The U.S. House of Representatives on Wednesday approved a multiemployer reform package by a vote of 264-169, with 29 Republicans in favor.
The divided House vote makes it likely that significant changes will be made when the Senate takes up its version, which also was introduced Wednesday.
Also known as the Butch Lewis Act, the bill sponsored by House Ways and Means Committee Chairman Richard E. Neal, D-Mass., would create the Pension Rehabilitation Administration and a related trust fund within the Treasury Department to make loans to multiemployer plans in critical and declining funded status.
The legislation would provide more funds to the Pension Benefit Guaranty Corp. to help struggling plans and possibly avert its own insolvency. According to its most recent report, the PBGC's long-running deficit improved slightly in fiscal year 2018, falling to a deficit of $53.9 billion from $65 billion in the previous fiscal year, helped by higher interest rates, which reduced the value of PBGC's benefit liabilities, and fewer new large claims.
The program is still projected to be insolvent by the end of fiscal year 2025 as it anticipates more and larger claims. Three of the largest troubled plans — Teamsters Central States, Southeast & Southwest Areas Pension Fund; the United Mine Workers of America 1974 Pension Plan; and the Bakery & Confectionery Union and Industry International Pension Fund — have a collective $45.4 billion in liabilities, including nearly $30 billion for current retirees.
Once the PBGC's multiemployer program becomes insolvent, it will only be able to pay a small fraction of guaranteed benefits for participants in all the failed multiemployer plans it covers.
Ways and Means Committee ranking member Kevin Brady, R-Texas, opposed the bill but said he is convinced that Congress can find a solution. He called the current system a Ponzi scheme, with trustees allowed to use gimmicks to hide underfunding. "We have to focus on accountability and companies need to be on the hook for every pension promise made to workers," Mr. Brady said.
Mr. Neal insisted that the measure has bipartisan support and rejected Republicans' description of it as a bailout. "For two years Congress has talked about it and not acted. It became a debating exercise," he said.
It is also "the only plan in town," Mr. Neal said. "There is an opportunity that once this moves to the Senate to at least have something to negotiate with."