The House narrowly approved another coronavirus relief legislative package late Friday that includes major changes for multiemployer pension plans, but with far less bipartisan support than previous measures.
Senate Republicans are already criticizing it before the Senate reconvenes June 1, and the White House has pledged to veto the $3 trillion virus relief package. A statement Thursday from the Office of Management and Budget said it was more about "longstanding partisan and ideological wishlists than with enhancing the ability of our nation to deal with the public health and economic challenges we face."
OMB criticized one provision that would repeal a cap on state and local tax deductions included in 2017's tax reform, and another one undoing a Republican provision in the first relief measure, the bipartisan CARES Act, that allows companies to carry losses back to previous years, which had higher tax rates. The House bill also prohibits businesses from taking those losses if they make excessive stock buybacks and dividend payments or trigger limits on executive compensation deductions.
The House's Heroes Act legislation, which passed 208 to 199 — largely along party lines, includes some funding relief for both multiemployer and single employer retirement plans, in a section titled the Emergency Pension Plan Relief Act of 2020 that extends amortization periods for funding shortfalls.
Multiemployer pension plans get several other areas of relief in the proposal, which is also aimed at shoring up the Pension Benefit Guaranty Corp.'s multiemployer program projected to be insolvent within five years. It gives the PBGC authority and resources to partition more troubled multiemployer pension plans and provide financial assistance to keep them solvent for 30 years, with no benefit cuts. The legislation also doubles the PBGC guarantee for multiemployer plans, which currently is much smaller than the one for single-employer plans.
Multiemployer and union groups welcomed many of the Heroes Act changes but are divided on a provision allowing for new composite plans that combine defined benefit and defined contribution features. Based on legislation first introduced in 2018, the Give Retirement Options to Workers Act would allow for freezing benefit accruals in the original plan and sharing more investment risk with plan participants.
"The EPRRA is a great bill that shores up underfunded pension plans, saves the full benefits of workers and retirees and also puts the PBGC on sound footing," said Karen Friedman, executive vice president and policy director for the Pension Rights Center in Washington, in an emailed statement. Ms. Friedman said that having the GROW Act part in it "makes no sense to us."
"Where EPRRA saves the multiemployer system," Ms. Friedman said, "the GROW Act undermines the system. We very much hope that the House leadership comes to its senses and drops the GROW Act."