U.S. House committee approval of a multiemployer pension reform package seems likely to be only the first step in a process that will see many changes before a final plan emerges.
The House Ways and Means Committee approved a multiemployer pension reform package along party lines July 10 that centers on a federal loan program for struggling plans.
The bill's main sponsor, House Ways and Means Committee Chairman Richard E. Neal, D-Mass., predicted the full House would approve H.R. 397, also known as the Butch Lewis Act, by the end of the month. But Republicans on the committee disagreed, warning that it needed more work.
Mr. Neal has pledged to have a full House vote by the end of July. The legislation 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 that are approved by Treasury to reduce benefits, or to plans that are already insolvent but not terminated. Loan applicants would have to prove that the loan will enable them to avoid insolvency and they will be reasonably able to pay benefits and repay the principal in 30 years.
Treasury would issue bonds to finance the loan program and oversee the portfolio, which would require annuity contracts and fixed-income portfolios matched to the current benefit obligations. Plan sponsors would also apply for financial assistance from the Pension Benefit Guaranty Corp., which would gain more funding to provide it. The Congressional Budget Office projects the loan program would cost $64 billion over 10 years.