Rep. Phil Roe, R-Tenn., called for “broad, structural changes” in the multiemployer pension system at a hearing Wednesday of the House Education and the Workforce Subcommittee on Health, Employment, Labor and Pensions.
Mr. Roe is chairman of the subcommittee. Ranking member Rep. Rob Andrews, D-N.J., said there was “broad consensus” for multiemployer pension reform.
Many of the ideas for legislative change discussed at Wednesday's hearing are based on recommendations from the Retirement Security Review Commission. That panel, convened over the past two years by the National Coordinating Committee for Multiemployer Plans, Washington, brought together employers and labor unions to craft ideas for legislative changes for all plans and remediation measures for the most troubled plans.
One of the most controversial ideas presented by the commission on Wednesday calls for allowing distressed plans to reduce benefits for future and possibly current retirees. Noting “insolvency hurts everyone,” Teresa Ghilarducci, an economics professor with the New School for Social Research, New York, joined other witnesses in calling for such cuts when they would keep plans solvent. Benefit cuts are opposed by the $8.4 billion International Association of Machinists and Aerospace Workers National Pension Fund and the Pension Rights Center, Machinists' legislative director Hasan Solomon told Pensions & Investments.
When asked what would happen if Congress did not act, several panelists predicted many of the most troubled multiemployer plans, such as the $16.5 billion Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., and United Mine Workers of America plans, would collapse and turn to the Pension Benefit Guaranty Corp., whose multiemployer pension program faces insolvency.
“And you'll see a domino effect across these industries,” Randy DeFrehn, NCCMP executive director said at the hearing. While most multiemployer plans have been “slowly but surely” recovering, “a small, but significant minority of plans … are facing ultimate insolvency,” he said.
