A bipartisan group of lawmakers is negotiating a deal to solve the multiemployer pension crisis while work continues on broader retirement security packages in Congress.
The Senate Finance Committee's subcommittee on Social Security, pensions, and family policy held a hearing Wednesday on the challenges facing Americans' retirement security. While talk mostly focused on legislation aimed at improving defined contribution plans, there were hopeful signs of a potential compromise to deal with the multiemployer pension crisis.
"We've been negotiating with our Democratic colleagues for more than a week to find a solution on the multiemployer pension (issue) and I'd still like to find a way to reach a deal," said Sen. Chuck Grassley, R-Iowa, finance committee chairman. "Both sides have very much been working diligently and very much in good faith, and I appreciate that and we plan to keep at this problem until we find a solution."
The Pension Benefit Guaranty Corp.'s multiemployer program had a deficit of $82.3 billion, as of Sept. 30, 2019, according to the agency's latest projections report released in September. The report projects a "very high likelihood" of the multiemployer program's insolvency by September 2026 and "near certainty" by September 2027.
The bipartisan 2018 Joint Select Committee on the Solvency of the Multiemployer Pension System failed to reach a consensus, but Mr. Grassley and other lawmakers have introduced legislation aimed at solving the crisis in recent years.
Ohio Sens. Rob Portman, a Republican, and Sherrod Brown, a Democrat, each spoke of the need to find a multiemployer solution quickly. "A pension system should be part of the work we're doing on COVID-19," Mr. Brown said. "There's no reason we shouldn't be able to do this as part of a year-end deal."
Added Mr. Portman: "It's time that we get it done and I think we've got a good compromise that is consistent with the plan that we all talked about in connection with the select committee that was formed. This is urgent for our businesses, it's urgent for retirees and it's urgent for our economy, so we cannot let the PBGC multiemployer program go underwater, which is what's going to happen if we don't solve the problem."
Michael P. Kreps, principal at Groom Law Group, said in testimony at the hearing that there's "simply no time left to lose as every day that ticks by the problem becomes more difficult and costly to fix."
The bulk of the hearing was spent discussing the merits of several retirement security bills introduced in Congress, including the Retirement Security and Savings Act of 2019, a major package from Mr. Portman and Sen. Ben Cardin, D-Md.
That bill features more than 50 provisions aimed at improving coverage for small business workers and part-time workers. It establishes a new automatic enrollment safe harbor for employers to meet non-discrimination requirements and allows employers to make matching contributions to retirement accounts for employees to use in paying off qualified student-loan debt.
Eric Stevenson, president of the retirement plans business at Nationwide Mutual Insurance Co., called attention in his testimony to a provision of the bill that would enable 403(b) plan sponsors to offer collective investment trusts to their participants. "CITs are a proven, cost-effective way to help people save and they're widely available in 401(k) plans, and I think we should make those (available) in 403(b) plans as well," Mr. Stevenson said.
Joshua Luskin, president of the National Association of Government Defined Contribution Administrators, testified that "DC plans that are able to invest in CITs can realize lower administrative costs, fees and greater flexibility."
When asked by Mr. Brown what Congress can do to reduce the number of missing participants and improve plan portability for workers who change jobs. Groom Law's Mr. Kreps said it would be helpful to encourage the use of automatic portability programs for 401(k) accounts upon employee termination and to pass a bipartisan bill that's been introduced in the House and Senate that would create a national online lost-and-found database for retirement accounts.
Last month, a bill similar in scope to the Portman-Cardin package was introduced in the House by Ways and Means Committee Chairman Richard Neal, D-Mass., and Kevin Brady, R-Texas, the committee's ranking member. And Mr. Grassley said Wednesday that he will introduce legislation "in the coming days" that "builds on the (Setting Every Community Up for Retirement Enhancement) Act and the important provisions of Portman-Cardin."
Looking ahead to 2021 and a new Congress, Mr. Portman sounded optimistic about the passage of more retirement security legislation. "This is an opportunity for bipartisan work… Regardless of who gets the majority in the Senate come January, this is an area where I think we have the potential to make some real progress because I think it has been, and will be, bipartisan," he said.
