A trio of liberal senators introduced legislation Tuesday to undo a bipartisan reform Congress passed in 2014 to help ensure that multi-employer pensions remain solvent. The senators argued that the reforms went too far and endangered the pensions themselves.
Sens. Bernie Sanders, I-Vt., Tammy Baldwin, D-Wis., and Al Franken, D-Minn., introduced the Keep Our Pension Promises Act, which would roll back a provision in the 2014 omnibus spending bill that allowed multi-employer pension plan administrators to trim the benefits promised to retirees if the cuts were necessary to prevent the entire program from going bankrupt, an action that previously had been illegal under the Employee Retirement Income Security Act. The senators' bill would make it illegal once more.
The type of cuts allowed under the plan have happened once since the legislation passed. In that case, it had the union members' approval, but the lawmakers said even the prospect of such cuts was too much.
"Retirees all over this country are waking up to the reality that the pension benefits they are receiving today may soon be cut by 20, 30, or even 65 percent," Sanders said. "Imagine that. Imagine working your whole life and sacrificing to ensure that your family has a secure retirement and one day you wake up and find out there are plans to cut your retirement."
Multi-employer plans are defined benefit pension funds that multiple businesses pool their resources into. The plans are jointly managed by business and labor groups. Should a business fail, the remaining ones are obligated to pay benefits to that company's retirees. An estimated 150 plans are in trouble due to the recession, company bankruptcies and ballooning payments as retirees live longer. Some companies are fleeing them. In 2006, the United Parcel Service paid $6.1 billion to pull out of the Teamsters' troubled Central States plan.
The 2014 reform plan allows trustees of severely underfunded plans to make cuts provided that both the Treasury Department and the plan participants approve them. Participants over 80 years old would face no cuts, and those over 75 would get partial protection. That was intended to give plan administrators wiggle room to adjust the payments if current obligations could not be met. The legislation was sponsored by former Rep. George Miller, D-Calif., a staunch liberal and union ally, and passed with the support of the North America's Building Trades Unions, the United Food and Commercial Workers Union and the Service Employees International Union.
"Right now, if we do nothing, those retirees have a very high likelihood of losing all of their benefits or going to the [Pension Benefit Guaranty Corporation] and getting the maximum benefit of $1,200 a month," Miller warned at the time.
The changes covered 1,400 plans and potentially 10 million workers. They were highly controversial, and even the supporters didn't bother to tout the changes. Only one such pension adjustment, a triming of the benefits of an Iron Workers' local, has been approved by the Treasury Department. Sanders proposed bailing out any failed pension programs through higher taxes on the wealthy.
"If we can bail out the people who caused the [2008 financial] crisis, we can damn well protect the workers who were impacted by that," Sanders said.