WASHINGTON - Two employer groups are trying anything they can to either strip or change a provision in the pension simplification package they say would damage funding levels of multiemployer plans.
At issue is a provision that would cut vesting periods in half for multiemployer plans - to five years from 10. That would cause huge increases in underfunding, which the American Trucking Associations, Alexandria, Va. estimates at $20 billion in 46 multiemployer plans nationwide.
The unfunded liability of the $14.6 billion Teamsters, Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., would increase $2 billion - to $5.8 billion - if the proposed vesting standard is enacted, estimates Ken Simonson, ATA vice president and chief economist.
"For some of the trucking companies in some of these multiemployer plans, (this provision) would have a crippling effect," Mr. Simonson said.
But one union attorney who asked not to be named said the ATA's push is simply a way to get plans fully funded, making it easier for companies to pull out of the plans without facing any withdrawal liabilities.
"This is a back door attempt to get Congress involved in a labor dispute," the attorney said.
For years, he said, multiemployer plans have been in favor of the five-year vesting change, but have also pushed for an exemption to 415 benefit limits and an exemption to a partial termination rule. Neither provision is in pension simplification.
The ATA and the Associated General Contractors, Washington aren't banking on getting the provision cut from pension simplification because some Capitol Hill staffers told them it was too late. The simplification package has been locked in as a solid provision since 1992.
"It has had a long track record and it has been hard to get members of Congress" to focus on their provision, Mr. Simonson said.
The two groups' backup plan is found in a bill introduced by Sen. Jim Jeffords, R-Vt., that would prevent multiemployer plans from increasing pension benefits unless the plan is 95% funded. The bill, The Workers Pension Protection Act of 1996, would change the vesting standard to five years from 10.
"We're not against five-year vesting. The point is that you can't do five-year vesting without addressing whether funds are adequately funded," says Thom Stohler, director of congressional relations for the Associated General Contractors.
Mr. Jeffords' bill conforms to many of the provisions in the 1994 Retirement Protection Act, which changed rules for single employer plans. One added provision would prevent multiemployer plans from offering increased benefits if the increase would reduce the funding below 90%. Other provisions include changing multiemployer interest rate and mortality table assumptions to what single employer pension plans use, requiring plan trustees to give participants annual statements about their plan's funding status and reducing vesting requirement to five years from 10.
"In the last Congress, we took significant and necessary steps to reform the pension laws for retirement security for millions of American workers. Unfortunately, a large segment of the work force was left behind and is in need of similar protection," Mr. Jeffords said when he introduced his bill June 5.
"This legislation will ensure that the pension benefits, union employees have worked so hard for and are depending on, will be there when they are ready to retire."
