The U.S. multiemployer defined benefit pension system needs fundamental restructuring but it should come from the private sector, not government, argues a new report issued Tuesday by the National Coordinating Committee for Multiemployer Plans, Washington.
The report is the culmination of a yearlong effort by labor and employer organizations, multiemployer plan officials and large employers to figure out how to reinvent the multiemployer system, “if such plans are to continue their mission for the foreseeable future,” according to the report.
No specific actions were detailed in the report. The proposals “represented the combined effort of over 40 organizations from disparate industries to solve the problems. They will protect participants and allow plans to attract new employers without relying on financial assistance from the government,” Josh Shapiro, NCCMP deputy executive director for research and education, said in an interview.
Mr. Shapiro stressed the private sector is in a better position than the federal government to come up with workable fixes for most plans and specific remediation measures for troubled plans. The group is also calling for plan design innovations to stem employer withdrawals and to attract new employers.
According to reports sent to Congress Jan. 29 by the Pension Benefit Guaranty Corp., multiemployer plans had a 48% aggregate funding ratio with 21% of roughly 1,500 plans facing significant and immediate funding problems. That is ominous for the PBGC multiemployer pension insurance program, which has a 35% probability of being insolvent by 2022, and a 91% chance of insolvency by 2032, according to the PBGC reports.
“Solutions not Bailouts: A Comprehensive Plan from Business and Labor to Safeguard Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth,” is available from the group's website.