One of the top items on Democrats’ agenda in the next Congress is saving multiemployer pension plans, an effort that will include trying to undo the last major reform: a bipartisan, union-backed 2014 law called as the Multiemployer Pension Reform Act.
The 2014 law was a concession to economic realities. It allowed pension plan trustees to reduce recipients’ payments, which was previously prohibited, so troubled plans could restructure and survive. Then-Rep. George Miller, D-Calif., a staunch union ally, coauthored it, and major unions such as the Service Employees International Union and the United Food and Commercial Workers backed it. It ultimately passed as part of that year’s omnibus spending bill.
The law was controversial, however, with other liberals and unions such as the Teamsters opposing the idea of any cuts. They are pushing for new legislation to bail out troubled plans with low-interest Treasury Department loans as well as separate legislation to repeal the 2014 reforms entirely.
Multiemployer pension plans are those in which several employers participate. Should any employer go bankrupt, the remaining employers in the plan are obligated to cover its contributions. An estimated 10 million workers and retirees are in about 1,400 plans.
“It is definitely not messaging,” said a House Democratic staffer who requested anonymity. They think they have a chance because the pension plans the legislation would address include blue-collar people from states Trump won such as Ohio. “The administration has to be acutely aware of the problem.”
The administration has put forward a different solution: adding a variable rate premium on unfunded benefits and an exit premium on companies that withdraw from the plans. It estimates that would add $16 billion to the Pension Benefit Guaranty Corporation's program over the next decade. That is still far short of what would be needed to cover the obligations but would buy time to get fuller solution, the administration has said.
Democratic staffers say that engagement is a good sign that they can at least get the issue on the front burner.
The urgency, Democrats say, is because the 2014 reform may start taking effect. “A million workers across the country … are on the verge of facing massive cuts if Congress doesn’t act,” said Sen. Sherrod Brown, D-Ohio, chief sponsor of the bailout legislation, called the Butch Lewis Act.
That the cuts may happen because of legislation that Democrats and unions backed is something they don’t like to address, never mentioning how the 2014 reform happened. Spokesmen for the Teamsters and lawmakers could not be reached, most saying they were gone for the holidays.
The plans are deeply troubled due to years of premiums paid into the plans being too low. One of the worst off is the Teamsters’ Central States plan, which is listed by the Labor Department as being in “critical and declining status” because it is less than 65 percent funded. Major employers such as UPS have pulled out of it, and the Krogers grocery store chain has begun to pull out as well.
The federal government won’t be able to help much. The PBGC's multiemployer plan currently has liabilities of $67.3 billion but assets of just $2.3 billion to cover them.
Democrats hope to remedy that with the Butch Lewis Act, legislation that would create a new Treasury Department agency called the Pension Rehabilitation Administration that would provide 30-year loans at low interest rates to shore up failing plans. The legislation has 13 Senate co-sponsors and the House version 106, all Democrats.
At a Teamsters-hosted rally an the Capitol in mid-December, Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., endorsed the legislation, promising that they would push to include it in the omnibus spending bill, which Congress will take up in January.
In addition to the Butch Lewis Act, liberals are pushing the Keep Our Pension Promises Act to roll back the 2014 reforms. It has nine Senate co-sponsors and 13 House co-sponsors, all Democrats. The Democratic leadership has yet to sign up.