Multiemployer pension plan sponsors would have a new hybrid option combining defined benefit and defined contribution features under bipartisan legislation introduced late Tuesday in the House of Representatives.
Reps. Phil Roe, R-Tenn., and Donald Norcross, D-N.J., introduced H.R. 4997, the Give Retirement Options to Workers (GROW) Act, that would allow sponsors to create the composite plans. The idea is part of an effort in Congress to address struggling multiemployer plans, including proposals to create a federal loan program.
The legislation is based on a proposal developed with the National Coordinating Committee for Multiemployer Plans.
Participants in existing multiemployer pension funds could join the new plans as part of their usual collective bargaining process, which would also require them to contribute to legacy plans that would be closed to further accruals.
Fund assets would be professionally managed, and the composite component of plans would have to be 120% funded to protect against market volatility.
Employers would negotiate a fixed contribution amount and be responsible only for their share, as opposed to unfunded liabilities that many multiemployer plans face.
The bill's sponsors say it will enable multiemployer pension funds to maintain fiscal solvency while protecting participant benefits earned under a traditional multiemployer plan after they are shifted into the new composite plans.
Mr. Roe said in a statement that "the multiemployer pension system as currently structured is irreparably broken," and the composite plan idea should be part of other reforms. The composite plan idea has bipartisan backing in the House and is "widely supported by retirement security advocates," he said.
Mr. Norcross, a former multiemployer plan participant and negotiator, said in the same statement that "workers deserve a safe, secure retirement and, at the same time, employers deserve predictability and flexibility without excess liability."
NCCMP Executive Director Michael Scott said the legislation comes at a time when the stakes "could not be higher." He notes that the multiemployer pension system contributes $158 billion in federal taxes and more than $1 trillion to U.S. GDP, but faces uncertainty and instability.