Legislation to help struggling multiemployer pension funds is to be considered this week by a key House panel as part of a COVID-19 relief measure.
The House Ways and Means Committee is expected to start marking up a package of pandemic relief measures Wednesday, including one aimed at stabilizing pensions for more than 1 million participants in multiemployer plans approaching insolvency.
The pension section of the proposed Emergency Pension Plan Relief Act of 2021 is cited as the “Butch Lewis 4 Emergency Pension Plan Relief Act of 2021.”
It is based on a previously proposed multiemployer pension relief bill named for retiree Butch Lewis that called for a federal loan program for struggling plans and more resources for the Pension Benefit Guaranty Corp. to help troubled plans through partitions.
The latest proposal does not include a loan program but does call for cash payments through the PBGC to help financially troubled multiemployer plans with more retirees than active workers in any plan year beginning in 2020 through 2022.
It would also increase the PBGC multiemployer plans premium rate to $52 a participant starting in calendar year 2031 and then be indexed for inflation.
The proposal also calls for some funding relief for single employer plans, through extended amortization periods and pension interest rate smoothing changes.
Sponsors and advocates are more concerned about a provision offsetting the federal budget impact of the assistance by freezing cost-of-living adjustments to annual contribution limits for defined contribution plans and annual defined benefit limits.
Brian Graff, CEO of the American Retirement Association, said in a social media posting that the multiemployer “bailout” that came “out of nowhere” would set a dangerous precedent of using COLA freezes to raise revenue. Mr. Graff said that his organization will fight to remove that part, which he noted would not apply to collectively bargained plans.
Once the House Ways and Means Committee finishes its markup later this week and votes on the package, it will move to the Senate, where it could change further. Whatever legislation is finalized would still have to be added to a larger COVID-19 relief package.
Source: Pensions & Investments