue pursuing a solution to the funding crisis engulfing organized labor retirement systems. In a joint statement, co-chairs Senator Sherrod Brown (D-Ohio) and his retiring colleague, Senator Orrin Hatch (R-Utah), noted:
“The problems facing our multiemployer pension system are multifaceted and over the years have proven to be incredibly difficult to address. Despite these challenges and a highly-charged political environment, we have made meaningful progress toward a bipartisan proposal to address the shortcomings in the system to improve retirement security for workers and retirees while also providing certainty for small businesses that participate in multiemployer plans. We understand that the longer that these problems persist, the more burdensome and expensive for taxpayers they become to address, and we are committed to working toward a final agreement as quickly as possible. We believe a bipartisan solution is attainable, and will continue working to reach that solution.”
Concurrent with Senate Joint Select Committee policy review and proposal formulation, U.S. Representatives Phil Roe, M.D. (R-TN) and Donald Norcross (D-NJ) had advanced a bipartisan effort, Give Retirement Options to Workers (GROW) Act, to modernize, strengthen and safeguard the multiemployer pension plan system for present and future retirees. A new type of retirement option at the heart of the Grow Act combines key defined benefit and defined contribution plan features: Workers would still receive lifetime income, while benefits they have earned under a traditional multiemployer plan are protected even after funds are shifted into a “composite” plan.
The legislation was written to eliminate the uncertainty and volatility employers face in the multiemployer pension system; limit their risk; and, authorize them to negotiate a fixed contribution rate. Sponsors also cite how the GROW Act positioned trustees to maintain pension plan solvency; offered a fiscally responsible way forward; and, should be an integral part of larger multiemployer pension system reforms.
“For decades, families have relied on multiemployer pension plans for retirement, but the system as currently structured is irreparably broken,” Congressman Roe affirmed. “The structure makes it more difficult for employees and employers to modernize their systems to provide the retirement security necessary for hardworking Americans. This plan will create a ‘best of both worlds’ scenario for employers and employees, and I look forward to working to ensure composite plans are a key reform adopted to ensure the multiemployer pension system is around for future retirees.”
“Millions of workers deserve a safe, secure retirement and, at the same time, employers deserve predictability and flexibility without excess liability. By focusing on the partnership between employees and employers, our bipartisan solution combines key features of defined benefit and defined contribution plans and is a win-win-win for employees, employers and our economy as a whole,” added Representative Norcross, an electrician by trade and 37-year multiemployer pension plan participant. “The GROW Act offers another tool for workers to grow their retirement savings and employers their businesses.”
The Roe-Norcross bill followed the Kline-Miller Multiemployer Pension Reform Act of 2014, which established a new process to propose a temporary or permanent reduction of pension benefits if a plan is projected to run out of money before paying all promised benefits. Kline-Miller requires the Treasury Department, in consultation with the Pension Benefit Guaranty Corporation and Department of Labor, to review a multiemployer pension plan’s application to reduce benefits and determine whether it meets the requirements set by Congress.