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International Brotherhood of Teamsters, Washington, endorsed legislation introduced Thursday that would repeal the Multiemployer Pension Reform Act of 2014.
The Teamsters union represents 1.4 million members. The International Association of Machinists and Aerospace Workers also endorsed the bill Thursday.
Introduced in the Senate by Sen. Bernie Sanders, Ind.-Vt., and in the House by Rep. Marcy Kaptur, D-Ohio, the legislation would undo provisions that allow severely distressed plans to reduce benefits for current and future retirees, after trustees have exhausted all other measures and the plans are likely to be insolvent within 15 or 20 years.
The legislation would also create a legacy fund at the Pension Benefit Guaranty Corp. to cover the benefits of workers whose companies stop paying benefits. Funding would come from closing loopholes on taxes paid by the highest income earners, including the estate tax and deductions for sales of expensive art.
The new fund would help shore up as many as 200 multiemployer plans covering an estimated 1.5 million workers, Mr. Sanders estimated. “If we do not repeal this disastrous law, retirees all over this country could see their pensions cut by 30% or more. Instead of asking retirees to take a massive cut in their pension benefits, we can make these plans solvent by closing egregious loopholes that allow the wealthiest Americans in this country to avoid paying their fair share of taxes,” Mr. Sanders said in a statement.
The legislation is also supported by AARP and the Pension Rights Center, who complain that the new law “undoes 40 years of pension protections,” according to Karen Friedman, executive vice president and policy director for the Pension Rights Center.
The 2014 law gives officials at the Treasury Department authority to review applications from plans seeking to reduce benefits, in consultation with the PBGC and Labor Department. Plan participants can vote on proposed benefit reductions, but government officials can override those votes if the plan poses too large a financial threat to the PBGC, where officials project that 10% of participants are in plans that could run out of money at some point.
On Wednesday, Treasury officials released interim regulations for implementing the new law, but they said applications will not be approved until the regulations are finalized after a public comment period.
Hazel Bradford writes for Pensions & Investments, a sister publication of Business Insurance.
More than half of multiemployer plan participants will have their benefits reduced when their plans become insolvent and rely on government guarantees in the near future, said a study released Wednesday by the Pension Benefit Guaranty Corp.