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Lawmakers are fine-tuning legislation to authorize a new design for multiemployer pension plans that's intended to lure new members, while a recent government report saying the federal insurance program that partially guarantees plan participants' benefits could go broke in as soon as 10 years also is seen as triggering congressional interest.
That new design is based on recommendations of a panel of the Washington-based National Coordinating Committee for Multiemployer Plans, which represents many of the nation's 1,400 multiemployer plans.
The panel's proposal would ease a key feature of a 1980 law: the requirement that employers leaving underfunded multiemployer plans pay part of the plans' promised but unfunded benefits.
Some plans are so massively underfunded plans that the withdrawal liability tab could be millions of dollars.
Under the proposal, withdrawal liability still would apply to benefits already earned. But for future benefits, there would be no withdrawal liability, and plans falling below a 120% funding level could reduce participants' benefits and increase employer contributions.
With the threat of withdrawal liability, “It can be difficult to get new employers to join the plans, said Diane Gleave, a senior vice president and regional manager at Segal Consulting in New York. “This design is intended to address that issue.”
“We are hopeful that legislation will be introduced later this year,” said Randy DeFrehn, executive director of the coordinating committee.
Rep. John Kline, R-Minn., who chairs the House Education and the Workforce Committee and has a strong interest in the issue, is not “shy about the need for getting this done,” said Josh Shapiro, a senior actuarial adviser at Groom Law Group Chartered in Washington.
In addition, experts say a recent Pension Benefit Guaranty Corp. report saying that multiemployer plans could run out of money in the next decade could spur congressional action on new legislation, which would add to changes made in 2014.
Under that 2014 law, the Hempstead, New York-based Road Carriers Local 707 Pension Fund has become the fourth multiemployer plan seeking to reduce participants' benefits.
Still, the PBGC has enough money to pay benefits for failed multiemployer plans it has taken over for at least another decade.
“There is time for lawmakers to take a measured approach,” Mr. DeFrehn said.
The Pension Benefit Guaranty Corp. will restore two pension funds that the agency took over from holding company The Renco Group Inc., the agency announced Friday.