The US House of Representatives’ Committee on Education and Labor has advanced the Rehabilitation for Multiemployer Pensions Act, also known as the Butch Lewis Act, which aims to prevent the collapse of the nation’s multiemployer pension plans. The act passed the committee with 26 votes for, 18 against, and six abstentions.
The bipartisan bill would establish the Pension Rehabilitation Administration (PRA)
within the Department of the Treasury. The PRA would be authorized to issue bonds to finance loans to failing multiemployer pension plans, plans that have suspended benefits, and some recently insolvent plans currently receiving financial assistance from the Pension Benefit Guaranty Corporation (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. The amount of the loan would equal what a 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.
Pension plans that could not remain or become solvent with only a loan could apply to the PBGC for financial assistance in conjunction with a PRA loan. The bill does not require benefit cuts. 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.
According to Josh Shapiro of the American Academy of Actuaries, the multiemployer pension system consists of approximately 1,250 active plans that cover between 10 million and 11 million people. And Department of Labor data shows that approximately 35% of those plans are either in endangered status, critical status, or in critical and declining status.
Although the Congressional Budget Office (CBO) has not yet provided an official cost estimate for the Act, it reviewed versions of the bill last year and gave preliminary estimates that ranged from $34 billion to $100 billion. However, according to Congressional testimony, the cost of doing nothing in terms of lost tax revenue and increased social safety net spending is estimated to be between $170.3 billion and $241.3 billion over the 10-year budget window, and between $332 billion and $479 billion over the next 30 years.
Teamsters General President Jim Hoffa lauded the advancement of the bill by the House committee.
“It is great to see the House Education and Labor Committee take the first step towards Congress ultimately protecting workers whose retirements are in jeopardy,” said Hoffa in a statement. “Now it’s time for the rest of Congress to follow suit and deliver for these hardworking Americans who are paying, or have paid, into the pension pool and have played by the rules all their lives.”
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Tags: Butch Lewis Act, Committee on Education and Labor, House of Representative, Pension