Rep. Richard Neal, a Massachusetts Democrat, has reintroduced a bill intended to help save struggling multiemployer pension plans.
The Rehabilitation for Multiemployer Pensions Act seeks to establish a new agency within the Department of the Treasury that would be authorized to issue bonds to finance loans to “critical and declining” status multiemployer pension plans.
According to the Pension Benefit Guaranty Corp. (PBGC), projections for its multiemployer program “show a very high likelihood of insolvency” during fiscal year 2025. Additionally, approximately 130 of the multiemployer plans that PBGC insures have declared that they will be unable to raise enough contributions to avoid insolvency within the next 20 years.
“We all know retirees with failing multiemployer pension plans who now find themselves in a devastating predicament,” said Neal in a release. “In fact, there are 1.5 million Americans who are in plans that are quickly running out of money … there’s no time to waste in addressing this crisis.”
The bill proposes to establish the Pension Rehabilitation Administration (PRA), which would be funded from within the Treasury Department’s appropriated budget. The PRA would be authorized to issue bonds to finance loans to critical and declining status multiemployer pension plans, plans that have suspended benefits, as well as some recently insolvent plans receiving financial assistance from the PBGC.
The bond proceeds would be kept in a separate Treasury fund known as the Pension Rehabilitation Trust Fund (PRTF). The PRA would be authorized to make loans from the PRTF to struggling multiemployer defined benefit plans, and the amount of the loan would equal what the plan needs to fund its obligations for the benefits of participants and beneficiaries in pay status at the time the loan is made.
The terms would require any plan receiving loans to make interest payments for 29 years, with final interest and principal repayment due in the 30th year.
The bill also calls for a presidentially appointed director who would have a term of five years, and who would have the power to appoint deputy directors, officers, and employees.
“This is not a bailout,” insists Neal. “These plans would be required by law to pay back the loans they receive from the PRA—the federal government is simply backstopping the risk.”
Neal added that the bill does not allow for any cuts to the benefits workers and retirees earned while on the job.