Sen. Bernie Sanders (I-Vt.) and Rep. Marcy Kaptur (D-Ohio) have introduced legislation that would repeal the provision in the Multiemployer Pension Reform Act of 2014 that allows for plan administrators to enact benefits reductions.
“When a promise is made to the working people of this country with respect to their pensions and retiree health benefits, that promise cannot be broken,” Sanders said. “If Congress could bail out Wall Street and foreign banks throughout the world, we certainly can protect the pension benefits of American workers.”
The Multiemployer Pension Reform Act of 2014 included provisions that allow for significant benefits reductions to financially troubled multi-employer pensions, if approved by the Department of Treasury. Prior to this, it was illegal for an employer to make any cuts in the pension benefits its retirees earned.
The bill calls for the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to be applied “as if such section and amendments had never been enacted.”
The proposed legislation, known as The Keep Our Pension Promises Act, would not only eliminate this option, it would also establish a legacy fund within the Pension Benefit Guaranty Corporation (PBGC) to ensure that multi-employer pension plans can continue to provide pension benefits. The legislation would be funded from the closing of two tax loopholes that the bill sponsors say “allow the wealthiest Americans to avoid paying their fair share of taxes.”
Although only one pension plan has so far been granted approval by the Treasury Department to enact benefits reductions, there are currently six pension plans whose applications are still pending.
The Keep Our Pension Promises Act key proposals include:
- Restoring anti-cutbacks rules so that retirees in financially troubled multi-employer pension plans will not see their earned pension benefits reduced.
- Giving participating employers relief from having to shoulder the full financial burden and risk of underfunded participants whose former employers went bankrupt, or pulled out of the plan without paying what they owed.
- Providing additional funding to help protect retirees and the PBGC by closing tax loopholes used by the very wealthy to accumulate expensive artwork and hundreds of millions of dollars in tax-advantaged savings.
- Creating a legacy fund within the PBGC to help ensure that participants in financially troubled plans will continue to receive benefits.
- Ensuring pension obligations are prioritized during bankruptcies.
The bill is co-sponsored in the Senate by Sens. Tammy Baldwin (D-Wis.), Sherrod Brown (D-Ohio), Claire McCaskill (D-Mo.), Al Franken (D-Minn.), Amy Klobuchar (D-Minn.), Gary Peters (D-Mich.), Debbie Stabenow (D-Mich.) and Sheldon Whitehouse (D-R.I.).