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Democratic members of the Senate Finance Committee want Congress to take another look at a 2014 federal law that allows financially troubled multiemployer pension plans to cut participants' benefits after receiving regulatory permission, but the panel's Republican chairman is defending the law.
Under that law, multiemployer plans, to prevent insolvency, can slash benefits.
The driving forces behind the passage of the 2014 law were widespread predictions that the failure of massively underfunded plans would lead, in turn, to the collapse of the PBGC's insurance program.
But in a letter released Tuesday, 12 Finance Committee Democrats said the multiemployer pension system “still is in crisis” and that new congressional action is necessary.
Citing the PBGC's 2015 annual report, the Democrats' letter, sent to Committee Chairman Orrin Hatch, R-Utah, noted that the PBGC's multiemployer pension insurance program has a $52.3 billion deficit and, even with the changes mandated by the 2014 law, is projected to go broke in about a decade.
“The only way to truly address this crisis is to do so on a bipartisan basis,” the letter said. “We need to make sure that we preserve pension benefits that people earned and are counting on to maintain their standard of living in retirement, while ensuring the solvency of the PBGC.”
But Sen. Hatch, in a statement released Tuesday at the start of a Finance Committee hearing on the multiemployer pension problem, described the 2014 law as the best available legislative approach.
Critics of the law “have to recognize that when dealing with the problem, there were only three choices: bad, worse and worst of all. In 2014, a bipartisan majority in Congress and the president went with bad. No one is happy with that choice, I suspect, but it was the best option available to us at the time,” Sen. Hatch said.
And to those who back a taxpayer-funded bailout of the PBGC's multiemployer insurance program, Sen. Hatch said the likelihood of Congress taking such action is low.
“The idea of a PBGC bailout was proposed by unions, employers and multiemployer plans in 2010. Back then, the House, Senate and White House were all controlled by Democrats, and the proposal got absolutely no traction. I have a hard time seeing how such a proposal could move forward in the current environment,” Sen. Hatch said.
The Treasury Department reopened for a second time the comment period for the benefit reduction application by the Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Illinois.